If you’ve checked out the benefits of truly self-directed retirement investing and are self-employed, there is an even better solution than a self-directed IRA: the self-directed 401(k). [If you’re not self-employed, don’t worry, as our self-directed IRA solutions are still a great choice!]
A self-directed 401(k) offers all the benefits of the self-directed IRA (including checkbook control and the ability to invest in Bitcoin while holding your own keys, as well as other alternative assets), but allows larger annual contributions (up to $57,000 per participant annually, depending on your self-employment income). There is no limit at all on the amount of tax-free rollovers into a self-directed 401(k) from existing IRAs or 401(k)s.
A self-directed 401(k) can also have both Traditional and Roth subaccounts.
To be eligible for a self-directed 401(k), you must fit one of the categories below:
- Sole Proprietorships (including Single Member LLCs taxed as disregarded entities): You must have either no employees or only a spouse as an employee. Nonspouse employees who work less than 1000 hours per year do not count and do not spoil the setup. If your spouse is an employee, he or she can also participate along with you.
- Partnerships (including Multi-Member LLCs taxed as disregarded entities): All partners can participate. The entity must have no employees who are not partners or spouses of partners. Nonspouse employees who work less than 1000 hours per year do not count and do not spoil the setup. Spouses of partners can also participate if they are employees.
- S-Corporations & C-Corporations (including LLCs taxed as C or S Corps): The entity must have either a single owner or two spouses as owners. The entity must have no employees who are not owners or spouses of owners. Nonspouse employees who work less than 1000 hours per year do not count and do not spoil the setup. Spouses of owners can also participate if they are employees.
If you are eligible, there is a one-time plan setup fee of $1995. The annual fee is a super low $50 per year, starting in Year 2. Unlike most marketing companies offering self-directed 401(k)s, we guide you though the whole process, including providing an EIN for the plan and assistance with getting a checking account, brokerage account, and Bitcoin exchange account (if you want one). Because I am a tax attorney, I can also provide tax advice throughout the process.
If you’re not eligible, don’t fret! You can still do a self-directed IRA.