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Self-Directed IRA vs. Solo 401(k)

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Self-Directed IRA vs. Solo 401(k) 2018-12-03T12:42:19+00:00

What are the Differences Between a Self-Directed IRA and Solo 401(k)?

What Are the Qualifications?

The Ultimate IRA®The Ultimate Solo 401(k)®
Who can open this account?Any working or retired person.Must be self-employed without any full-time employees.
Maximum annual contributions(2015)Age<50= $5,500
Age > 50= $6,500 Sep IRA =$55,000
Age<50=$55,000 (Roth $18,500)
Age>50=$61,000 (Roth $24,000)
Need for custodianYesNo
Entity that holds retirement moneyLLCTrust
Can invest in Life InsuranceNoYes
Invest in Art/CollectablesNoNo
Start of RMDBy 04/15 on year after 70.5By 04/15 on year after 70.5
Minimum Withdrawal Age<59.5=10% penalty taxable distribution
>59.5=tax. distribribution
<59.5=10% penalty taxable distribution
>59.5=tax. distribution
Required Mininmum Distributions (RMDs)Yes, (Roth- NO)Yes, (Roth- YES)
Required ContributionsNoYes
Availability of funds transferredClears via custodian, then transfers to LLCDirectly into Solo 401k account
Checkbook ControlYesYes
Personal Loan from the accountNo50% of account value up to $50,000
UBIT for active investmentYesYes
UDFI for margin tradingYesYes
UDFI for real estate leverageYesNo
Annual Report Filings5498 for current account value & contributions made; 1099R if any distributions;
990T if UBIT or UDFI
5500-EZ only if plan assets exceed $250,000.
990T if UBIT
Annual amendments neededNoYes
Annual Maintenance FeePaid to CustodianPaid to Broad Financial
Roth component abilityRequires separate accountCan have Roth & Traditional in same account
Can spouse/ partner make contributions/ use same accountNo, one person per IRAYes, they can use the same account
Consequences of Prohibited TransactionsDistribution of entire IRACan undo PT
Roth componentIncome restrictedNon-income restricted
Contributions & DistributionsInto IRAInto Solo 401k account
Placing Investments(in & out)LLC checking accountTrust checking account
Can Invest in an S. CorpNoYes

Let’s find out which one is best for you:

Learn more about Self-Directed IRAs with the following info:


Custodial or Checkbook Control Plan: Which is Best for You? We Offer Both.

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