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Steps to set up a solo 401k

Posted on by Quest Trust Company
Estimated reading time: 2 minutes

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401k accounts are retirement accounts that are set up and managed by your employer. However, if you are a freelancer or entrepreneur that runs your own business, you may want to set up a 401k just for yourself. 

Many people don’t realize they have this option, but it’s a great way to build up your savings for retirement. Setting up a solo 401k can be tricky at first – here are the basic steps to get started.

Choose a 401k provider

The first step to opening a solo 401k is choosing a provider. Many financial institutions offer solo 401ks to their customers, so they’re fairly easy to find. There are several things to take into account when choosing a 401k provider, but the most important factors are fees and investment options. 

You’ll want to make sure your provider has investment options you like, and that you have enough flexibility when putting your plan together. You should also look for a provider with low fees, as high transaction fees can really add up.

Fill out your application

Once you’ve decided on a provider, you’ll need to work with them to fill out your paperwork and get the account set up. 

You’ll need to fill out your employer kit with a plan adoption agreement for a solo 401k. These are complex and can be confusing to fill out on your own, which is why it’s so important to have a provider you trust walk you through them. 

You will also need to prepare your employee disclosures about your business to send to the IRS for tax purposes.

Open your account

Once you have all of your paperwork filled out, you can set up an account and make contributions as you see fit. Since you are both employer and employee, you can make one sum contribution instead of worrying about employer matching.

When you’re setting up a retirement account, it’s important to make sure you’re working with a reputable financial institution you can trust. 

Quest Trust Company offers an individual 401k as well as many other retirement savings options, including self-directed IRA and Roth IRA accounts. We offer truly self-directed investment options as well as fast processing times and low fees. Contact a financial expert at Quest Trust Company today to set up your account.

Tips for Investing Out of State

Posted on by Juan Deshon

Estimated reading time: 3 minutesWith an investment like real estate, sometimes it makes more sense to take your money to a different state. Whether the market is slow, stagnant, or just not good in your area, many other places around the country are experiencing amazing growth that’s predicted to last a while. Those who get in on the action now can reap major rewards in just a few short years. Most of us can’t afford two mortgages to make this happen, but we do have available retirement funds at our disposal. Conventional IRAs don’t allow for real estate investments, but Self-Directed IRAs do. Like any investment, real estate investments take education, research, and analysis to increase your chances of coming out ahead. Learn more about how to wisely invest in out-of-state opportunities below.

Learn the Local Laws

Before investing out of state, it’s best to research and understand the local laws pertaining to your investment. If you are planning on investing in a rental property, you may want to check out the tenant-landlord laws in that state. What does the evection process look like and when are tenants liable for damages? Establishing a relationship with a real estate lawyer in that state is also a good idea in the event you need one or have a legal question about your property.

Complete a Market Analysis

Obviously, you will want to investigate the area and understand what the market projections look like in the next five and ten years, or however long you are planning on keeping the investment. Look for previous pricing patterns and learn what new businesses could be driving in jobs for particular areas. What are some of the economic decisions being voted on in the next election and how will they impact your investment? There are dozens of factors at play when it comes to real estate investments, and it’s important to understand most, if not all of them before jumping in. Learn more about Real Estate IRA Rules here.

Narrow Down Your Options

Once you’ve decided on a general area of where to invest, it’s time to choose a specific neighborhood or property. What types of renters does the neighborhood attract? Low income neighborhoods may score you a great deal at first but are more at risk for missed rents or vandalism. Check crime rate statistics and understand how quickly rental properties find qualified tenants in the area. Rural renting can sometimes prove more difficult, which means lost income potential for you.

Analyze Each Property

Just like inspecting your own home before purchasing, you will want to complete a full inspection of your investment as well. Will it need a lot of repairs before any income can be generated from the property? How long will repairs take? Besides initial repairs, it’s also important to be aware of future repairs. How old is the HVAC and water heater? What shape is the roof in and what is the seasonal weather like in the area? Don’t forget to calculate taxes, insurance, and property management costs into the equation as well.

Assemble a Trustworthy Team

Being out of state can be a hinderance when there are emergencies to handle. Having a trustworthy team on the ground can ease your anxieties but will also add to the expense of the investment. Some crucial players you will want to consider for your dream team are real estate attorneys, property managers, contractors, inspectors, insurance providers, and CPAs. Remember, you are essentially hiring them to work for you, so don’t take these decisions lightly. After all, your retirement funds are at stake!

Investing in real estate with a Self-Directed IRA is an exciting adventure no matter where you are. These tips will help you make a smart choice when it comes to choosing the right investment.