Solo 401(k) vs. Self-Directed IRA… How is it better or different?

I was just making a “get to the point” chart showing how the Solo 401(k) is different than a Self-Directed IRA. Click the chart to view a larger version:

As you can see from the chart above, and as you may know from our free education posts, articles and videos… the Solo 401(k) can be structured to be much more powerful than any IRA.

These extra powers (self-trustee, participant loan, higher tax-deductible contributions, etc) are made possible by careful preparation of the plan documents.

Here’s how a Solo 401(k) is different:

  • Requires document maintenance
  • Doesn’t require custodian

401(k) document maintenance fees are much lower than IRA custodian fees, and to make the 401(k) even more of a no-brainer, it eliminates all unnecessary transactional paperwork and delays  😉

Reader Interactions


  1. After rolling individual IRA’s into a Solo 401k trust account, is it possible, and if possible, then maybe difficult to roll funds from the 401k back out to an IRA in order to buy, say, mutual funds or stocks from a different broker and still keep the tax deferred status intact on those funds?

  2. Is it possible to buy mutual funds from multiple brokers with my solo401k?

    Would the mutual fund statements act as a paper trail similar to a deed to a rental property purchased by the 401k?

    In other words would the mutual funds purchased by the 401k funds cause tax problems or tax confusion with the IRS, or from gains reported directly to the IRS from indivdual brokers? Would the purchase of the mutual funds purchased by, and in the name of the 401k trust, be sufficient as a paper trail and be understood by the IRS and the brokerage company, that the purchased funds and gains are all under the tax deferred bubble of my 401k?


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