ForumsSolo 401kCompliant cash management – solo 401K

Forums Solo 401k Compliant cash management – solo 401K

  • Compliant cash management – solo 401K

    Alex K. replied 1 year, 4 months ago 4 Members · 6 Posts
  • 5 Replies
  • Top SubjectSolo 401k,Real Estate Investments
    Top ForumsSolo 401k, Real Estate Investments

    Warren E.
    Top SubjectSolo 401k,Real Estate Investments

    January 27, 2023 at 1:35 pm

    Hi,

    I keep a percentage of my solo 401K in cash as “dry powder”. Currently, the cash sits at my local bank, in my solo 401K trust’s “Roth” checking account. My bank pays zero interest on checking accounts.

    I am looking for compliant options for managing cash better. Here are some of the options I am considering. In each case, since my cash is primarily “Roth”, I would only transfer “Roth” funds; no mingling pre-tax and Roth, of course.

    1. Ally bank currently pays 3.3% APR. Open a checking account at Ally in the name of my solo 401K trust and transfer my cash there. Q: What type of account would I set up here?

    2. TreasuryDirect.gov is currently paying 4.579% APR on 4-week bills. Open an TreasuryDirect.gov trust account in my trust’s name and link it to my “Roth” checking account at my local bank. Periodically purchase 4-week bills, or set up a ladder.

    3. Brokerage money markets are currently paying 4+% (7 day SEC yield). Open a brokerage account (TDA, Vanguard, etc) in my trust’s name and transfer my cash there. Q: Same as 1), what type of account would I set up at a brokerage? Also, if IRA account, would each transfer between the brokerage and my local bank account be considered a reportable “rollover”?

    Questions:

    – Are all of the above compliant and viable options for managing the cash of a solo 401K trust account?

    -What type of accounts would I set up for options 1 and 3? And what are the pros and cons?

    -Are there other options for better cash management that I am not considering?

    Thanks much and best!

    Warren E.
  • George Blower

    Top SubjectDaily Live Webinar,Solo 401k
    Top ForumsDaily Live Webinar, Solo 401k

    George Blower

    George Blower

    Top SubjectDaily Live Webinar,Solo 401k

    January 30, 2023 at 4:59 am

    From a Solo 401k perspective, what is most important is that the account (whether bank, brokerage, etc.) is set up under the name and EIN of the Solo 401k and that there is a separate sub-account for Roth solo 401k funds.

    What the particular institution labels the account (e.g. as a business bank or trust account) is acceptable provided that the account is open under the name and EIN of the Solo 401k.

    I note that based on client feedback and experience Vanguard will not open accounts for a third-party Solo 401k plan.

  • Top SubjectSolo 401k,Real Estate Investments
    Top ForumsSolo 401k, Real Estate Investments

    Warren E.
    Top SubjectSolo 401k,Real Estate Investments

    January 30, 2023 at 12:36 pm

    OK. This is helpful. Thanks much!

    Warren E.
  • Top SubjectSolo 401k Brokerage Account,Solo 401k
    Top ForumsSolo 401k Brokerage Account, Solo 401k

    Alex K.
    Top SubjectSolo 401k Brokerage Account,Solo 401k

    February 19, 2023 at 9:30 am

    Short-term (under 1 yr) CDs through your brokerage account, usually new issues, if you are willing to lock the money in for a year or lose the interest if you need money earlier. Currently some issues are paying 4.85-5%.

    Alex K.

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