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Newly created 6 SCHWAB Brokerage Account for 401k Problems
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5 Replies
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Hi,
I sent in my forms for creating 6 Schwab brokerage accounts for my solo 401K
However, when inspecting each Scwab account, there is no indication which account is designated as the Before Tax, Roth, and After Tax account.
Nor is there indication for which trustee (Myself and my wife) does the accounts belong.
So are these accounts arbitrary?
I created two groups:
* My 401K and
* My Wife’s 401K
I named 3 accounts:
* My IRA,
* My Roth, and
* My After Tax,
and added them to group My 401K
And for My Wife, I similarly named 3 accounts:
* My Wife IRA,
* My Wife Roth,
* My Wife After Tax.
and added them to group My Wife 401K
Will this organization of the accounts work for the 401K through Schwab?
Thank you.
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It sounds like you’re doing this correctly. From Schwab’s perspective, they don’t care or of have any reason to be aware of the uses for any of your 6 accounts, only that they are 6 unique accounts owned by your 401(k). They aren’t doing any 401(k)-type record keeping in terms of the tax status or who is the beneficiary of the accounts, etc. That is all on you as the administrator and trustee of the 401(k).
So in a sense the accounts are arbitrary until you label them and place funds in them at which point it is critical that you treat them as you have labelled them.-
I am not sure about Schwab, but when I recently opened Fidelity, they were able to tell me on the phone which was pre-tax, after-tax and roth. I would suggest checking the form submitted, in mine, we can see it was labelled. I agree that should not matter at the end of they day, but I preferred to follow the correct mapping
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Following is the common method used to nickname each of the Schwab brokerage accounts for the self-directed solo 401k:
If Just One Participant in the Solo 401k Plan: If the plan name is “XYZ Trust” and the participant’s name is Jane Doe
Brokerage Account 1: XYZ Trust (Jane Doe, PRE TAX)
Brokerage Account 2: XYZ Trust (Jane Doe, ROTH)
Brokerage Account 3: XYZ Trust (Jane Doe, VOLUNTARY AFTER-TAX)
If 2 Participants in the Solo 401k Plan: If the plan name is “XYZ Trust” and the participants names are Jane Doe & Matthew Doe
Brokerage Account 1: XYZ Trust (Jane Doe, PRE TAX)
Brokerage Account 2: XYZ Trust (Jane Doe, ROTH)
Brokerage Account 3: XYZ Trust (Jane Doe, VOLUNTARY AFTER-TAX)
_______________________________________________________________________________________
Brokerage Account 4: XYZ Trust (Matthew Doe, PRE TAX)
Brokerage Account 5: XYZ Trust (Matthew Doe, ROTH)
Brokerage Account 6: XYZ Trust (Matthew , VOLUNTARY AFTER-TAX)
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I have a similar question regarding setting up the various Solo401k accounts at Schwab. I currently have one “Master Account Application” labeled as “Pre-tax” and has only received pre-tax contributions to date. I would like to make a voluntary after-tax contribution for 2024 before the Oct 15 deadline. Do I open a new “Master Account” labeled as “After Tax”? Schwab also offers the ability to open “Participant Accounts” that are associated with a Master Account. Is that a better option?
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UPDATE:
I found which 401K account each Schwab account belongs to.
It is in the Account Verification Statement’s Name and Address section on the upper-left of the statement. The first name is the first trustee, the second name is the second trustee. Then the type of account (Pre-Tax, ROTH, After-tax) is listed as well as the Company’s Trust Name.
Thank you guys for all your help.
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