ForumsCryptocurrencyVerifying trust account set up + tracking trades + direct contributions

Forums Cryptocurrency Verifying trust account set up + tracking trades + direct contributions

  • Verifying trust account set up + tracking trades + direct contributions

    9 Replies
  • Roger B.

    Top SubjectSolo 401k Contributions,Cryptocurrency
    Top ForumsSolo 401k Contributions, Cryptocurrency

    Roger B.

    Roger B.

    Top SubjectSolo 401k Contributions,Cryptocurrency

    July 17, 2022 at 12:08 pm

    Question 1:

    I set up an institutional account in the name of my Solo401k trust on Gemini a couple years ago. At this time, MySolo401k had not yet drawn up the detailed instructions that it currently has regarding how to set up trust crypto accounts (at least, not that I was aware). I see in the current instructions that one of the steps is “Select ‚ÄúProfit Sharing/Pension/Retirement Plan (Employer-Sponsored; Not Individual IRA).” I don’t see this option anywhere in the records that I kept from my Gemini account set-up, which gives me pause.

    How should I verify that my account has been set up properly? Should I simply call Gemini and make sure my trust account has been set up with the EIN of my trust? Are there other numbers/codes/technicalities that I should use to verify that I established this account correctly? (I’m paranoid that I’m going to try to cash in my Roth crypto investments several decades from now only to find that the account was not properly established…)

    Question 2:

    If I sell crypto in my Gemini trust account, do I have to report the gains/losses, as I would with a personal crypto account? (Apologies if someone has already answered this question somewhere in the forum. I looked through the posts but turned up no results.)

    Question 3:

    If I make direct contributions to my Roth crypto account, do I have to notify MySolo401k, as I would for in-plan conversions for the 1099-R? As far as I understand, I do not, but I want to double-check (again, paranoid…ha). (To be clear, when I say “direct contributions,” I’m referring to funds that I have transferred from my personal checking account to the checking account set up in the name of my trust; I then transfer these funds to the crypto account set up in the name of my trust. For added context, I am paying taxes on these funds up-front–they’re Roth contributions– and I only use my trust bank account and Gemini crypto account for Roth contributions.)

    Roger B.
  • George Blower

    Top SubjectSolo 401k,Solo 401k Contributions
    Top ForumsSolo 401k, Solo 401k Contributions

    George Blower

    George Blower

    Top SubjectSolo 401k,Solo 401k Contributions

    July 19, 2022 at 4:48 am

    1) From a solo 401k perspective, the key is that the account is set up under the name and EIN of the Solo 401k plan (regardless how the account is labeled in the records of the exchange).

    2) The selling of crypto in one’s Solo 401k retirement account is tax-deferred and not reportable.

    3) Solo 401k contributions need to be made to an account at a financial institution in the name and EIN of the Solo 401k such as an account for the Solo 401k at a bank or brokerage (given that Gemini is a trust company regulated by the NY Department of Financial Services one may make a reasonable decision to contribute to an account for one’s Solo 401k at Gemini). While our clients don’t need to notify us when they make Solo 401k contributions, contributions must be made by the deadline, subject to the limits, reported on the business and/or personal tax return(s) as applicable, etc.

    • Roger B.

      Top SubjectSolo 401k Contributions,Cryptocurrency
      Top ForumsSolo 401k Contributions, Cryptocurrency

      Roger B.

      Roger B.

      Top SubjectSolo 401k Contributions,Cryptocurrency

      July 31, 2022 at 5:54 pm

      Thanks, George! Just to make sure, is that the way that I laid out above the correct way to make the direct Roth crypto contributions? I transfer the funds from my personal checking account to my trust checking account (set up at a bank with the EIN of my 401k), then transfer those funds to the crypto account at Gemini (set up with my 401k EIN).

      Roger B.
      • George Blower

        Top SubjectSolo 401k,Solo 401k Contributions
        Top ForumsSolo 401k, Solo 401k Contributions

        George Blower

        George Blower

        Top SubjectSolo 401k,Solo 401k Contributions

        August 1, 2022 at 7:14 am

        Yes provided that such accounts are separate and segregated Roth Solo 401k sub-accounts and that such contributions are within the limits, made by the deadlines, supported by sufficient self-employment income, etc.

        • Roger B.

          Top SubjectSolo 401k Contributions,Cryptocurrency
          Top ForumsSolo 401k Contributions, Cryptocurrency

          Roger B.

          Roger B.

          Top SubjectSolo 401k Contributions,Cryptocurrency

          August 5, 2022 at 4:18 pm

          Okay, thank you. Re: your comment ” that such accounts are separate and segregated Roth Solo 401k sub-accounts,” you’re talking about the trust bank account the Gemini account, right? (The trust bank account and Gemini crypto account are separate accounts at separate institutions set up with the EIN of my 401k sole proprietorship.) The personal checking account that the funds are starting in isn’t a Roth Solo401k sub-account.

          Roger B.
          • George Blower

            Top SubjectSolo 401k,Solo 401k Contributions
            Top ForumsSolo 401k, Solo 401k Contributions

            George Blower

            George Blower

            Top SubjectSolo 401k,Solo 401k Contributions

            August 5, 2022 at 9:39 pm

            In short: yes separate accounts at a bank and crypto exchange opened under the name and EIN of the solo 401k, which accounts are exclusively for Roth Solo 401k funds.

            • Roger B.

              Top SubjectSolo 401k Contributions,Cryptocurrency
              Top ForumsSolo 401k Contributions, Cryptocurrency

              Roger B.

              Roger B.

              Top SubjectSolo 401k Contributions,Cryptocurrency

              August 7, 2022 at 8:32 am

              Thank you, George.

              And the above method is correct for mega backdoor Roth contributions to my crypto platform, too (assuming deadlines, limits, tax reporting, etc are done correctly)? Namely, transferring funds from personal checking account –> Roth bank account set up w/EIN of 401k –> crypto account set up w/EIN of 401k; no need to notify MySolo401k.

              I appreciate your fielding all of these follow-up questions. I just want to make sure that mega backdoor Roth contributions at still considered solo 401k contributions and, therefore, follow the same contribution procedures in this regard.

              Roger B.
            • George Blower

              Top SubjectSolo 401k,Solo 401k Contributions
              Top ForumsSolo 401k, Solo 401k Contributions

              George Blower

              George Blower

              Top SubjectSolo 401k,Solo 401k Contributions

              August 8, 2022 at 4:41 am

              Mega Backdoor Roth Solo 401k contributions (as opposed to Roth Solo 401k contributions) are made by making Voluntary After-tax solo 401k contributions and then converted such voluntary after-tax contributions to the Roth Solo 401k sub-account.

              Such transfer from the voluntary after-tax sub-account to the Roth Solo 401k bank account is reportable on a 1099-R.

              Our clients use the following online form to provide us the information needed to report the transfer: https://www.mysolo401k.net/after-tax-to-roth-solo-401k-in-plan-conversion-form/

              Such funds would flow as follows: (i) Contributions made to the Voluntary After-tax Solo 401k sub-account at bank; (ii) Transfer from Voluntary After-tax Solo 401k sub-account at bank to Roth Solo 401k sub-account at bank; (iii) Roth Solo 401k bank account to Roth Solo 401k account at Cryptocurrency exchange.

            • Roger B.

              Top SubjectSolo 401k Contributions,Cryptocurrency
              Top ForumsSolo 401k Contributions, Cryptocurrency

              Roger B.

              Roger B.

              Top SubjectSolo 401k Contributions,Cryptocurrency

              August 8, 2022 at 12:04 pm

              Got it–glad I confirmed.

              Can I use my 401k after-tax account at Fidelity as the ” Voluntary After-tax Solo 401k sub-account at bank” that you mentioned in step (i) of the flow, as I do for my mega backdoor Roth contributions to my Vanguard IRA (for stock investments)?

              I’ll unpack that a bit:

              As far as I understand, the following is the process for making mega backdoor Roth contributions for stock investments: (i) Contribute to the after-tax sub-account at Fidelity (set up with the EIN of my solo401k sole proprietorship); (ii) Fill out distribution form & send to MySolo401k; (iii) Use Fidelity after-tax check book to write check to Vanguard Roth IRA account. Do I have that correct? This does not appear to involve transferring funds from an after-tax solo401k subaccount at a bank to a Roth Solo401k subaccount at a bank prior to transferring to Vanguard–which is why I’m a bit confused as to why I’d have to do that prior to the crypto contribution at Gemini.

              My bank closed my after-tax and pre-tax subaccounts, leaving only the Roth subaccount open. (No one at the bank can tell me why nor will they let me reopen them despite repeated attempts–it’s maddening.) So, I’m wondering if I can contribute funds to my after-tax subaccount at Fidelity, fill out the conversion forms, and then use my Fidelity after-tax check book to write a check to my Roth subaccount at the bank…and then transfer those funds to Gemini.

              Roger B.
            • George Blower

              Top SubjectSolo 401k,Solo 401k Contributions
              Top ForumsSolo 401k, Solo 401k Contributions

              George Blower

              George Blower

              Top SubjectSolo 401k,Solo 401k Contributions

              August 9, 2022 at 9:56 am

              I understand that the follow-up question is whether it is acceptable to make voluntary after-tax contributions to an account at Fidelity for one’s solo 401k and then transfer the funds from such account to a Roth Solo 401k sub-account at a Bank (and then transfer the funds from the Roth Solo 401k bank account to a cryptocurrency exchange account at Gemini). This confirms that it is acceptable to do so from a Solo 401k perspective.

              Please note that the transfer from the voluntary after-tax sub-account to the Roth solo 401k sub-account is a reportable event and we handle the preparation and submission of the 1099-R to the IRS as part of our service for no additional charge. Our clients simply need to submit our online form to provide us the information needed for the 1099-R. https://www.mysolo401k.net/after-tax-to-roth-solo-401k-in-plan-conversion-form/

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