Based on an interesting post from My Personal Finance Blog discussing setting-up his individual 401ks.
I actually decided in the opposite direction: against going with 401kbrokers and instead going with Fidelity.
Although 401kbrokers does allow borrowing against a 401k account, I have a separate cash reserve, so that is not a significant requirement for me.
What is interesting is that I can invest in the various fidelity index funds, some spartan, mutual funds have expense ratios as lows as 0.08%. That sure beats whatever 401kbrokers offers, even if you can use Vanguard mutual funds - after all, they tack on 0.25% admnistrative fee.
Somehow I have a visceral dislike for any kind of aum based admninisrative fee.
Also, there's less institutional risk - Fidelity has been around alot longer than 401kbrokers.
Regards,
makingourway
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4 comments:
I'm a bit confused... Don't you have a 401k with your employer? Can you also have a solo 401k for a side-business?
You can have a 401k with your employer and an individual 401k if you have a side business.
Your aggregate contributions (of the two) cannot exceed the limits of a 401k plan; i.e. no more than $15,500 in salary deferals and $4x,000 in total profit share/match, etc....
regards, m
hmm yes I guess that is pretty obvious. Could be a good solution if you don't like your main employer's 401k plan?
There are just way too many different account types in the US retirement system!
moom,
the more the better - maybe confusing for some, but more flexibility for all!
It's only an effective alternative if you have sufficient income from your side business to take advantage of the deductions.
regards, m
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