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Vanguard 401K Adoption Agreement

I`m going to keep my plan with Fidelity. Vanguard only allows more expensive investor shares in 401k solo plans. No admiral actions, no ETFs. Fidelity does not have this restriction. You can buy advantage Spartan Funds shares cheaper if you meet the minimum purchase (usually 10k). Or you can buy ETFs, including Vanguard ETFs. You only pay $8 per trade if you want Vanguard EtFs instead of ETFs without commission. I have most of my funds at Vanguard and iShares ETF. My new contributions go to a Spartan fund. I`ll get the best of both worlds that way. The non-acceptance of IRAs incoming rollovers had been a weakness of Vanguard`s Solo 401k product. This means you haven`t been able to consolidate your SEP-IRA with your 401k solo. You also couldn`t ride on VAT money upstream of your traditional IRA.

People who wanted this had to go somewhere else, like Fidelity. The PLAN consists of an adoption agreement and a plan document. In the case of Vanguards Solo 401k PLAN, THE PLAN is actually written by Ascensus, a large company specializing in writing retirement plans. THE PLAN determines your behaviour as an employer and your behaviour as a participant. I do not agree with Nora that the avant-garde plan is not very good. The Vanguard plan document is virtually identical to the plans used by each brokerage (which also buys their plans from Ascensus). The IRS provides examples of approved language, which must be included in each approved prototype, and therefore most plans are materially identical. The only problem I have with Vanguard`s plan is that it forces you to appoint Vanguard as an agent instead of allowing you to call yourself a trustee.

Etrade/Fidelity/Scwab`s plans allow you to qualify as a trustee, but they require you to call them administrators, which limits you to the use of their accounts. If this is not the case, you could accept their plans, qualify yourself as an agent, and then open a trust account with any bank or brokerage in the country (or more than one). Every time you sign up for Solo 401k in a brokerage, you adopt a plan that has been deliberately crippled. It is limited to investments in the accounts of the brokerage firm, although there is no legal obligation for THE PLAN to do so. An IRA agreement and adoption document is a contract between the owner of the IRA and the financial institution in which the account is held. The IRA acceptance agreement and plan document must be signed by the account holder before the individual pension account (IRA) can be valid.

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