I’ve set up a retirement plan, and I’m ready to open up an investment account. How do I do it?

Many banks (both large and small) don’t have a lot of experience opening a bank account for a retirement plan.  Here are some tips to make this process easier.

1. Bring a copy of the EIN provided when plan documents were set up for your retirement plan. The plan EIN will be used to open your bank account. Do NOT use your social security # or the EIN for your company.
2. In most instances the banker will not need to see the actual plan document.  If you want to be safe, print off the Adoption Agreement and bring it into the bank.  But please realize that it is a lengthy document (normally 30 pages or so).  Any documents they request should have been provided when the plan set up was completed.
3. Tell the banker that you wish to open a “Trust” bank account and not a business or personal bank account.  Often the banker will assume that you are seeking to open a solo 401k with the bank as the trustee.  This is of course not the case as you will be trustee for the plan.
4. You may need to explain that a self-directed 401(k) falls under the Internal Revenue Code and falls under the retirement trust umbrella and that the business owner can serve as the trustee of the trust.
5. The business owner as trustee directs all investments and decides on the bank or credit union of where to hold the trust liquid funds; therefore, the bank will not serve as the trustee of any of the alternative investments
   1. (e.g., real estate, precious metals, tax liens, notes, private shares, etc.) and will not administer the plan.
6. If there is still confusion, you can recite the following.

Trusts and trustees. 401(k) plans are funded through a trust established to hold and invest the plan’s assets. At least one trustee is appointed to have responsibility for the activities of the trust and its assets. This is a serious responsibility with considerable potential for liability. Trustees might include the business owner, an employee, or a financial or trust institution.

Other Common Questions You May Encounter:

Question. How is account titled?

Answer: The bank account is titled in the name of the solo 401(k) trust.

Question: Who is the trustee?

Answer: You, the business owner, is the trustee.

Question: Who has signing authority?

Answer: The solo 401(k) trustee has signing authority.

Question: What banking features are allowed for the solo 401(k) trust bank account?

Answer: Check writing, debit cards, ACH, wires and cashier checks are permitted; however, credit cards and personal lines of credit are not.