Self Administered Plan Basics — Video

For most, self administered plan basics are a bit elusive. Has that been the case for you? Allow John Park to simplify a few things for ya.


Transcript:   Hi, this is John Park with PGI Self-Directed and contributor to BawldGuy Talking. Most of the time, I’m getting phone calls from folks who are wanting to set up self-directed IRAs and 401ks. That’s why they’re calling me, obviously. That’s my company. But what I’d like to do in today’s video is go through eight steps and you could actually even add more steps, but these eight steps will basically educate you on what we’re going to be involved with in working with the client and establishing a self-administered 401k plan for your benefit. Number one and most importantly to start the process is we have to know who you are, a little bit about you. Are you self employed 100%? Do you have a side business? Is your spouse the one that’s self employed? Are you W-2? What is your situation? At the end of the day, we’re going to set up the 401k plan based on your own determination of whether not you meet the IRS’ words and definition of self employment. So that’s step number one. Step number two is, I’m real big on education, so I would encouraged prospective clients and clients to be calling, asking me questions about what they’re trying to accomplish. But at the end of the day, you, the consumer, has to decide what company you may choose to work with to establish yourself administered 401k. There are tons of differences. You could have work with the company that charges an annual fee. You could work with the company that charges one-time fee. You could work with a company that doesn’t allow you to have checkbook control of your retirement assets. You could work with a company that does allow you to have checkbook control of your retirement assets. Bottom line is it’s a somewhat open menu, but you have to decide from your education what you want. Number three. Let’s say you were saying PGI as that company. We then are going to start the paperwork for your plan. One of the most critical things with a 401k plan, in addition to complying with all the IRS’ requirements to how you invest your money and what you can invest your money into, with, etc., is that the plan is sponsored and it has to have written plan documents in place. It’s a very critical aspect of the process. So number three to your checklist is PGI starts off that process by establishing an employer identification number of an EIN for your 401k plan. That business or that plan is tied back to your business whether you’re a sole proprietor, C Corp, S Corp, LLC. Number four, PGI assists you in setting up a host account for that 401k. Now, here’s where there’s a little secret in the putting. We’re working with various companies and here’s the great thing. They serve as … they’re not the custodian. You are the trustee of your own plan, but we house the account there and it gives you the ability literally from one account to invest in traditional assets, financial assets such as stocks, bonds and mutual funds, or non-traditional assets, things such as discounted notes. But the bottom line is it’s a wonderful process because literally from one account, you can invest and have checkbook control to invest however you see fit. Number five, you’re then going to be responsible for securing the rollover of any other eligible funds into your new 401k plan whether it’s coming from an IRA, whether it’s coming from a 403b, a SEP, a 457. Bottom line is you’ll get those funds because PGI doesn’t touch your money. We don’t direct any rollovers. You’re responsible for getting the funds into your plan. Number six, once we’re getting towards the end of the process, PGI registers and files your plan as an active 401k plan and provides you all the plan documents for the operation of your plan, further, when Congress makes changes two 401k regulations. PGI is responsible for updating and amending those plan documents on your behalf. Number seven. you now have checkbook control from that master host account that I mentioned, but you also may choose to establish an LLC that’s tied back to your 401k plan. The 401k is actually a member of the LLC and think of the LLC as an investment arm of your 401k plan. There are benefits to having the LLC, but it’s not a requirement. You can either write checks from that host account, from the LLC account, or both. Then step number eight and I already touched on this; but step number eight is the final step, and that is assuming you’re complying and following all the IRS’ rules with regard to your investments. PGI is responsible to you for amending and updating those plan documents for your 401k plan as necessary. So those are the basic eight steps. If you took good notes, you have a good idea of what we’re doing. Obviously, when we invest with you we can expand into much more greater detail on all these different eight steps. But I hope you enjoyed the video. I hope it was educational and informative, and until next time. I look forward to seeing you then. Thanks.

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About BawldGuy

I'm second generation real estate, first licensed in fall of 1969. Having been mentored by several iconic brokers, I'm also CCIM trained, having completed all 200 hours back in 1980. Have successfully executed well over 200 tax deferred exchanges, many of which have been multi-state in nature. Strong points are analysis and the creation and real world application of Purposeful Plans employing several strategies synergistically. The idea is to arrive at retirement with the most after tax income possible, backed by the largest net worth.

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