Best individual 401k provider for Interactive Brokers?

Discussion in 'Taxes and Accounting' started by toonerdy, Jul 21, 2014.

  1. toonerdy


    I'd be interested in recent experiences from anyone with an individual 401k account at Interactive Brokers, especially regarding the legal document provider or any other service used to maintain the 401k (for example, a record keeping service if you don't do it yourself), such as a provider listed at . charges $215/year + more if you want them to generate tax forms, which is much less than I think I'd save in commissions and make from putting on a few more marginal trades, but I would prefer to deal with a 401k provider that has actually dealt with Interactive Brokers before. For example, one "blog" at mentions, "We have a number of clients who have opened brokerage account for their Solo 401k with Interactive Brokers."

    I might consider solutions using other low cost brokerages, such as MB Trading or Lightspeed, but I have other accounts at IB, and like the variety of instruments available, even if I don't currently trade strategies that use many of them.

    Thanks in advance for any help with this.
  2. toonerdy


    Just to provide an update for anyone else who finds this post in the course of searching the web for a related question, I went with Ubiquity (formerly, The Online 401k), and my 401k trust now has accounts at both Interactive Brokers and TD Ameritrade.

    Other companies that I believe provide similar services are The IRA Financial Group and
  3. J59


    A few years ago i put a lot of effort into finding a good 401K plan not tied to a single custodian. Went with Sunwest Trust (Albuquerque). They use a prototype plan by Ascensus. Has every feature you could ask for including, including Roth conversions. The cost was just a few hundred dollars, plus small continuing update fees. You can probably get the identical plan for free (limited to one particular custodian) at TD Ameritrade and possibly some of the other brokers, though they don't seem to advertise this. IB has the slight disadvantage of classifying the account as a "trust" rather than a retirement account.This makes ACAT transfers a bit more difficult. Tax reporting is your responsibility. Just to be clear, in setting up the IB account you have to have a tax ID and submit PDF copies of the plan documents. Whereas at TD Ameritrade you have a choice of using your purchased plan or their free plan.
    Last edited: Mar 23, 2015
  4. xandman


    A big 401k provider was charging $5000 setup and $200 annual maintenance.

    The specific stucture was to use the 401k money to fund an LLC whose employee, myself and a business partner, would make the typical contributions to the fund thus the LLC as well.

    Do those fees sound outrageous?
  5. Consider that Vanguard charges, $20 per investment account (up to 4) per year, with zero upfront, I'd say YES!
  6. xandman


    Mind you, it's not a simple rollover. They create the business structure and the 401K plan within the LLC. After that, your IRA and 401K plan from a previous custodian is used to capitalize your business. Or is that the case for all self run 401K's?

    This was proposed to me by a business lender who required certain debt/capitalization ratios. The lender recommended the third party custodian, but you can't help but believe that they are all in cahoots.

    My thoughts are that I could set up an LLC online for a few hundred and just draft the proper accounting structure to show that my broker (IBKR/Vanguard etc) run 401K plan is part of the LLC's capitalization.

    • I am waiting for the accountants to scream cheapskate.
  7. xandman - if you've got other employees in your 401k, it's not a "Solo 401k" anymore. OP was talking about Solo 401ks, which can at most have you and your spouse. Solo 401ks can be very cheap and many brokers will do the paperwork for free to get your investment business (Fidelity for example). A reasonable cost for a Solo plan might be a few $100 or so.

    Full 401k plans are MUCH more involved. There are discrimination tests, contribution limits, and lots more paperwork. Reasonable costs are several $k, and $5k wouldn't be out of the question if you wanted a special setup for LLC investing. You might find it for cheaper than that, but it's not going to be in the same ballpark.
  8. toonerdy


    Thanks, everyone, for your thoughtful replies.

    I confirm that TD Ameritrade's 401k plan was from Ascensus when I used it, and it had just about every feature I could think of. I also confirm complications with doing ACAT transfers between my TD Ameritrade and Interactive Brokers accounts, because the IB account was coded as a trust while the TDA account was qualifieid plan (and TDA also offers trust accounts with a different coding). I think I had to provide IB with a scan of my photo ID and a scan of a signed letter authorizing the ACAT transfer between unlike account types. I thinkit took me about a week for me to discover that my first ACAT request had been rejected.

    One bonus that I should mention is that IB authorized my 401k for margin and pretty much all of the instruments available to US accounts. They required me to submit a letter stating that my 401k plan authorized this and I was requesting it. I also wrote that I was not and could not legally guarantee the possible losses from margin trading.
    elt894 and MoreLeverage like this.