Over at Bogleheads we came across the following discussion: self employed solo 401k
self employed solo 401k
by D57102 » Sun Feb 09, 2014 3:29 pm
I am trying to set up self-employed solo 401K and invest some money on Vanguard funds. I checked the website of Vanguard, which says it costs $20 annual fee. However, at Fidelity, there is no annual fee and it also provides Vanguard funds. I am wondering in which I should open an account.
I appreciate if someone can give me advice.
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Re: self employed solo 401k
by Laura » Sun Feb 09, 2014 3:33 pm
If you have $50k in assets with Vanguard then you would not be charged the fee. If you will quickly have $50k with Vanguard then I would go with Vanguard rather than Fidelity. Are you sure there is no cost for Vanguard funds through the Fidelity 401k program?
Laura
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Re: self employed solo 401k
by DSInvestor » Sun Feb 09, 2014
3:42 pm
Vanguard funds are available at fidelity but there is a $75 transaction fee for each purchase. If you have already established a position in a vanguard fund, you can set up an automatic purchase to add to it $5 per automatic transaction.
Fidelity has some low cost spartan index funds that have expense ratios that are competitive with Vanguard index funds.
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Re: self employed solo 401k
by snowman » Sun Feb 09, 2014 4:22
pm
I opened mine at Fidelity and am very satisfied with their service. You can buy Spartan funds or commission-free ETFs with Vanguard-like ERs. The only downside is that you cannot deposit new funds electronically - you either go to the branch, or mail the check.
I don't think you pay $20 at Vanguard if you opt for electronic delivery of documents, but I am not 100% positive on that. The main reason I don't like Vanguard for solo 401k is that you can only invest in investor shares of their mutual funds. ETFs and Admiral shares are off limis.
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Re: self employed solo 401k
by Saving$ » Sun Feb 09, 2014 9:22
pm
The objective benefit to Fidelity is that their solo 401k will allow you to roll pretax tIRA into the Solo 401k. Vanguard will not.
Some prefer Fidelity's website; some prefer Vanguards.
You can use Fidelity's Spartan funds, which are similar to the Vanguard funds for low cost, etc. If you want ETF's you can use the I-shares ETF's at Fidelity, which are similar to the Vanguard ETF's.
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Re: self employed solo 401k
by neurosphere » Sun Feb 09, 2014
9:48 pm
One small difference between Vanguard and Fidelity solo 401ks: all contributions to the 401k at Fidelity require you to fill out a form and mail in a check, while Vanguard allows for electronic contributions/transfers.
If you anticipate needing to roll over any IRAs into the solo 401k, Fidelity is the way to go however.
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Re: self employed solo 401kby DSInvestor » Sun Feb 09, 2014 10:16
pm
neurosphere wrote:One small difference between Vanguard and Fidelity solo 401ks: all contributions to the 401k at Fidelity require you to fill out a form and mail in a check, while Vanguard allows for electronic contributions/transfers.
If you anticipate needing to roll over any IRAs into the solo 401k, Fidelity is the way to go however.
I have never filled in a form or mailed in a check to contribute to my Fidelity Self Employed 401(k). I have a taxable business account at Fidelity and I make my contributions by calling a Fidelity rep advising the contribution amount, contribution type (employee/employer). The contributions are transferred from the taxable account into the 401k.
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Re: self employed solo 401k
by tfb » Sun Feb 09, 2014 10:20 pm
neurosphere wrote:One small difference between Vanguard and Fidelity solo 401ks: all contributions to the 401k at Fidelity require you to fill out a form and mail in a check, while Vanguard allows for electronic contributions/transfers.
I do it once a year. I'm not bothered by it. The expense savings over Investor shares at Vanguard becomes substantial over time.
Harry aka TFB, taking a break from the forums.
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Re: self employed solo 401k
by neurosphere » Mon Feb 10, 2014 9:20 am
tfb wrote:
neurosphere wrote:One small difference between Vanguard and Fidelity solo 401ks: all contributions to the 401k at Fidelity require you to fill out a form and mail in a check, while Vanguard allows for electronic contributions/transfers.
I do it once a year. I'm not bothered by it. The expense savings over Investor shares at Vanguard becomes substantial over time.
I agree. I don't mind filling out a very short form and writing one check a year. But I point it out only because I have a friend who is very much annoyed by this, and views this as evidence that Fidelity is a luddite compared to Vanguard. I can only smile when I hear this. 
I have never filled in a form or mailed in a check to contribute to my Fidelity Self Employed 401(k). I have a taxable business account at Fidelity and I make my contributions by calling a Fidelity rep advising the contribution amount, contribution type (employee/employer). The contributions are transferred from the taxable account into the 401k.
I cannot make a transfer because I have no other accounts at Fidelity. But it's good info to know they allow telephone contributions for those who do. Personally, I would still prefer to fill out a paper form and mail a check rather than call a representative.
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