EP 470 – Self-Directed Employer Plans with Rebecca Miller

NCS 470 | Self Directed Employer Plans

NCS 470 | Self Directed Employer Plans


Anyone who is dealing with self-directed employer plans needs the help of an IRA specialist to make transactions smoother and faster. Certified IRA Specialist Rebecca Miller from Quest Trust Company explains the different self-directed plans available to employers. Noting the importance of having someone do the custodial work and bookkeeping of your 401(k), she shares about her company’s role in helping you set up your 401(k) plan. Rebecca also discusses the pros and cons of SEP and simple IRAs and how to set these up along with the qualified retirement plan and solo 401(k) versus SEP. Gain additional knowledge about these concepts with Rebecca’s discussion on how to make processing them so much easier.

Listen to the podcast here:

Self-Directed Employer Plans with Rebecca Miller

I’m excited to be back. I couldn’t think of a better way than to kick things off with our good friend, Rebecca Miller from Quest Trust Company coming on board to talk about self-directed IRA plans, specifically employer plans out there. Welcome, Rebecca.

I’m excited to be here to discuss about employer plans with you.

We’re glad to have you on. Before we dive into the plans, give everybody a little bit of your background, several years at Quest and prior to that.

I started with Quest Trust Company as an intern. Before that, I had done a lot of work in the customer service industry, a little bit of management at a grocery store as a customer service manager. That was about it until I came to Quest. I started with their internship. They trained me from the ground up. I continued going through college during that time too. Imagine working with Quest at nights and weekends and also going to school part-time. It’s been quite a trip.

Look at how much growth has happened in the last several years.

We have grown this company. It’s probably doubling in size every year. I can’t believe how much it’s grown. There were about ten employees here when I started and now we’re well over 100. It’s incredible.

You are the most knowledgeable CISP over there at Quest that handles a lot of the employer plans. Your phone is constantly ringing and you’re constantly answering questions. Is that correct?

Yeah, I am our 401(k) expert as well as employer plan expert. Some of the other account types are SIMPLE and SEP IRAs that we’re going to talk about first. A lot more of our employees are more comfortable talking about those simply because they’re IRAs. The 401(k) is such a different animal that I’ve been working on training people. You either use it or you lose it. Now I’m retraining them all over again.

It’s like cracking the whip on them getting to do it. You’re growing. You’re adding so many IRA account owners coming on board to Quest’s records every year on new accounts. You’ve got a big event coming with a Quest Expo taking place in August. You’ve got the Trillion Dollar Mixers in Houston, Austin and Dallas. Are you going to go over four accounts for the most part?

It’s mainly three. They’re SIMPLE, SEP and Solo 401(k).

The big thing here too that’s a little bit different is if you’re going to use one of these accounts, you can only use one of the three. You can’t use two or all three.

As an employer, you’re able to set up an employer plan to offer yourself as well as any other employees that you have. It’s a retirement savings benefit. If the IRS let you use more than one, for instance, SEP and the 401(k), they’ll be losing out on so much money because you’ve got such a huge tax deduction. They limit you to having one employer plan for your company. That normally extends to other companies that you own as well. The IRS does limit you on the number of employer plans that you can actively contribute to during a given year for yourself and your employees.

God forbid that the IRS lose out on collecting some tax money. Everybody is like, “I don’t feel sorry for them.” Let’s start with that first one.

One of the first employer plans I wanted to touch on was SIMPLE IRAs. We don’t have that many SIMPLE IRAs here at Quest. We have even less SIMPLE IRAs than we have the Solo 401(k)s. It’s the smallest number of actual accounts set up here at Quest. Not that many people use them as much and self-direct them. A SIMPLE IRA account is often used by a small business owner who has less than 100 employees. It works great for them because the employee gets to put in a majority of the contribution. For instance, for the 2019 tax year, if somebody had set one up for their business, the employees can choose to contribute up to $13,000 from their paychecks. If they’re over the age of 50, they get another $3,000. $16,000 would be the maximum for somebody over the age of 50, tax-deductible to the employees. The best part for the employer is that they only have to do a 3% matching contribution, contributing up to 3% of the employee’s salary. It’s like the employee is putting in that much of their salary anyways. They have the option to sometimes do 2%. The rules can get changed back and forth a little bit if you’re going with that 2% versus that 3% option. Most folks do the 3% match.

If we got an employee and let’s say they’re making $50,000 a year, they can put away a total of $13,000 under there. Is that what you said?


If we wanted to do that, would I only be responsible for matching up to 3%?

It’s of the employee’s salary, yes. It can be nice because if the employee wasn’t that interested in contributing, maybe they didn’t see the benefit of locking away that money for their retirement, you don’t have to match them. It works well for you. You also don’t have to put in as much money for them. It gives the employee the ability to share in the responsibility of building up their retirement savings.

You said it’s less than 100 employees. That surprised me a little bit because you said it’s the easiest to set up of the three plans. If they don’t partake into it, that’s pretty cool.

What we often see a lot too is that, usually, when somebody chooses to self-direct it, they’re not moving all of their employees’ accounts to us. They’re usually just moving their own. Your employees are able to set up their SIMPLE IRAs normally with about any bank of their choosing using the government paperwork, the SIMPLE 5304 form that’s provided.

The accounts are not being set up through Quest Trust. Is it set up through their own bank?

It’s not all of them. Let’s say that you as a note investment expert wanted to self-direct your SIMPLE IRA. You can set your account up with Quest. You can have your contributions come here, but maybe your employees aren’t as interested in note investing or don’t feel confident in note investing. They may choose to have their SIMPLE IRAs with a more traditional brokerage firm like E*TRADE or Charles Schwab, someplace where they feel a little bit more comfortable investing and growing their retirement savings if they’re not ready to take control of their investing.

That’s a nice benefit for those that want to put something away and not be active in it. You’ve got an admin staff who says, “I don’t want to do real estate. I just want to do the paperwork day in, day out.” What are some of the cons of SIMPLE IRAs?

It’s not that flexible. One of the things that I always found the strangest about SIMPLE IRAs is they have this funny two-year restriction. From the first time you make a contribution to your SIMPLE IRA, it starts a two-year aging period. During that two-year aging period, maybe you quit your job, got fired, broke a leg or got in a car accident and you needed to withdraw some of that money. The penalties increase during that two-year period from a 10% penalty, which is what most IRAs have. If you try to withdraw money before retirement age, the penalty is increased at 25% during that two-year period. You also can’t move your SIMPLE IRA funds into any other types of accounts. A lot of self-directed investors want to use a Roth IRA. The Roth IRA is so sought after because it’s an after-tax account that grows tax-free instead. You can usually pay taxes on any tax-deferred money that goes into any other type of retirement vehicle, like a SEP, a traditional and SIMPLEs too. During that two-year period, you can’t do a Roth conversion to change into a Roth IRA. That’s a funny restriction. On top of that, there’s no flexibility in changing the way that you make contributions. It’s not very flexible.

Can an employee also have a traditional IRA or a Roth IRA outside of the SIMPLE IRA on their own?

NCS 470 | Self Directed Employer Plans

Self Directed Employer Plans: A SIMPLE IRA account is often used by small business owners who have less than 100 employees.


Yes. With most employer plans, SEPs, SIMPLEs and 401(k)s, you as an employee or employer can be contributing to one of those. It’s in addition to your own individual retirement savings, like a traditional or Roth IRA, which we consider more personal accounts since they’re not related to an employer at all. They’re just related to you as an individual.

SIMPLE IRAs, if you set one up for less than 100 employees, is that going to be offered to everybody in the business?

Everybody is eligible to join the SIMPLE IRA. There are no discrimination clauses in it for you to exclude employees. We’ll talk about some of the other plans and how you can exclude some folks on those.

They all contribute up to $13,000. We’re all responsible if we were the boss to match up to 2% or 3%, depending on what you select at the time it is created. Is there any maximum or minimum number of employees you have to have?

There’s no minimum. If you entered contributions for yourself, you’d have to put yourself that you’re your own employer. One would be the minimum. The other thing that makes the SIMPLE great is if you have a lower income year. Maybe you only made $30,000 or you only made $20,000 of self-employment income in addition to some other job that you had. Maybe you’re a W2 employee. In that instance, the SIMPLE IRA gives you the ability to do a higher contribution if you only have a little bit of earnings that year. That’s a plus if you had a lower income year for your self-employment income in comparison to the SEP or 401(k).

Is the money that you contributed to drawn pre-tax or post-tax?

It is pre-tax. It’s a tax-deductible contribution, that $13,000 that the employee can put in, as well as the employers, for instance, matching contribution of 3%.

After two years, if you were to leave the company and wanted to convert your Roth, you’d be paying the conversion cost of converting it from a traditional to a Roth at that point. Let’s move onto the next one, the SEP, the Simplified Employee Pension plan.

SEPs are one of my favorites. I see a lot more people work with them. It’s also because many of our clients are related to the real estate industry. They may have income as a realtor. They may be doing some self-employment income and have no other employees. In which case, the SEP can usually work the best for them. The SEP is a little bit more flexible. One of the things that are great about it is you can’t exclude some employees. You can discriminate against them based off of their age. You can say that they have to be at least 21 years of age or some number below that in order to qualify for the plan or you could exclude them. If you had some young interns at the office you wanted to exclude, you could do that. They have to be at least this age of up to 21 years of age. You can also discriminate against them based on the years of service.

You can say that they have to work for one year, two years or three years as an employee in order to qualify to join the plan too. If somebody hired a new employee for the first time but wasn’t ready to start contributing to them as well yet, they’d be able to say that they had to have X number of years of service up to three years in order to qualify for the contributions. Part of that is because the employer is the one making all of the contributions to a SEP, not the employee. That’s the other part of the reason for why they have that ability to discriminate on years of service, for instance.

You don’t want to be making contributions for somebody who’s around for a year and takes off. You want somebody who’s going to be vetted a little bit.

You’re investing in them.

What are the amounts that somebody can contribute to that?

The contributions get quite a bit higher. The employer is able to contribute up to 25% of W2 wages or 20% of their net earnings from self-employment. The total amount of their contributions for the 2019 tax year cannot exceed $56,000. It’s all tax deductible.

Is there a solopreneur too? Do they set up their own pension plan?

Yes, it’s extremely powerful. What gets even better is that this account can save you a lot of money on taxes when it comes to tax filing deadline because it’s the only employer plan out there that you can start after the year is over. For instance, if there’s somebody who’s self-employed out there who already filed an extension on their taxes for 2018, they still have the ability to open us up and make a SEP contribution for the 2018 tax year that could be tax deductible. It’s the only employer plan you can still do that too.

They filed an extension. It doesn’t matter if it’s the April 15th deadline for most.

They get that plus an extension for this account. This is great if you’re a realtor. You had a large commission in 2018 and hadn’t planned for it fully. You started your taxes and said, “What am I going to do? That’s a lot to pay.” The SEP IRA could allow you to make a high tax-deductible contribution. It’s important with any of these employer plans to also consult with your CPAs or your tax advisors to have them help you calculate your maximum contribution. In this instance, the SEP IRA saved so many people because it is the only account that you can start so late in the year, like after January 1st of the prior year, and even make contributions all the way up until the tax filing deadline plus an extension.

Is it easy and inexpensive to set up?

The SIMPLE IRA and the SEP IRA are easy to set up. The government has already created the plan paperwork for you. It’s fill in the blank. It is easy to set up. There are no real reporting requirements either. 401(k)’s have a lot of reporting requirements. Other than that, it’s inexpensive. If you’ve seen our IRA fees, it’s at most a couple of $100 a year. When you compare that to the employer plans, the 401(k)s can get much more costly, especially if you have a lot of W2 employees. Still, the 401(k)s can be a little bit cheaper. It depends.

Let’s talk about the cons. You mentioned you’ve got to contribute equally to all qualified employees.

SEP IRAs don’t work well if you have common law or W2 employees unless you liked them. You have to treat all employees equally. If you wanted to contribute the maximum, maybe 25% of your W2 wages for yourself, you know how to do 25% of all your employees’ W2 wages. That’s why I was joking that you may want to use those discrimination options to exclude folks that are too young or exclude folks that haven’t worked for you long enough. You’re making that investment into them, putting all the contributions in for them. Although you get a great tax deduction for your business, that’s the tradeoff.

Especially if you’ve got to do it for everybody. If you’ve got three employees that you’re paying $50,000 a year each, you’ve got to put $12,500 in. That’s up to 25% or $56,000 max.

You can only reach the $56,000 if you were paying them a lot more because you cannot exceed that 25% of their W2 wages.

$56,000 would be 25%. They’d be making $200,000 a year.

NCS 470 | Self Directed Employer Plans

Self Directed Employer Plans: All IRAs are easy to set up. The government has already created the plan paperwork for you, making it easier to fill up.


It’s $200,000 to $250,000.

It’s good to know because every April 15th, we always see people, “I wrote a big check to the government.” I’m like, “Maybe you didn’t. Hopefully, you’ve got a SEP. You could have extended it a day, gone back and readjust a few things, dropped in a chunk of money into it, did a write-off and pay the government a little bit less then.”

It’s nice that you can start them so late in the year. One of the things that I’ve run into a lot with folks who are exploring setting up the 401(k) is that they wish they had done it sooner or started that research sooner. A lot of them will end up working with a SEP IRA maybe for the prior tax year or the year that they’re wrapping up. They’re moving into a 401(k) the following year because, in order to contribute to a 401(k) for a given tax year, you have to have that plan already set up during that tax year. It’s before December 31st in order to make a contribution. That’s why the SEP IRA saves so many people. They didn’t plan ahead on making an employer plan contribution.

If they did a SEP, could they have that for one year and change it the next year to add a Solo 401(k)?

Yeah. You can even roll the SEP into the 401(k) and consolidate the accounts. As soon as the 401(k) is set up, you can roll in other traditional IRAs as well. Another great thing about the SEP is you can also instantly convert it to a Roth IRA. This is a huge way to shovel money into a Roth account. You can make that tax-deductible contribution to the SEP from your business. As soon as that check or wire clears, convert it to your Roth IRA. It cancels out your tax deduction if you do it in the same year. It’s incredibly powerful.

You could do it one year, file your taxes and convert it later on after you file taxes to get that tax deduction to then roll it over to a Roth.

When you think about the power of the SEP along with the traditional IRA, you can make your traditional contribution of $6,000 or $7,000, depending on your age. Also, you can max out your SEP contribution of 20% or 25% of your wages or earnings and put those to the SEP account. Did you know that both traditional and SEP contributions can go into a SEP? That’s the fun secret out there. The SEP and traditional IRA accounts are the same accounts, only you can make employer contributions to the SEP. That’s why you can transfer money back and forth between the two of them as well.

Let’s dive into the Solo 401(k)s next.

Solo 401(k)s are my forte, simply because there’s so much education that goes into them. We spend quite a bit of time with any client that wants to set up the 401(k) plan to make sure that they understand it and provide them the best education that we can because it makes them a better 401(k) client too. One of the things I always like to point out to people about Solo 401(k)s versus SEP or SIMPLE IRAs is how the account works overall too. It works entirely different. If somebody is self-directing a SEP IRA or self-directing a SIMPLE IRA, they’re working with a custodian like us where we hold the account and the funds in the account. They give us permission to make investments for them. We deploy those funds and profits like your rents or your note payments that come into the account that’s completely tax deferred. That’s how it works. You’re always running everything through Quest, the custodian, with those types of accounts.

Our 401(k) plan is different because the account holder gets to take on those duties as their custodian trustee and administrator with us. It’s much more hands-on. There are some incredible benefits out there for folks who qualify to work with it. The qualifications are a little bit steeper than the SIMPLE or SEP IRA accounts because not only do you have to be self-employed, but you have to have self-employment earnings. You have to have your Schedule C, 299 or W2 and have profit to make contributions to the account because you have to legitimize it. If you set up a SEP and didn’t make a contribution, the IRS is not going to worry about it. If you set up a 401(k), enrolled your IRA into it and never made a contribution, it can create issues for the account holder because they never legitimized the 401(k). It’s one of the requirement to legitimize the account. If somebody never made a contribution to their 401(k) but just rolled an old IRA into it, the IRS can consider it illegitimate as if you didn’t have a 401(k) and simply treat the account as if it was distributed. It’s a nightmare if somebody doesn’t contribute.

That’s usually where we like to start by talking with folks about the importance of making contributions and their qualifications as a self-employed person. If you just have investment income, that’s not the same thing as self-employment income. You have self-employment taxes like Social Security and Medicare when you have 299 or Schedule C earnings for instance, or if you have a corporation where you’re paying yourself a W2. Self-employment taxes make a big difference and qualify you to make these contributions to the employer plans. Other than that, you also can’t have any other employees under any other company to specifically work with a Solo 401(k). This also messes with people if they have more than one company that they own.

I see this a lot with real estate investors that have their real estate investment business over here on the side and it’s just them, but over here, they have their consulting firm, law firm or dental practice, where they do have employees. That entirely excludes them from being able to work with a Solo 401(k) in particular, which is huge when you’re self-directing. 401(k)s get costly if you have employees and want to self-direct them. I remember a quote from Quincy or Nathan way back in the day when we only had ten employees. That costs us about $10,000 a year to self-direct our 401(k) plan. That’s an outrageous expense for most small business owners. When it’s just you, the employee, and you have no other employees under any other companies, a Solo 401(k) is so much cheaper to self-direct anyway.

If you have an investor who’s self-employed and a real estate investor, they can’t have any other type of entity with employees, none whatsoever. They can’t be making 1099 income if they’re teaching dancing. If they’re a consultant for something else in a different entity, they can’t have the Solo 401(k).

You can have more than one form of self-employment earnings. You can’t have any common law W2 employees under any other companies. If Company B has common law employees, a dance studio, for instance, that won’t work. 299 employees are fine because you don’t have to provide them an employee benefit, but more common law W2 is what creates the issue for an employer.

I couldn’t have We Close Notes, be myself and have inverse ventures that have twenty employees. It would disqualify me.

That’s because the IRS doesn’t want you to discriminate against those employees of the other company and not provide them the same benefit that you’re providing to you, the employee of this other company.

What’s the amount of the highest possible contribution limit?

It’s similar to the SEP, but it gets higher. For instance, you get the same employer contribution. Your business can still contribute that same 25% of a W2 wage or 20% of your net earnings. In addition to that, you get to put money in as the employee too up to $19,000 if you’re under the age of 50. If you’re over the age of 50, it jumps up at another $6,000 to $25,000. You’re able to tack on another $19,000 or $25,000 to make it easier to max out the maximum contribution limit. If you’re under the age of 50, that maximum limit is still $56,000. You can see how it’s a little bit easier to hit that now that you can contribute money as the employee too. If you’re over the age of 50, it increases by that $6,000. It puts you up a little bit higher to $62,000.

The biggest risk is the reporting aspect of this thing.

It’s that custodial work. 401(k)s also have reporting requirements. If you hit $250,000 or $1 million, you have to do some annual reporting requirements telling the IRS the value of your account and things like that or if you have any loans out. Until you hit that $250,000 point, the reporting is a little bit less. You still have a lot of bookkeeping and recordkeeping requirements. If the IRS ever wanted to audit your account, you get to hand over all the books, all the records. You have to also track the types of money that you’ve been putting in, money that you’ve rolled in, money that you’ve contributed as the employee, money that you’ve contributed as the employer, as well as the 401(k) in particular. Our 401(k) does have a Roth component built into it.

Your employee contributions, you can choose if you want it to be traditional or Roth. You can do Roth conversions inside the plan of any tax-deferred contributions or any tax-deferred IRAs that you rolled into the 401(k), but you have to track all of that. That’s a lot of bookkeeping. It’s not just tracking traditional from Roth. You also want to track the types of money that you have in the account, all those different types. That’s a lot to do. I don’t know if you handle the bookkeeping yourself for We Close Notes, but it would be an additional headache. On top of regular bookkeeping for your business, here’s some incredible employer plan bookkeeping for you.

That’s why I have a professional that does that for me.

I highly encourage people to consult with a professional before even trying to do it their own.

That’s the thing that people have to realize. There’s a lot of paperwork that’s involved with these things. That’s why it’s a great plan to have. You’ve got to contribute to it on the front end to legitimize it. You’ve got to keep track of the paperwork. You’ve got maximum contribution amounts. You’ve got some great flexibility of having a Roth feature inside of it. You can put an extra $19,000 away or $25,000 away for over 55. You’ve got checkbook access to it, but you still need to have a quality third party for the most part. You should not be doing the paperwork yourselves. I imagine that you probably get the most amount of questions on this plan from people.

There are a lot of reasons why folks seek out the 401(k). There are so many advantages. Beyond those great contributions and the Roth component, there’s this cool unrelated business income tax exemption. This is where I get the most calls, related to why somebody wants to set up a Solo 401(k). They’ve heard that they can avoid this crazy tax the IRAs get called Unrelated Business Income Tax, UBIT. It’s also referred to as UDFI, Unrelated Debt Financed Income. They’re usually doing multi-family investments, which have not only debt financing but also run through a business, an LLC that usually pass it through taxation. Those are two triggers for UBIT tax, both of them. We do a lot of education about the actual exemption to make sure people understand it. The exemption is a little bit funny. It’s not a full exemption. A lot of people get that confused. They think that Solo 401(k)s are entirely exempt from UBIT tax. That’s not even the case. We always have to encourage them, “Take a step back. Double check that you’re even going to get the UBIT exemption by talking to your CPA, your tax attorney.”

NCS 470 | Self Directed Employer Plans

Self Directed Employer Plans: Self-employment taxes make a big difference and qualify you to make these contributions to the employer plans.


401(k)s only get an exemption to UDFI, Unrelated Debt Financed Income as it relates to having debt financing on real estate. They don’t get an exemption to the business tax or the actual UBIT, which is triggered by running a business inside of the 401(k), which also qualifies for when you own a portion of a business that’s passing through taxation. It requires your 401(k) to pay an equivocal tax to other business owners. There is no exemption on that. We’d like to make sure that folks understand that and do their due diligence because that is my number one reason for people to want to set up a Solo 401(k). Other than the great contributions, it’s usually the two biggest ones. The other biggest sought after aspect is that checkbook control. Who doesn’t want to have a checkbook for their retirement savings? That makes it a little bit easier to pay your contractors. It gives you a little bit more control to write those checks and execute the documents yourself. There’s also a lot of responsibility that comes with that. Nathan once joked about the 401(k) that it’s a superman cape. You have to make sure that you know how to fly with it before you put it on.

There are a lot of moving parts, but that’s the whole point of having you on here. It’s talking about these different things. People get a little confused between a SIMPLE and a SEP because it sounds similar. That was one of the things that always confused me. What are the biggest mistakes that you’re seeing from people on any of these plans? What’s one of the biggest things that you see people stubbing their toes when it comes to it?

I haven’t seen anybody have an issue with SEPs or SIMPLEs before. I do see people stub their toes on 401(k)s, but it’s also because I get all of our 401(k) calls. I don’t know why, but for some reason, they called me after they already did this. It’s like, “I wanted to let you know I did this. I want to get your input on it.” “You did what?” That is no joke. That happened on another podcast. I did a podcast with that hard money lending company. We’re talking about the Solo 401(k)s as well. He said, “Rebecca, I have a question for you. I heard that you don’t have fair market valuation with Solo 401(k)s.” They didn’t have to submit them before their 401(k) holders. They had to do it for all their IRA investors, but not their 401(k) investors. That’s incorrect. People don’t ask you for it. For your 401(k), you still have those reporting requirements. You still have the responsibility of documenting the value of your investments and how you came up with the value that you put down on your 5500-EZ reporting form for that year. Folks aren’t asking for them, they thought they weren’t even required. I’m like, “No. People should still see documenting the value of their investments each year, even with the 401(k) plan.” Fair market valuations are still a requirement for not only IRAs but the little 401(k)s as well.

Are they required across all three, besides the SIMPLE and SEPs too?

The self-directed accounts, especially for an IRA company, it’s hard for us to determine the value of some private stock that’s being used to invest into racehorses or the value of this property or the current value of this loan that’s not receiving payments. We have to ask our clients once a year to submit a fair market valuation. “Tell us the value of your investments and show us how you came up with this value.” We require that because, for every tax year, we have to report to the IRS, “Here’s the value of every single IRA out there, and health savings account and educational savings account.” That value of that IRA account may not be accurate if we didn’t have them update the value of their assets with us. It’s nearly impossible for us to try to do it all when people can invest into about anything you can take title to. We have to do it. We have to chase down folks and have them turn in those fair market valuations. It’s required for all of them. For 401(k)s, some investors may not think that they need to get them simply because you’re the custodian now. You should be doing it for yourself.

For people out there that are reading and are looking at starting with these, especially they’re going to be rolling over the money into one of the accounts and things like that, they still got to have that aspect there. It’s still titled the same way for the most part. Are there any special titling issues with any of these?

With IRAs like the SEP, the SIMPLE, your personal accounts, your traditional Roth, your health savings or educational savings, all of those are titled in the name of Quest Trust Company, FBO, the account holder’s name, the type of account and their account number. 401(k)’s titling is entirely different because you’re acting as your own custodian. You’re able to execute paperwork as the trustee of the 401(k) in the name of the 401(k). If my name was Bob Jones, I have a consulting company and I wanted to name my 401(k) Jones Consulting 401(k), that’s the legal name of my 401(k). When I purchase an asset like a rental property, the warranty deed, the closing documents, all of it would be in the name of my 401(k) plan. It’s Jones Consulting 401(k), Bob Jones trustee. It’s in the name of my retirement account. I have clear signing authority as the trustee of the 401(k). You’ll notice that Quest IRA’s name is nowhere on there because we’re not holding the assets. We’re not acting as the custodian in the same way we do for the IRAs.

If they’re going to set up one of these accounts, are there forms that they get from you to fill up to start it up, then they go into a bank and other things to set things up?

That is correct. Essentially with the 401(k) plan, we are acting as the plan document provider. We have the IRS approved prototype plan documents that we set you to set up the 401(k) plan with the self-employed individual who’s opening the account. Now that the 401(k) plan is created, they grab an EIN number for it and go set up a checking account in the name of the 401(k) plan as an entity. That’s what they have check writing authority over as the trustee.

Who are some individuals that you would recommend that they talked to? It’s a CPA or somebody else that’s handling the documentation or sign off on things. Is there an extra level of security so they’re not screwing things up or can you not say?

I know that there are some great books out there. One of the things that I’ve encouraged over the years is not going through one of our 401(k) consultations and trying to set up an account, but also doing some due diligence and reading a book. Most good books will also have some resources. Maybe they’re written by a CPA or a bookkeeper. Our president did contribute to a book that’s written by a third party CPA named Dyches Boddiford. It’s available for purchase on his website Assets101.com. You can’t miss it. It has Solo 401(k) in huge letters on it. One of the things that you get by reading his book or any other book out there is a lot more of that education on your responsibilities, the bookkeeping, the record keeping and the IRS reporting. All of that gets committed to memory quite a bit better than a conversation that you had a year ago. That’s why I get so many crazy calls and they call me after they did something. They forgot what we talked about a year ago. I’ve been encouraging folks to do due diligence in a book. Usually, you’ll find resources to strong attorney resources in that book or John Hyre and Jeff Watson. It’s written by a CPA side. He can give you some good idea about how to handle the bookkeeping as well.

What was the name of the book?

I have the old version. It’s The Solo 401(k). It’s available through their website, Assets101.com. There are other books out there too. There is a lot of hype and excitement out there about an account called a QRP. Have you heard of this before?

Is it the Qualified Retirement Plan?

Yes, you could refer to a SIMPLE, SEP or the Solo 401(k) as a Qualified Retirement Plan. They started marketing Solo 401(k)s as QRPs like it’s a new product and how it’s better and offers more asset protection because they have the Solo 401(k) invest into an LLC to create additional levels of asset protection. I’ve been getting a ton of calls about QRP plans. It cracks me up that people are marketing something under a new name and they don’t think it’s the same thing. You can invest your 401(k) into LLCs or other structures to create liability protection but consult with your attorney on that.

Rebecca is not an accountant or an attorney. You should always consult with your proper asset protection individuals out there to make sure you’re doing what fits you best. John Hyre and Jeff Watson are two of the best in the industry out there. Jeff is moving to Dallas and John Hyre has moved to Puerto Rico. We don’t want people bombarding you with questions and phone calls if they don’t even have stuff set up or don’t even have an account set up. Should they do one of these three if they’ve got a job?

If you don’t have self-employment income, meaning you’re a W2 employee, none of these accounts would be a good fit. These are all designed for somebody who has self-employment earnings like 1099, Schedule C earnings or their own corporation where they’re paying themselves a W2 wage.

If they have a side hustle that’s working while they’re still working for somebody, can they at that point?


Are you going to be talking about some of these stuff, or Quincy or Nathan in the Quest Expo coming in August?

Yes. I also want to touch on one more thing. You mentioned the best way for people to get in touch with us if they had more questions. We always have tons of free education on our website. We have a whole webinar that are just employer plans that you can check out. You can get a recap. It’s a little bit more organized. It’s step-by-step. Here’s how they compare. Here are slides that tell you how much you can contribute. We can also send you the PowerPoint for that if you wanted to have it and make some better notes watching it yourself. We also have a video on the Solo 401(k)s they’re a topic all on their own. I can spend an hour or hour and a half depending on how many questions somebody had on a 401(k) consultation. We have eighteen IRA specialists on staff here at Quest. We’re here to provide you that one-on-one consultation, whether a personal account like a traditional or Roth IRA would work well and go over those. If you have self-employment income, it’s how you can work with these accounts. It’s also super great to consult with your CPAs, your tax advisors, because you may need them to help you look over your income and make sure that you qualify to contribute to a SEP, SIMPLE or 401(k) and how much you qualify to contribute from your self-employment earnings.

Beyond that, the Quest Expo is coming up. It’s going to be off the hook. We threw it in August 2018 up in Dallas, Texas. Before the event was over, we had so many great reviews of the event from all the attendees that we said, “We need to do this again. Let’s pick a date, start marketing it and selling tickets.” We did and it’s growing up fast. By the time the event gets here, that’s going to be close to 1,000, maybe 800. We’re going to knock it out of the park. Also because we have so many clients in Houston, Texas which is where we’ve moved the event. It’s going to be down in the Houston area on August 23rd through the 25th of 2019. We have a great lineup of speakers. We’re still confirming a few in putting together several panels. I’m excited about it. There’s so much that the event offers. You can check it out at QuestExpo.com to see a little bit of a video of the last one. You’ll get a taste of how much education, how much folks loved it, and why you should come and check it out too. They’re going to cover fantastic topics from small-dollar IRAs to asset protection and a whole lot more.

It’s August 23rd through the 25th of 2019. Use the discount code Carson19. It will give you a nice little discount off of the ticket price. It’s a Friday, Saturday and Sunday event, not going until late on Sunday. Nathan confirmed with me.

It’s going to be a half day on Sunday. People got to travel home and we have so many people flying in for the event as well.

NCS 470 | Self Directed Employer Plans

The Solo 401k: The Entrepreneur’s Guide to a Powerful Pension Plan

You’ll have vendor area, booths and a lot of great stuff. We may be filming live podcast or two from the actual expo as well with everybody. It would be fun for everybody to do. You can reach out to the best phone number to give you a phone call. Rebecca, do you have any of these CISP professionals on the phone?

855-FUN-IRAS is our toll-free number. You can ask for an IRA specialist. They can help you answer questions about our employer plan options. We can also schedule you a Solo 401(k) consultation if that’s the best account for you to get all the great benefits that the Solo 401(k) has too.

Can somebody bring on their CPA and sit with you or even on the same phone with you at the same time too?

It’s not a problem. Three-way calls are more than welcome.

Rebecca, thank you so much for taking time and being on this show.

Thank you so much for having me.

Check out Quest Trust Company if you want one of those plans and it looks like it’s going to work for you. Feel free to give Rebecca a phone call or anybody else over there at Quest Trust Company. We’ll see you all the top.

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About Rebecca Miller

NCS 470 | Self Directed Employer PlansRebecca Miller, one of the longest-tenured employees at Quest IRA, joined the company in 2009. Rebecca currently serves as the Special Accounts Director, specializing in employer plans such as the complex Solo 401(k). Rebecca received the designation of Certified IRA Services Professional from the American Bankers Association and is currently pursuing her Bachelor of Business Administration in Marketing. After Rebecca completed her IRA Specialist training in Houston, she was transferred to the Quest IRA Austin office to spearhead the growth of the Austin and San Antonio territory. Rebecca is very passionate about providing exceptional education to those residing in Texas’ capital city and can always be found sporting a smile at local events!

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