Solo Roth IRA with Vanguard or Fidelity (Help!)

[barrett]

I ran into a roadblock with Fidelity and Vanguard yesterday and I am looking for suggestions. If one is self-employed the solo 401(k) is a great way to get a lot of money into a retirement account quickly. I recently set up one of these at Fidelity for my wife and we plan to deploy the PP in that account. Now there is also the possibility of opening a solo 401(k) Roth. We would desperately like to have more of our retirement savings in Roth accounts. Right now only about 10% of our total retirement pie is in Roth accounts. Here is the hitch: Fidelity doesn't offer the option for this type of account. The rep I spoke with on the phone was as apologetic as I was mystified. I called Vanguard (no account with them, ever) and asked about it. They said that they can do it but with a couple of (friggin' major) caveats. If you have a solo 401(k) Roth account with Vanguard, you can only invest in Vanguard mutual funds. ALSO, they require that you park your regular solo 401(k) with them. Again, their rep was apologetic. In both cases these companies couldn't give me a reason for why they are making this so difficult. Me admonishing them for bad business felt good but didn't accomplish what I am trying to do.

So, by using Vanguard mutual funds exclusively, can a proper PP be set up? (no possibility of buying of LTTs, no gold ETF... just a precious metals fund from what I was told).

One more bit of info will help fine tune any suggestions... If we go the Vanguard route, in short order almost 2/3 of my wife's retirement funds would be with them, so the possibility of just buying their S&P Index Fund for these accounts and then using her other retirement funds at Fidelity to get to a 25/25/25/25 balance can't be accomplished from what I can determine.

Has anyone else dealt with a similar situation and found a workable PP solution? Thanks in advance for any help!

[dualstow]

ALSO, (Vanguard) require that you park your regular solo 401(k) with them.

This is a wake-up call for me and something I need to check out.
I have a solo 401(k) at Fidelity and have had it for several years. It's not going anywhere.
I have other retirement accounts at Vanguard, some of which I've had to stop contributing to.

I have planned to set up a solo Roth at Vanguard, but this is the 2nd year in a row I neglected to make it happen. My contributions are kind of squeezed because of my home renovation budget). So, I keep putting a modest amount money in the Fido 401(k) until I'm ready.
If that restriction quoted above is real, I guess I won't be able to have a solo Roth after all.

[barrett]

Dualstow, it sounds like both Fidelity and Vanguard are taking baby steps toward resolving this but neither has any clue when these roadblocks will be lifted... at least not at the level of the employees I was able to talk to. Please don't throw in the towel based on what I was told. Maybe you can get more or better information than what I got. The reps I was speaking with at both institutions understood that what they are offering is way less than ideal. I am trying to park retirement funds with them money and they are unable to take them. You would take my money, wouldn't you? 

[dualstow]

I'd take it today. 

Don't worry, I'm not throwing in the towel. I will definitely explore.

I've had a few missteps in the past. For example, after my first wife and I started filing separate returns (for part of the same reason she is my first wife), I found myself disqualified for the contribution I had made to my Roth. Income maximum was 10,000 for the year! I had earned more than that, and as a result, I had to take money out of the Roth and put it in a new Traditional IRA. Or was it the other way around? Either way, I paid a penalty.

That was Vanguard. When I set up a solo 401k at Fidelity, my former accountant miscalculated the contribution, and then he and Fidelity argued over how I should resolve it. Part of the reason he is my former accountant.

Not that this isn't my fault, too, but I'm stuck with myself.

Despite these hiccups, it's all been worth it.

[barrett]

What about another institution like E-Trade? Anyone have any experience setting up a respectable PP mix with them? I am specifically dealing with the headache described above with Fidelity and Vanguard regarding a solo 401(k) Roth account, but welcome anyone's input on whether, in general, there are any issues with E-Trade (or other institutions). I have a phone number to speak with a "small business retirement specialist" at E-Trade, but they won't be open again until after the weekend. Just trying to do my homework. Thanks!

[Dozha]

I have my solo 401k with TD Ameritrade.  Mine is not Roth, but they offered a Roth version as well when I was setting mine up.  I hold individual bonds, TLT,  IAU, VTI.  I chose TD Ameritrade because of Vanguard's restrictions.  There are none with TD Ameritrade. 

[barrett]

Thank you, Dozha. That is a big help! I'll talk to them and see if they can just do a solo 401(k) Roth without requiring that the regular solo 401(k) be moved there as well. And, as agreed, you get 10% of all our future tax-free profits. 

[barrett]

Dualstow & Dozha... Just got off the line with TD Ameritrade. The solo 401(k) Roth sounds easy to set up with them with the LTT, Stock and Gold options Dozha mentioned (among many others). Their catch, and it's a tiny one, is that in order to open a solo 401(k) Roth, one also has to have a regular solo 401(k) account there, BUT, it doesn't have to hold any assets. It just has to exist. I'll be getting this all set up and funded in the next couple weeks and will report back if I have any issues. For self-employed people these solo 401(k) Roths are a great way to stash a bunch of money away quickly in a tax-free account. The option of withdrawals later in life from an account on which you don't have to worry about paying "income tax" should be a big bonus. Just a bit of a pep talk to all of the self-employed folks out there because we really have to make sure we fund our own retirement.

[Dozha]

Barrett, I'm really glad that the info was helpful.  I did find it easy to set up and I knew nothing, NOTHING about investing at the time, was mostly in cash and GLD. 

It was late in my working life (in fact I'm virtually retired as of this year) that I was able to sign up, so my income has been too high to make a Roth comfortable.  However, the upside of this is that as my self-employed income (mostly royalties now) decreases, a larger and larger percentage of it will be sheltered in the 401K, and my obscene taxes will, hopefully, drop dramatically.  I can fund it to the max and thus shelter a big part of my dwindling income while I live off the generous 25% cash allocation in Treasuries until taxes aren't much of an issue anymore.

And of course I'll always have the 10% of your profits that you will be shoveling my way.  Thank you!

[barrett]

Dozha, Just realized that earlier in the thread I offered Dualstow a cut of the action as well. Might have to drop you down to 5% of the action. Just searching for my checkbook now. Not sure what I am going to do with the rest of my life once I get this remaining PP slice set up.