MySolo401k Review: Pros, Cons, And Alternatives

MySolo401k provides and administers solo 401k plans, self-directed IRAs, and more.

Investing in your retirement account is usually a can’t-go-wrong move. But if you’re running a business on the side while working a full-time job, where do you put those extra funds? 

Or, if your side gig is now your full-time job (i.e., you’re a business owner), what retirement account options do you have?

There’s a sea of retirement account options to choose from. By going with a solo 401k, you’ll get some of the highest annual contribution limits, the ability to take a loan against your 401k, and plenty of investment options.

For that last one, you’ll a need self-administered 401k, which means finding a provider for that type of plan. MySolo401k is one of those providers. In this article, we’ll see what they have to offer for solo 401k account holders.

Who Is MySolo401k?

MySolo401k is a solo 401k plan provider (and SDIRA provider) that allows investing in alternative assets. It was started in 2009 and is based in Carlsbad, CA. They have over 6,000 clients and service all 50 states.

They have a heavy focus on their Solo 401k plan.

Mark Nolan is the founder and Chief Operating Officer. MySolo401k has a 5/5 rating on the Better Business Bureau and no open complaints.

What Do They Offer?

MySolo401k offers self-administered solo 401k plans as well 401k Business Financing and IRA LLCs. In today's article, we'll reviewing its self-directed 401k plans. 

Self-administered 401ks are different from fully-administered or brokerage Solo 401k plans. Fully-administered plans are offered by Schwab, Fidelity, and many other brokerages. And many of these plans are FREE.

If fully-administered solo 401k plans are often free, why would someone go with MySolo401k? To answer that question, let’s first go over what a solo 401k is.

What Is A Solo 401k?

A solo 401k is also called an individual 401k. Contributions to a solo 401k are tax-free. In this regard, it’s similar to a 401k that is offered by employers. Employees (W2 wage earners) contribute pre-tax money to their employer-sponsored 401k plan.

To contribute to a solo 401k, you must be a self-employed individual of an owner-only business. An owner-only business doesn’t have any employees. The business can have contractors but no W-2 wage earners or those with 1,000 or more hours per year working for the business. A big benefit of a solo 401k is that the owner’s spouse can work for the business.

With a solo 401k, you also have checkbook control. This means you can write checks directly from your 401k. The ability to write checks can be critical for any time-sensitive investments.

High Contribution Limits

A solo 401k has higher contribution limits than an IRA. For 2024, those limits are $69,000 total for the year or $76,500 if you are 50 or older.

The $69,000 breaks down into an employee (i.e., owner) maximum contribution of $23,500. Additionally, the business can contribute up to 25% of business revenues toward the employee’s 401k plan. For those 50 or older, a $7,500 catch contribution is available.

For example, imagine that a business made $100,000. The owner contributed $22,500 and the business contributed $25,000 (25% x $100,000) for a total of $47,500. The owner is 51 so the $7,500 catch contribution is also available, bringing the total contribution to $55,000.

Note that 401k contribution limits are combined across 401k plans. If you are still working a W2 full-time job and contributing to your employer-sponsored 401k, those contributions plus your solo 401k contributions are combined.

Auto-Contribution Credit

The MySolo401k plan conforms with the requirements to get the SECURE 2.0 Auto-Contribution Credit. This credit is $1,500 ($500 per year for 3 years) for simply adding the "auto-contribution" feature to your 401k plan.

The funny part is - you as the participant don't have to opt-in. So you can claim the credit simply for having the feature, and you never have to use it! 

This credit alone will cover the cost to open a non-prototype Solo 401k plan!

Participant Loan

A popular feature of a Solo 401k is the participant loan. You’re able to borrow up to 50% of your solo 401k balance, not to exceed $50,000. The loan term is for five years or 30 if the money is used for a primary residence.

The loan is tax-free but be aware that you’ll be paying it back using taxed dollars. Also, if you allow the loan to lapse, you’ll incur a 10% penalty. Certainly, you want to be careful if you decide to borrow against your 401k.

Holding Equities

With a Solo 401k, you can hold your equities pretty much anywhere. However, what we like about MySolo401k is that they allow you to setup your holdings at Fidelity and Schwab, two of the most popular traditional brokerage houses.

However, since you're using a Solo 401k plan, you don't need to follow "their" prototype rules. The account is simply held at these firms, but the rules your setup under your own plan are what apply. It's a great way to build a more flexible investment plan compared to what you'd have if you went through them directly.

Alternative Investments

Now we get back to our question from earlier — why go with MySolo401k? By going with a self-administered plan, you’re in full control. Mainly, this means you can invest in alternative assets such as real estate, private investments, gold, promissory notes, and other investment types that are not available from brokerages.

How Does MySolo401k Work?

Let’s say you have a solo 401k with Schwab. Stocks, ETFs, and bonds are the only investments available. You decide to set up a Solo 401k plan with MySolo401k. Instead of Schwab being your solo 401k plan provider, now MySolo401k is the plan provider.

Your funds remain at Schwab, but you get a new account (since it is a new plan). Also, you can still invest in the stocks, ETFs, and bonds offered by Schwab. But now, you have the flexibility to invest in alternative investments as well.

Are There Any Fees?

Yes, MySolo401k charges a one-time set up fee of $525. After year one, account holders pay an ongoing annual fee of $125.

The annual fee is to cover the updates required by the IRS to the plan documents, as well as for tax document filing (for any 1099-R or 5500-EZ).

How Does My Solo401k Compare?

MySolo401k is one of the most robust solo 401k plan options available. While the fees may seem high (especially if you're coming from a free plan like E*TRADE), the amount of investment options, support, and ongoing resources you get is amazing.

Solo 401k by Nabers Group is probably the closest competitor to MySolo401k. They offer many of the same features for nearly the same price.

Rocket Dollar is another option, but they are very lacking on the traditional investment front. The focus a lot on real estate and other alternative investments, but don't really have great support for traditional brokerage.

How Do I Open An Account?

You can visit https://www.mysolo401k.net to open an account. MySolo401k walks you through the process of setting up your account and rolling funds into it.

Is My Money Safe?

Yes, your money is not on deposit with MySolo401k since they are not a custodian. Instead, your funds remain with your original broker of choice.

My Solo401k has a 5/5 A+ rating with the Better Business Bureau. They also have many positive stories on forums like Bigger Pockets.

Why Should You Trust Us?

I have been advocating and discussing the Solo 401k for at least 7 years now - creating one of the first (and most robust) comparisons of the major solo 401k providers. I created this guide (and all of the other reviews) because of my own needs to find a solo 401k that allowed me to not only invest in stocks and bonds, but also startups and real estate.

Beyond my own experience and research in the space, our compliance and editorial team thoroughly checks the content for accuracy and updates pricing and features as needed. 

Who Is It For And Is It Worth It?

If you want to go beyond stocks, ETFs, and bonds with your solo 401k, MySolo401k may certainly be worth it. Compared to other self-directed retirement account companies like Rocket Dollar and Alto IRA, MySolo401k's set up fee is a bit high; but you may pay less in ongoing fees.

If you're not interested in alternative investments, however, you'd be better off opening a solo 401k account with a traditional broker. Many of the best solo 401k providers charge no fees and offer a wide range of investment options including stocks, mutual funds, ETFs, bonds, and more.

MySolo401k Features