BACKGROUND / QUESTION: I’m planning to open a self-directed solo 401k trust for investing in rental real-estate properties here in Florida and all over the United State. When we write the Real Estate Contract we know that it needs to list the name of the solo 401k trust. The title company is requesting a copy of the solo 401k trust agreement. Is that all they need or should I record it too?
ANSWERS: 401k plan trusts, whether full-time or self-employed 401k trusts, are not recorded with the state like other types of trusts (e.g., living and family trusts). Instead, 401k trusts are established through a solo 401k provider-- when you setup a solo 401k trust, the 401k provider will provide a copy of the IRS letter listing them as the 401k plan provider. What's more the IRS will issue an employer identification letter listing the 401k EIN which formally registers the 401k with the IRS.
Lastly, the title company would be provided with a copy of the signed Solo Trust Agreement and Adoption Agreement which is drafted by the solo 401k provider at the time the solo 401k plan is adopted.