QUESTION 1): I currently work for Wells Fargo Bank and am enrolled in their 401k plan. Can I also enroll in a self-directed 401k?
ANSWER: The 401k rules allow for participation in multiple 401k plans. Therefore, theoretically an individual can contribute to his day-time employer 401k and his or her self-employed business 401k, commonly referred to as a self-directed 401k or solo 401k. However, an individual can only open a solo 401k if he or she is self-employed, with part-time self-employment qualifying. Lastly, the self-employed business owner cannot have any full-time employees besides the business owner and his or her wife or a business partner.
QUESTION 2): I would use the SD401k for the sole purpose of purchasing investment real estate in California. If I set up a SD401k and obtain an EIN (as required) does this mean that I will become liable for State of California annual license fee of $800?
ANSWER: The EIN is assigned by the IRS for the solo 401k, not by the state of California. Nor is the solo 401k registered with the California Secretary of State since solo 401k plans are governed at the federal level. You appear to be confusing the annual California franchise fee applicable to LLCs or Corporations, which does not apply to a self-directed 401k since it is not filed with the state.
QUESTION 3): I would fund the SD401k through a rollover of funds from a traditional (non-Roth) IRA that I have. Is there any limit on how much I can rollover from the IRA into the SD401k?
ANSWER: One can transfer unlimited amounts. The IRA rollover/transfer rules do not place a cap on what amounts an individual may transfer from his or her Traditional IRA, SIMPLE IRA or SEP IRA.
AW in CA