A Solo 401(k) plan allows small business owners to save up to $58,000 per year for retirement through tax-free salary deferrals and company contributions. Choosing the right provider is an important part of successfully using a Solo 401(k). From a regulatory standpoint, Solo 401(k) plans are very similar to traditional 401(k) plans. However, those using Solo 401(k)s will have different goals and objectives for investing and thus will need to decide on a provider a bit differently than they would with other plans.
We’ve reviewed many Solo 401(k) options based on costs, investment choices, customer service, and other features. Here are the six best Solo 401(k) providers.
Provider | Best for |
|---|---|
Overall choice of investment funds | |
Ease of administration | |
Minimal costs | |
Additional banking and brokerage services | |
Alternative investing | |
Active traders |
Vanguard: Best Overall Solo 401(k) Provider
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Investment Options:
| Setup Fee | None |
Annual Fund Fee | $20 per fund | |
Administration? | Provides participant details for tax filing | |
Why We Like Vanguard: Vanguard is an extremely reputable company, offering low-cost investment choices for its customers. As the largest mutual fund company in the world, Vanguard provides simple, straightforward plans with access to professionally managed funds. Vanguard provides clients with generous cost savings for Solo 401(k) plans.
Vanguard doesn’t provide active administration of Solo 401(k) plans, only providing participants with details that are needed for business and personal tax filing.
Vanguard Solo 401(k) Costs
Vanguard is very straightforward with its Solo 401(k) costs. There are no account maintenance fees or trading costs, which is a big plus. Solo 401(k) plans cost just $20 per year for each fund that’s used in the plan. These fees can be waived for account holders who have at least $50,000 in Vanguard accounts.
ShareBuilder 401k: Best for Ease of Administration
 | ||
Investment Options:
| Setup Fee | $150 |
Annual Fund Fee | .75% on average | |
Administration? | Full administration at $25/month | |
Why We Like ShareBuilder 401k: ShareBuilder 401k’s goal is to make 401(k) plans accessible to everyone, including single-employee businesses. ShareBuilder 401k offers low-cost plans that can be established and administered completely online. They include investment options, such as index exchange-traded funds (ETFs) and model portfolios, which are selected by an investment committee made up of industry professionals.
ShareBuilder 401k will actively administer and handle all record keeping and reporting of your Solo 401(k) plan, taking the onus off of the business owner and providing additional peace of mind.
ShareBuilder 401k Costs
Solo 401(k) plans from ShareBuilder 401k have flat fees that vary based on the number of owners of your business. Plans start at $150 for setup, with administration fees of $25 per month. There are also investment-specific fees that are deducted automatically from your account, averaging out to .75% annually.
TD Ameritrade: Best for Minimal Costs
 | ||
Investment Options:
| Setup Fee | None |
Annual Fund Fee | None | |
Administration? | Provides participant details for tax filing | |
Why We Like TD Ameritrade: TD Ameritrade offers a large selection of investment options at little or no cost to investors. Its Solo 401(k) plan offers the opportunity to invest in mutual funds, ETFs, bond funds, and managed portfolios.
One drawback with TD Ameritrade is that, like Vanguard, you are on your own with any IRS-related reporting. TD Ameritrade will provide the necessary information, but it isn’t an active administrator. Also, it’s worth pointing out that TD Ameritrade will become a part of Charles Schwab eventually but is operating independently until the acquisition is finalized.
TD Ameritrade Costs
Solo 401(k) plans from TD Ameritrade have no setup or annual fees for the plan itself. Some transaction fees may apply to individual fund sales, depending on how long they are held or if you choose to have a robo-advisor manage your portfolio for you. However, the vast majority of stock and ETF trades won’t have associated fees.
Charles Schwab: Best for Additional Banking Services
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Investment Options:
Other Services Include:
| Setup Fee | None |
Annual Fund Fee | None | |
Administration? | Provides participant details for tax filing | |
Why We Like Charles Schwab: Charles Schwab offers a Solo 401(k) that’s ideal for small business owners who need additional brokerage or banking services. Charles Schwab offers clients a full array of services ranging from investment advice to consumer banking as well as several lending options for its customers.
Charles Schwab doesn’t offer an active administration service and, like many larger investment firms, only provides participants with pertinent tax information on an annual basis.
Charles Schwab Solo 401(k) Costs
Charles Schwab doesn’t charge monthly or annual account fees but instead charges account holders commissions based on the type of trade. Trading commissions are free for domestic stocks, mutual fund transactions, and Charles Schwab’s proprietary ETFs. However, there are costs for contract options, bond trades, and foreign stock transactions. Additional costs will apply for other services, including business banking and lending.
Rocket Dollar: Best for Alternative Investing
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Investment Options:
| Setup Fee | $360 plus |
Annual Fund Fee | None | |
Administration? | $15 plus per month | |
Why We Like Rocket Dollar: Rocket Dollar offers flexibility to investors through checkbook control, which means you can invest your Solo 401(k) contributions in any investment vehicle you like. That opens the opportunity for someone who has a higher tolerance for risk to invest in cryptocurrency, real estate, peer-to-peer lending, or precious metals. Rocket Dollar also offers conventional options like stocks, bonds, and ETFs. Rocket Dollar will administer your Solo 401(k) account actively.
Rocket Dollar Solo 401(k) Costs
Rocket Dollar charges an upfront setup fee as well as monthly costs associated with maintaining your Solo 401(k). The basic level setup fee is $360, with a monthly administration fee of $15 per month. A gold tier, which will provide more robust administration and additional benefits for investors, is available at an additional cost.
E-Trade: Best for Active Traders
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Investment Options:
Other Services Include:
| Setup Fee | None |
Annual Fund Fee | None | |
Administration? | Provides participant details for tax filing | |
Why We Like E-Trade: An E-Trade Solo 401(k) is a good option for small business owners who like to do a lot of individual stock and bond trading in their accounts. E-Trade offers a full suite of stocks, bonds, mutual funds, and ETFs. Additionally, E-Trade offers some limited banking services, including borrowing against a retirement account.
E-Trade doesn’t charge fees for setup or administration. However, it’ll only provide details of information for tax filing, leaving the account owner responsible for reporting.
E-Trade Solo 401(k) Costs
Compared to other providers, E-Trade remains very competitive on cost. However, trading still isn’t free, and costs can add up very quickly for account holders who trade too frequently. Day trading isn’t recommended in retirement accounts like Solo 401(k) plans, but it’s available with E-Trade for those who want access.
Alternatives to a Solo 401(k)
If you aren’t sure if a Solo 401(k) plan is right for you, you may want to consider a different type of retirement benefit account. Simplified employee pension individual retirement accounts (SEP-IRAs) and traditional IRAs both offer some tax benefits and, as IRAs, they avoid the administrative costs that can come with some 401(k) plans.
SEP-IRAs
SEP-IRAs are great potential alternatives for self-employed individuals and small business owners who want to contribute up to 25% of income or $58,000 without the headache of administering a 401(k). Compared to Solo 401(k) plans, SEP-IRAs are a superior option if you make more than $75,000 per year and don’t plan to hire any employees in the future.
Traditional IRAs
Of all retirement accounts, traditional IRAs are the most straightforward and easiest to set up. Unlike a Solo 401(k) or a SEP-IRA, traditional IRA contribution limits are $6,000 per year under age 50 and $7,000 per year above that. Traditional IRAs are great options for small business owners who can afford to only put away a few thousand dollars annually for retirement. For those wanting to make after-tax contributions, consider a Roth IRA.
Bottom Line
Once you’ve decided that you want a Solo 401(k) plan, it’s important to consider several factors to determine which provider is best for you. These factors include cost, investment options, and additional services. Most Solo 401(k) plans are very similar in product offerings. However, there are differences in service and pricing that you should consider.
