Solo 401(k): The Tool That Renders Self-Directed IRA’s OBSOLETE!

August 1, 2017  --  Episode #3

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  • The Solo 401(k) is, in every way but one, vastly superior to the self-directed IRA
  • The Solo 401(k) offers all of the best features of the checkbook IRA without any additional LLCs or other legal complexities
  • Only weakness for Solo 401(k):  It’s only available to owners of certain small businesses


What if you could have all of the benefits of a Self-Directed IRA… but those benefits are VASTLY AMPLIFIED… and the “downsides” of the Self Directed IRA… including automatic IRS scrutiny… practically vanish without a trace?  This is Episode #3 of Self Directed Investor Talk.


You folks have continued to blow me away with awesome feedback and questions from Episodes 1 and 2.  Thank you… and keep it coming!  I read every message received at [email protected]!

Now… while I have received a lot of GREAT questions via email, there’s a GREAT question I’ve not received, but that you should be asking:  Are there any superior alternatives to Self Directed IRA’s?

The answer to that… for many of you… is a resounding YES!  In fact, if you qualify for this special type of financial power-tool, there’s no real reason to use a Self Directed IRA at all.  This tool is known by several names… the Self Directed 401k, the Solo 401k, or the Individual K… and frankly, by whatever name you call it, the self directed 401k is clearly superior to the self-directed IRA in every single way, except for one… which I’ll tell you in just a moment.

Here are 7 key differences that make the Self Directed 401k a vastly superior alternative to the IRA:

  1. With a standard IRA, the maximum annual contribution is about $5,500. For a 401k, you can save nearly 10X more… over $50,000 per year!
  2. If you and your spouse both have a self directed 401k, you can both contribute over $50,000 per year… and you can actually POOL your money together in order to do bigger deals! This is not allowed with IRA’s.
  3. There’s a common myth that IRA’s are invincible to the threat of lawsuits, tax problems and bankruptcy. The truth is:  That’s not true… and self-directed IRA’s are substantially INFERIOR to 401k’s when it comes to asset protection advantages.
  4. With an IRA, if you want to have checkbook control of your account, you have to go through the expensive and tedious process of forming an entirely new business entity and instruct your custodian to purchase that entity and put you in charge of it. With a properly established self directed 401k, you have automatic, built-in checkbook control without the need for additional complications!
  5. With both self directed IRA’s and 401k’s, it’s easy to commit a “prohibited transaction”… in other words, do something you shouldn’t. But while the ramifications of committing such a prohibited transaction can be DIRE for an IRA, there’s a lot of flexibility and legal grace that’s built into self directed 401k’s.
  6. With your 401k, you can actually BORROW money from it anytime, for any reason!
  7. The Self-Directed 401k AUTOMATICALLY has both the “traditional” and “Roth” styles of tax advantage, and you can choose which type of taxation rules you want to use with each individual contribution to your Self Directed 401k!

That’s really just a short list of some of the huge advantages offered by the self-directed 401k.  So, you may be asking, “How does it work?”

Well, you’ve quite certainly heard of a 401k program… you know, the kind without the words “Self Directed” in front of it.  The 401k is a retirement savings program created so that employers can provide their employees with a tax-advantaged way to save and invest for retirement.  401k’s are very powerful, very flexible and very common, and the Self-Directed 401k is nothing more than a very specialized type of 401k program that’s made exclusively for the benefit of small owner-operated businesses.

And there’s the rub for Self-Directed 401k’s:  You’ve got to be a business owner, and your business has to meet certain criteria, including limitations on the number and types of employees you can have.  And that’s the one and only way that IRA’s are superior:  Nearly everybody qualifies to have some sort of IRA, whereas 401k’s are reserved for business owners only.

But if you can meet the simple requirements to have a Self-Directed 401k, the benefits to a Self Directed 401k can be HUGE compared to a Self Directed IRA.

Self Directed 401k’s are, in my humble but entirely accurate opinion, the Mercedes Benz of individual retirement account options.  The laws pertaining to them are so much more flexible than the laws governing IRA’s.  There’s simply no comparison.

Warning:  Not all self-directed 401k plans are the same.  Here’s the person I recommend to set yours up.

But my friends… as important as retirement accounts are to the Self Directed Investor… they aren’t the whole story.  Far from it.  And in the next episode – Episode #4 – of Self Directed Investor Talk, we’re doing to dig a bit deeper into some real wealth-building strategies. It’s available RIGHT NOW in Episode #4, available here on and on iTunesiHeartRadio and Stitcher!  Download it right now!


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Bryan Ellis

I am host of Self Directed Investor Talk, which I'm told is America's #1 podcast and for affluent self-directed investors. I'm also something of an expert in self-directed IRA's, solo 401k's and 1031 exchanges. You can find more of my writing in some cool places like,, ThinkRealty and even Forbes (that was always one of my goals!). I live in metro Atlanta, Georgia with my wife and business partner Carole Ellis(she's a real business partner... not just because she's my wife... I'd want to work with her if I wasn't married to her... and I'd want to marry her, too). I also have 4 children ranging in age from 2 to 20 (yes, you read that correctly). It's my goal to be the name everybody thinks of when they think of Self-Directed IRA's and Solo 401(k)'s.