PENSCO Trust - Open a Solo(k)

Plan Establishment Guidelines

Solo(k) Overview

Solo(k) Action Checklist

Plan Establishment Routing Guide

Asset Consolidation Guide

Plan Establishment Forms

You MUST print the following:

Solo(k) Plan Establishment Kit - Click here for a printable version of all the documents you need bundled together (36 pages).

You will need to READ and EITHER PRINT - OR - SAVE to your hard drive the following document. (It consists of more than 50 pages.)

Solo(k) Plan Document

To download the PDFs on this page you will need the Adobe Acrobat Reader version 5 or newer software. Click on the link to the left if you do not already have Adobe Acrobat Reader version 5 or newer.

Solo(k) Overview

PENSCO Trust Company’s Solo(k) plan allows individuals to invest in all permitted investments including real estate, S corporations, and many other asset types such as traded stocks and mutual funds. You may be able to contribute as much as $44,000 ($49,000 if you will be at least age 50) beginning in 2006, and more in following years. Please read PENSCO Trust’s Solo(k) FAQs to learn more.

What’s new about the Solo(k)? In general, the main cause for excitement is the Solo(k)’s new “Roth” contribution component. While you may still elect to make your entire contribution on a pre-tax, deductible basis, you may now choose instead to have up to $15,000 of your contribution ($20,000 if you will be at least age 50) in 2006 made as “Roth 401(k)” deferrals. Roth 401(k) deferrals (like contributions into a Roth IRA) are after-tax contributions that, like other deferrals and contributions, can generate tax-deferred earnings. The big difference is that “qualifying distributions” on Roth 401(k) deferrals and their earnings will not be taxed when paid out.

Other major advantages to the Solo(k) are:

Unlike with Roth IRAs, there are no income limitations related to the ability to contribute to the Solo(k)’s Roth (after-tax) deferral component.

Also unlike IRAs, you can invest in an S corporation, buy life insurance, borrow up to $50,000 or 50% of your participant account (whichever is less).

Income from leveraged real estate investments may not be subject to UDFI tax.

PENSCO Trust will be the custodian of your Solo(k) plan and invest contributions as you direct. PENSCO Trust will also provide you with a complete plan document required by the tax laws and necessary plan adoption, enrollment, deferral election, and beneficiary designation forms. We will also provide you with updates to the plan document as necessary to keep it in compliance with tax law changes.

We’ve made signing up with PENSCO Trust simple. After confirming that your company is eligible (see preliminary step below), move on to our step-by-step Solo(k) Action Checklist.

PRELIMINARY STEP:
Confirm that your business is eligible for PENSCO Trust’s Solo(k).

PENSCO Trust’s Solo(k) is available to your business if you (or you and your spouse) are its only owner(s) and employee(s).

PENSCO Trust’s Solo(k) may be available your business even if it has other employees, as long as they are of a type that that the tax laws permit you to exclude from plan participation. Excludable employees generally are those under age 21, or who are not credited with 1,000 hours of service in any year, are union employees or are non-resident aliens with no U.S. income.

Even if you (and your spouse) are the sole owner(s) of your business, the pension laws may treat it as combined with other “commonly-controlled” or “affiliated” businesses. If your business is so combined with another that has other owners or employees, it may not be eligible to adopt the PENSCO Trust Solo(k) plan. Consult a knowledgeable pension professional to determine if these laws apply to you.

Once you’ve confirmed that your business is eligible for PENSCO Trust’s Solo(k), please follow the simple steps in our Solo(k) Action Checklist, using the documents included in this Plan Establishment Kit.

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Solo(k) Action Checklist

Helpful Tip: You may be wearing several “hats” with regard to your Solo Roth (k) plan, i.e., that as Employer, Participant, and/or Trustee of the plan. It will help to bear these separate yet overlapping “hats” in mind when following our establishment steps. We have broken down the plan establishment process into three parts, based on the three roles that you are likely playing.

Part One: Establish Your Plan

Using the guide below and the documents found in this Establishment Kit, please work through the forms in the following order.

Document Name ("It")	Who	Does What (to It)	And Where Does It Go?
Document Name ("It")	Who	Does What (to It)	Send Originals to PENSCO Trust?	Employer Keeps?
Solo(k) Overview	Employer	Read	----------	---------
Solo(k) Action Checklist	Employer, Participant, Trustee (ALL)	Read and use as guide.	----------	---------
Solo(k) Application	Employer, Participant	Print; Complete, Date, and Sign	YES	Copy
Solo(k) Plan Document	Employer	Read (and Print or Save to your computer)		Originals
Adoption Agreement	Employer	Print; Complete, Date, and Sign	Copy only	Originals
Plan Document Agreement	Employer	Print; Read, Date, and Sign	YES	Copy
Custodial Agreement	Employer, Trustee	Print; Read, Date, and Sign	YES	Copy
Resolutions Adopting Plan	Employer	Print; Complete, Date, and Sign (If you are using our provided sample.) As Employer, you must complete and retain resolutions adopting the Solo(k) plan.	----------	Originals
PBC Recordkeeping Service Agreement	Employer	Print; Complete, Date, and Sign	YES (PENSCO Trust will forward to TPA.)	Copy
Enrollment and Salary Deferral Form	Participant	Print; Complete, Date, and Sign	Copy only	Originals
Beneficiary Designation/Change Form	Participant	Print; Complete, Date, and Sign	Copy(s) only	Originals

Part Two: Fund Your Solo(k) Plan
Use the following to: Make a new contribution Consolidate other tax-deferred accounts into your Solo(k) Plans
Asset Consolidation Guide	This helpful chart diagrams how you can easily consolidate virtually any of your tax-deferred accounts into your PENSCO Trust Solo(k) Plan.
Solo(k) Rollover Form	Complete and submit this form to PENSCO Trust when rolling over funds from non-Roth IRAs and plans such as 401(k)s, Profit Sharing, Defined Benefit, 403(b), Governmental 457(b).
Solo(k) Contribution Form	Use this Solo(k) Contribution Form to contribute new funds to your plan.

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Plan Establishment Routing Guide
When you are finished completing the various plan establishment forms in this kit, please route them in the following ways:
MAIL TO PENSCO TRUST:
Solo(k) Plan Establishment Forms
*Solo(k) Application* (Original)
*Adoption Agreement* (Copy only)
*Plan Document Agreement* (Original)
*Custodial Agreement* (Original)
*PBC Recordkeeping Service Agreement* (Original. PENSCO will forward to Pension Benefit Consultants)
*Enrollment and Salary Deferral Form* (Copy(s) only)
*Solo(k) Beneficiary Designation / Change Form* (Copy(s) only)
Fees
Only if you did not choose to have us charge a credit card for fees:
$250 Check payable to Pension Benefit Consultants
And, only if you did not choose to have PENSCO Trust charge a credit card for fees: $125 Check payable to PENSCO Trust Company for the Solo(k)Plan Establishment Fee ($125 for a Participant Plan or $150 for 2 Participant Plan)
If Funding Your Solo(k) Now
If you are making a new contribution:
Solo(k) Contribution Form	Check(s) made payable to your plan. See below. All funds rolling into your plan should be payable: “PENSCO Trust Company, Custodian of (Plan Name), FBO (Participant Name)” Plan Name = The Plan Name you created in Section 1 of your Solo(k) Application Form
If you are rolling over funds from other non-PENSCO Trust tax-deferred accounts:
Solo(k) Rollover Form(s)	Either check(s) made payable to your plan, or an understanding that the Administrator/Custodian of plan will be delivering funds directly to PENSCO Trust Company.
Employer Must Keep:
Solo(k) Application (Copy only)
Adoption Agreement (Originals)
Plan Document Agreement (Copy only)
Custodial Agreement (Copy only)
PBC Recordkeeping Service Agreement (Copy only)
Enrollment and Salary Deferral Form (One per participant. Copy(s) only)
Beneficiary Designation / Change Form (One per participant. Copy(s) only)

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Asset Consolidation Guide This chart shows you how to move funds into your PENSCO Trust Solo(k) from virtually any prior existing plan.
Fund Moving From:	Component (if applicable)	Method of Funding	PENSCO Trust Forms To Use:	Into PENSCO Trust Solo(k) Subaccount:
Plan of Previous Employer	401(k) - Roth (After-tax) Component	Direct Rollover	Solo(k) Rollover Form	Roth Elective Deferral
	401(k) - Non-Roth (Pre-tax) Component	Direct Rollover	Solo(k) Rollover Form	Rollover
	Other Qualified Plans (Profit Sharing, Defined Benefit, 403(b), Governmental 457, etc.)	Direct Rollover	Solo(k) Rollover Form	Rollover
IRA or SEP IRA	N/A	60-Day Cash Rollover	Solo(k) Rollover Form	Rollover
Roth IRA	N/A	The tax laws do not permit a rollover of a Roth IRA into the Solo(k) or any other qualified plan. Although the tax laws do permit a Roth IRA to become an adjunct to a qualified plan, doing so has few advantages. For this reason, the Solo(k) does not offer the adjunct feature.
Current Employer Plan (Another qualified plan sponsored by the same or related employer that is sponsoring your PENSCO Trust Solo(k) )	N/A	If your company is currently sponsoring another plan and you prefer to consolidate it with your PENSCO Trust Solo(k) Plan, please call us at 866-818-4472 for assistance.

Direct Rollover
A direct rollover is a direct movement from the distributing plan to the receiving plan of funds or assets that could have been distributed to you (individually) instead. A direct rollover will avoid mandatory income tax withholding on the moved amount.

STEP 1) Request a Distribution.
Complete the distribution form provided by the prior plan administrator (usually the plan’s sponsoring employer). Completed forms should be returned to this same prior plan administrator for processing. You will indicate on the form that the receiving custodian is PENSCO Trust Company. This will allow the administrator to make the check payable to your Solo(k) plan.

The distributed plan funds should be payable to your Solo(k) plan as follows:
“PENSCO Trust Company, Custodian of (Plan Name), FBO (Participant Name)”
Plan Name = “‘The Plan Name you created in Section 1 of your Solo(k) Application Form”
Participant Name = ‘Your Name’

If applicable: For any direct rollover of Roth 401(k) amounts, your prior plan administrator (usually your prior employer) must furnish a statement indicating either (1) the beginning of the applicable “five-year” period for those amounts and the total dollar amount of Roth 401(k) contributions or (2) that the distribution is a “qualified distribution” under the Roth 401(k) taxation rules. Please provide a copy of this statement to PENSCO Trust.

STEP 2) Deposit Distribution check into your Solo(k) plan using our Solo(k) Rollover Form, Sections 1,2,3.
Your prior plan administrator should issue a check payable to your Solo(k) Plan at PENSCO Trust. Depending on protocol, the administrator will mail the check either directly to PENSCO Trust, or to you. If you receive it, please forward to PENSCO Trust, indicating that it is a direct rollover from another plan. Either forward the Rollover Form to PENSCO in advance, indicating that a check will be sent to PENSCO Trust, or forward the check to PENSCO Trust with the Rollover Form attached.

60-Day Cash Rollover
A 60-day cash rollover is a contribution of funds actually distributed to you. Such a rollover must be completed within 60 days of the date of distribution (although the IRS may extend this period in limited circumstances).

STEP 1) Request a Distribution.
Complete the distribution forms provided by the prior IRA administrator/custodian. Indicate that you do not want taxes withheld. Completed distribution form should be returned to the prior IRA custodian.

STEP 2) Endorse Distribution Check.When you receive the distribution check, you may endorse the check over to your Solo(k) Plan (by writing on the back of it):
“PENSCO Trust Company, Custodian of (Plan Name), FBO (Participant Name)” Alternatively, you may deposit that check and write a new one made out to PENSCO Trust in the same way.

STEP 3) Deposit endorsed distribution check into your Solo(k) plan using our Solo(k) Rollover Form, Sections 1,2,4. When you’ve received your check and correctly endorsed it over (Step 2 above), use the exact dollar amount of the check to complete Section 4. Mail your check and Rollover Form in to PENSCO Trust either on their own, or along with your Solo(k) Application and Establishment Forms.