Solo(k) Plan Establishment

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 $49,000 ($54,000 if you will be at least age 50) beginning in 2009, and potentially more in following years.

Please read PENSCO Trusts 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 $16,500 of your contribution ($22,000 if you will be at least age 50) in 2009 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, contained within our Solo(k) Plan Establishment Kit (below).

PRELIMINARY STEP:

Confirm that your business is eligible for PENSCO Trusts Solo(k).

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

If you've confirmed that your business is eligible for PENSCO Trusts Solo(k), please download the following documents and use our Solo(k) Action Checklist to guide you through the documents included in this Plan Establishment Kit.

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	N/A	N/A
Solo(k) Action Checklist	Employer, Participant, Trustee (ALL)	Read and use as guide.	N/A	N/A
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)	N/A	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.	N/A	Originals
PBC Recordkeeping Service Agreement	Employer	Print; Complete, Date, and Sign	YES (PENSCO Trust will forward to TPA.)	Copy
Enrollment & 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.

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 to: 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.