Author Topic: Question about Individual 401K (+question on bots)  (Read 4879 times)

bdonovan

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Question about Individual 401K (+question on bots)
« on: July 25, 2016, 04:25:59 PM »
Hey all,

I have a few questions thought you may be able to help me with.

1. Retirement Account: I want to investing in Lending Club notes as part of my retirement account.  I recently left my job and created a consulting company.  So I am planning on creating an Individual 401k (also called solo 401K) retirement account.  It has a much higher contribution limit (~50K; 18K self; and about 30K from profit distributions from the company).  However, I'm not clear how this works with LC.  LC offers different retirement accounts including SEP IRA, but not Individual 401K.   I plan to create my Individual 401K with Fidelity.  At that point, how do I invest in Lending Club from it?

2. Robots: I set up LendingRobot to invest my initial LC account.  However, it seems to want to manage ALL of it.  Am I able to tell the bot to only invest part of it?  NSR seems to be the same way when you link an account; though not 100% sure as I didn't link yet.  You can link and just do the analytics, but I'm asking is there any way to get a bot to invest only a portion of my LC account or just one portfolio within it.  Do any of the bots allow this? 

bdonovan

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Re: Question about Individual 401K (+question on bots)
« Reply #1 on: July 25, 2016, 04:46:37 PM »
Updates:

*On #1- spoke to Schwab re: individual 401k.  They said they could not do LendingClub because they cannot consider anything involving debt as an alternative investment.  They were very helpful; even giving me a reference to another company- a trust company that they said would have more flexibility making alternative investments.  However, I am still stuck- as I'd prefer to use a mainstream 'solo 401k' provider AND also invest in LC through it. 

*On #2- NSR wrote this to me: "Thanks for reaching out. We strongly advise against having multiple providers investing within one account. You can learn more here: Can NSR only manage a portion of the funds in my investing account?".  The answer is no.  I wanted to avoid multiple accounts, especially due to minimums  (LC charges $100/yr for retirement accounts; unless have 5K invested in them; so splitting accounts means adding more than I had wanted to at first.

.Ryan.

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Re: Question about Individual 401K (+question on bots)
« Reply #2 on: July 25, 2016, 06:16:26 PM »
LendingRobot does have a "Minimum cash balance to leave on account" feature in which you set to a specific dollar amount of your choice. LR will keep this as cash in your account, allowing you to use those funds to manually invest in notes of your choice.

Might be the closest way to segmenting a single account as you are looking to do.

bdonovan

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Re: Question about Individual 401K (+question on bots)
« Reply #3 on: July 25, 2016, 08:49:36 PM »
Ryan- cool, thanks; will check that out!

BruiserB

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Question about Individual 401K (+question on bots)
« Reply #4 on: July 25, 2016, 09:23:27 PM »
LendingClub uses Self Directed IRA Services for their IRA administrator. You may want to check with them to see if they offer individual 401 (k) plans. www.sdiraservices.com


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Edward Reid

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Re: Question about Individual 401K (+question on bots)
« Reply #5 on: July 26, 2016, 10:51:32 AM »
I wanted to avoid multiple accounts, especially due to minimums  (LC charges $100/yr for retirement accounts; unless have 5K invested in them; so splitting accounts means adding more than I had wanted to at first.
To me, this implies that you barely have enough to invest in a single LC account and still have adequate diversification. My impression is that you are being too aggressive about setting up these schemes. Pick one and do it for a couple of years, or five years, or until you have quite a bit more to invest.

$100/year for a retirement account is steep. If you only expect to have $5,000 in it for now, that's 2%, which will eat your lunch. A mutual fund that charges 2% is a major ripoff. I've never paid a penny in fees on my SEP-IRA, It was in a local bank for some years, then at Vanguard for over 15 years now. (And the mutual funds I'm in charge 0.05%.) I wouldn't touch that $100 fee unless I had around $100,000 to put into that account.

Edward

bdonovan

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Re: Question about Individual 401K (+question on bots)
« Reply #6 on: July 26, 2016, 09:19:21 PM »

Quote
$100/year for a retirement account is steep. If you only expect to have $5,000 in it for now, that's 2%, which will eat your lunch. A mutual fund that charges 2% is a major ripoff. I've never paid a penny in fees on my SEP-IRA, It was in a local bank for some years, then at Vanguard for over 15 years now. (And the mutual funds I'm in charge 0.05%.) I wouldn't touch that $100 fee unless I had around $100,000 to put into that account.

Edward

Were you able to invest from the tax-advantaged IRA account into Lending Club?  I talked with Schwab about doing this and they prohibit "alternative investments" that involve debt; which includes LC.  The challenge I'm finding is an IRA account that enables me to invest in LC; there are trust companies that allow all kinds of alternative investments, but I don't want the hassle of that; not until I've become more confident I'll invest a larger amount in LC.

Edward Reid

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Re: Question about Individual 401K (+question on bots)
« Reply #7 on: July 26, 2016, 09:33:07 PM »
Were you able to invest from the tax-advantaged IRA account into Lending Club?
No. Well, I never tried, but I'm sure I could not have. My point is simply that a LendingClub IRA is a poor choice for investing relatively small amounts. If you are absolutely determined to have an LC IRA at any cost, then your only option is to pay the exorbitant $100/year. But that fee makes it a bad investment choice if you only have a few thousand dollars to invest.

Edward

bdonovan

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Re: Question about Individual 401K (+question on bots)
« Reply #8 on: July 27, 2016, 02:19:07 AM »
LendingClub uses Self Directed IRA Services for their IRA administrator. You may want to check with them to see if they offer individual 401 (k) plans. www.sdiraservices.com


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Thanks; I had seen their reference somewhere on LC's site but didn't think to check with them directly.  Will check with them; worth a call.  It turns out in my case SEP IRA and solo 401K may be similar in contribution amounts- since they do offer SEP, it may be feasible.  I'm curious what kind of platform they offer for investments in general.

BruiserB

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Re: Question about Individual 401K (+question on bots)
« Reply #9 on: July 27, 2016, 08:55:17 AM »
LendingClub uses Self Directed IRA Services for their IRA administrator. You may want to check with them to see if they offer individual 401 (k) plans. www.sdiraservices.com


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Thanks; I had seen their reference somewhere on LC's site but didn't think to check with them directly.  Will check with them; worth a call.  It turns out in my case SEP IRA and solo 401K may be similar in contribution amounts- since they do offer SEP, it may be feasible.  I'm curious what kind of platform they offer for investments in general.

I'd be interested to see what you find out if you speak with them.  I know that SDIRA offers administration for non-traditional investments.  For instance you can actually own investment real-estate and have it within your IRA.  What I don't know is if they work with any traditional brokerage companies to allow for investments in stocks, etc.  I think you can have your LC Account and other options all under the same SDIRA account and then transfer between them....but it's not clear to me about how this actually works in practice.  Also LC pays the fee if you keep a minimum balance, but I'm not sure if you are then allowed to hold other investments in that same account that LC is paying the fee on?