E-Trade offers one of the best free solo 401k plans. It comes with both a pre-tax and Roth option, allows solo 401k loans and rollovers, and a wide variety of investment options into traditional asset classes like stocks, bonds, and mutual funds. While it’s free for online US-listed stock, ETF, mutual fund, and options trades, investing in broker-assisted trades could come with high fees. The only real downsides of an E-Trade Solo 401k is that you cannot invest in alternative assets, you can’t perform a mega backdoor Roth solo 401k, and some people have reported that it’s difficult to make contributions to your account.
Overview
| Cost | Free |
| Roth option | Yes |
| Mega backdoor Roth | No |
| Self-directed | No |
| Checkbook control | No |
| Contribution limit | $61,000 for 2022, $66,000 for 2023 |
| Catch-up contributions (if age 50+) | $6,500 for 2022, $7,500 for 2023 |
| Investment options | Stocks, bonds, mutual funds, ETFs. |
| Rollovers | Yes |
| Loans | Yes |
| Invest in alternative assets | No |
| Invest in crypto | No |
| Invest in real estate | No |
| Invest in private equity | No |
Pricing
It’s free to set up your E-Trade Solo 401k plan, and US stock, option, mutual fund, and ETF trades are $0 commissions. However, options contracts cost $0.65 per trade ($0.50 if you have 30+ trades per quarter), futures contracts cost $1.50 per trade, and bonds cost $1 per trade.
Contribution limits and Roth
You can contribute up to $61,000 for 2022 and $66,000 for 2023. If you’re at least 50 years of age, you can contribute an additional $6,500 for 2022 and an additional $7,500 for 2023.
Not many prototype plans offer a Roth option. The E-Trade Solo 401k comes with both a pre-tax and a Roth account. However, it does not allow the mega backdoor Roth solo 401k.
Investment Options
You’re allowed to invest in a wide range of traditional assets with the E-Trade Solo 401k. You can invest in individual stocks, bonds, mutual funds, and ETFs. However, you cannot invest in alternative assets. If you want to invest your solo 401k funds into asset classes like real estate, private equity, or crypto and NFTs, you’ll want to look into a self-directed solo 401k instead.
A self-directed solo 401k, like the Ocho Solo 401k, gives you checkbook control. Instead of being bound by the investment options offered by your plan provider, you have complete control over your solo 401k funds and can invest it in any asset class you like.
Rollovers & Loans
The E-Trade Solo 401k is one of the only free solo 401k plans that give you the option to take a solo 401k loan. You’re allowed to borrow up to 50% of your account’s value, up to $50,000. While taking a loan from your retirement plan is generally not the best idea, since you’re depleting your account of funds that would otherwise be invested, it’s still convenient to have the option.
Wrapping up
When it comes to free solo 401k plans, the E-Trade Solo 401k is one of the best plans available if you want to invest only into traditional asset classes. It comes with a wide range of investment options with $0 commissions, a Roth option, and the ability to rollover assets from another retirement plan. E-Trade is also one of the only free solo 401k plan providers that offer the option to take a solo 401k loan.
The E-Trade Solo 401k is missing a few things that some power users look for in a solo 401k. It doesn’t allow you to perform a mega backdoor Roth (which would allow you to 3x your Roth contributions), and it’s not a self-directed plan so your investment options are limited to just traditional assets. You cannot invest in alternative investments like crypto, private equity, precious metals, or real estate.
For an overview of the best solo 401k providers, click here.
If you’re looking for a premium solo 401k plan, with checkbook control, check out the Ocho Solo 401k Plan.
Set up a new solo 401k in under 10 minutes
Contribute up to $66,000 and invest in any asset class with tax-free compounding†.
Anyone who makes money from a business, freelancing, or a side hustle is eligible, as long as you have no employees.
