SELF DIRECTED OR ADVISOR FEE PAID--- WHO CAPTURED THE HIGHER RETURN

Solo 401k

In 2013 Sigfig, an online site which helps about one million investors track and manager their money, reviewed the performance of their investors’ funds. Those investors that directed their own investments captured a 17.1% return over the year. Those investors paying fees to advisors only captured portfolio returns of 14.1% in 2013.

Why??

According to advisors, the difference in returns arose because the investments of self directed investors were not as diversified as the portfolios recommended by advisors. Advisor portfolios included a higher weighting in bonds and international markets, both of which fared poorly in 2013.

Advisor fees affected the returns as well. Average expense ratios ranged from 90 basis points for clients with less than $250,000 in holdings to 40 basis points for those with more than $2 million invested.

Apparently self directed investors are willing to accept more risk and therefore capture higher returns with fewer fees.

Solo 401k Plan: Your Opportunity for Checkbook Control of Your Future

Tax Court Attacks IRA Rollover Rule

In Bobrow v. Commissioner, the Tax Court ruled that each taxpayer is limited to one IRA distribution eligible for rollover per 12-month period, regardless of the number of IRAs the taxpayer may have. 

IRS Publication 590 clearly states that each IRA owned by a taxpayer (not including beneficiary IRAs) is entitled to one rollover-eligible distribution per 12-month period. Seems like a difference of interpretation. 

We are awaiting further IRS guidance.


Solo 401k Plan: Your Opportunity for Checkbook Control of Your Future