| Party | Role | Involved in your investment decisions? |
|---|---|---|
| Custodian | Holds the IRA of record, reports to the IRS | No |
| Facilitator | Builds the entity structure, provides ongoing support | No |
| You (account holder) | Owns the plan, directs every investment | Yes, entirely |
Who are the parties involved in a self-directed plan?
Three roles matter here, though only one of them makes investment decisions. The custodian is the regulated institution that holds the IRA of record and satisfies the requirement in IRC Section 408 that every IRA be held by a regulated entity. The facilitator builds the structure, the IRA LLC or IRA Trust, and provides ongoing support for how the plan operates. You, the account holder, are the one making every investment decision.
A Solo 401(k) simplifies this list further. Because it is a qualified employer plan rather than an IRA, it has no custodian at all. The facilitator and account holder roles remain, with the facilitator's ongoing role taking on additional importance, covered below.
What does each party do when the plan is set up?
At setup, the facilitator does the structural work: forming the IRA LLC or IRA Trust, obtaining tax identification numbers, drafting the operating agreement or trust agreement, and coordinating the custodial account opening. The critical step for the custodian at this stage is documenting the IRA's investment into the LLC or Trust and sending the funds to the entity's bank account.
You, the account holder, do two things during setup: provide the information the structure is built from, and direct the funding, whether that is a rollover from a prior employer plan or a transfer from an existing IRA. Nobody but you decides what the plan will ultimately invest in. That decision does not happen at setup. It happens next.
What does each party do once you're making an investment?
Neither the custodian nor the facilitator has a role in this step. You sign the contract, wire the funds, and close the deal directly from the entity's own bank account. The decision, the diligence, and the execution belong to you alone.
What ongoing support does a facilitator provide?
A facilitator is not a custodian, a trustee, an administrator, or a fiduciary, and Self-Directed Plans never holds or has access to plan funds at any point. What a facilitator provides is education and general support about how the plan operates: how the structure works, what a given step requires, and how to keep the plan running correctly. That support is available both while you are actively investing and over the life of the plan.
What a facilitator does not provide is tax, legal, or investment advice. That line exists by design. The facilitator can explain how the structure works; it cannot tell you whether a specific deal is sound or what a specific tax outcome will be.
What role does the facilitator play in a Solo 401(k)?
In a Solo 401(k), the facilitator provides the same ongoing education and support described above. It also takes on one additional responsibility that an IRA structure does not require: keeping the plan document current with amendments and restatements whenever tax law changes require them. A Solo 401(k)'s plan document is a legal instrument that has to track law changes over the life of the plan, and maintaining that document is part of what a facilitator does for as long as the plan exists.
Can you build a team around your plan?
Yes. As account holder, you carry full responsibility for proper operation, recordkeeping, and every investment decision the plan makes, and none of that responsibility transfers to anyone else. What you can do is bring in outside professionals to support that responsibility: a CPA for tax filings and planning, an attorney for legal questions specific to a transaction, or a financial advisor for investment guidance. The facilitator's support covers how the structure operates. A professional team you assemble covers judgment calls specific to your situation, which is exactly the kind of guidance a facilitator is not positioned to give.
Frequently Asked Questions
Does the custodian ever review or approve my investments?
No. A custodian's role is recordkeeping and reporting, never evaluation of specific transactions. This is true whether the account is custodian-directed or has checkbook control. The responsibility for evaluating an investment belongs to the account holder in every structure.
Can the facilitator ever access or hold my plan's funds?
No. Self-Directed Plans LLC forms the structure and provides ongoing support but never holds or has access to plan funds at any point. Funds move directly between the custodian, the entity's bank account, and the investments the account holder directs.
If a Solo 401(k) has no custodian, who reports to the IRS?
The plan itself, through an annual Form 5500-EZ filing once combined plan assets exceed $250,000 at any time during the plan year. That filing responsibility belongs to the plan administrator, a role you hold as the person running the plan, not to a custodian, since the Solo 401(k) has none.
Does the facilitator relationship end once the plan is set up?
No. Facilitator support continues for the life of the plan, covering education and general questions about how the structure operates. It does not include tax, legal, or investment advice, which is where a CPA, attorney, or financial advisor comes in.
Who is responsible if a transaction violates the prohibited transaction rules?
The account holder, in every structure. Neither the custodian nor the facilitator reviews transactions for compliance with the Disqualified Person and prohibited transaction rules under IRC Section 4975. That responsibility sits with you regardless of whether the plan is custodian-directed or checkbook-controlled.
Next steps
Understanding who does what makes the rest of the self-directed process easier to follow. See How checkbook control actually works for how these same roles interact transaction by transaction, or use the Plan Finder to see which structure fits your situation.