How AET Handles 401(k) Plan Accounts
If you have a self-directed 401(k) plan with American Estate & Trust (AET), it's helpful to understand how AET's custodial role for your 401(k) differs from how we handle IRA accounts. This article explains the key differences and what they mean for you.
Summary
AET serves as a directed custodian of cash only for 401(k) plan accounts. This means AET holds and manages the cash in your plan, but does not take custody of non-cash investments like real estate, private placements, or promissory notes. Those assets are held by your plan trustee. If non-cash assets appear on your AET statement, they are listed as a courtesy based on information your plan trustee provided. This is different from IRA accounts, where AET holds custody of all assets.
How 401(k) Custody Differs from IRAs
If you also have an IRA at AET, you may notice that your 401(k) account works differently. Here is a summary of the key differences:
| IRA | 401(k) | |
|---|---|---|
| What AET custodies | All assets (cash and investments) | Cash only |
| Non-cash investments | Held by AET | Held by your plan trustee |
| Tax forms | Issued by AET | Issued by your plan administrator |
| Beneficiary records | Maintained by AET | Maintained by your plan administrator |
| Who directs transactions | You (the account holder) | Your plan trustee |
What AET Does for Your 401(k) Plan
- Holds your plan's cash in a custodial account
- Processes cash transactions (deposits, disbursements, and transfers) as directed by the plan trustee
- Lists non-cash assets on statements as a courtesy, based on information your plan trustee provides
- Segregates pre-tax and Roth funds into separate accounts for clearer accounting
What Your Plan Administrator Handles
Your plan administrator (which may be you, if you have a solo 401(k)) is responsible for:
- Participant record-keeping including individual account balances and contribution tracking
- Tax reporting including Forms 1099-R, 5498, and 5500
- Beneficiary designations through your plan documents
- Compliance with IRS rules and ERISA requirements
- Investment decisions and reviews
Important Information
- Non-cash assets on your statement are courtesy reporting. If your 401(k) statement lists investments like real estate or private placements, AET is displaying those as a courtesy. AET does not hold custody of these assets and cannot transact on them. Your plan trustee is responsible for those investments.
- AET does not issue tax forms for 401(k) accounts. If you need a 1099-R, 5498, or Form 5500, contact your plan administrator. For IRA accounts, AET does issue these forms, but 401(k) tax reporting is handled differently.
- Beneficiary information should be maintained through your plan documents. While AET may have beneficiary information on file, the authoritative beneficiary designations for a 401(k) are maintained by the plan administrator through the plan documents.
- For questions about your investments or plan administration, contact your plan administrator or third-party administrator (TPA). AET can assist with questions about cash held in your plan.