URGENT WARNING: Your Retirement Plan Information Has Been EXPOSED Publicly | Episode 104 - a podcast by Bryan Ellis - SelfDirected.org

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I know how much money is in your retirement account.  It’s on the public record… and you didn’t even know it, did you?  I’m Bryan Ellis… I’ll tell you how to protect your private data RIGHT NOW in Episode #104.

Intro Here

Hello, SDI Nation.  Today’s episode is short… but really, really BIG.

There’s this booming issue out there called Cyber Security.  You may have heard of it.  It’s close cousin, Data Privacy, is also getting a lot of attention.  And reasonably so.

The major retailer Target was targeted by hackers.  There’s news out TODAY that the Canadian government was just hit by hackers.  And… oh yeah… due to colossal incompetence in the current presidential administration, over 21 million Americans have had their social security number and other private data exposed directly to Chinese hackers who, let’s face it, bear no good will towards you and me.

Well… it’s probably going to blow your mind that one piece of wildly sensitive financial data is readily available to the public, and the party who is exposing it – unnecessarily – is your tax preparer.

You see, 401k plans – including the self-directed variety I recommend so highly here on SDI Radio – are required to file tax returns once they pass a certain threshold of asset value.  Under the law, a 401k plan is really just a type of trust, and thus it’s required to file its own tax return.

So far, so good.  Data filed on tax returns is private, isn’t it?

Ummm…. Not so fast.

Get ready to be bowled over, my friends.

There are 2 different forms that can be used when filing a return for self-directed 401k.  One is called the 5500EZ, and one is called the 5500SF.

The EZ form is simple.  Not much data is required.  Again, very simple.

The SF form is more complicated and discloses far more information.

Your tax preparer gets the choice of which one to file for your self-directed 401k plan.  It’s totally their choice.  There are NO OTHER FACTORS determining which of those forms is used.

But there’s a HUGE difference in what happens with that data.

Data submitted on the EZ form… it’s basically private.  Only the feds get this info.  And to the extent you trust them with your data – and really, why should you?  But I digress – to the extent they are able to keep that data secure, it will not be exposed to the public in any way.

But the other form… the 5500SF form… well, not only is it far more complicated… not only does it expose far more data… including the name, address and telephone number of the owner along with the value of all of your assets… and a whole lot more information as well.

So there’s a lot more information.  But the real kicker?  That data is public record.  Yep, that’s right… if a 5500SF is filed for your 401k – whether a solo 401k or a normal 401k – that data is available to the public, and the amount of data is staggering.

I’ve got the latest spreadsheet.  There are over 180,000 401k plans that have divulged a massive amount of information that is, frankly, just mind blowing.

And if you have a solo 401k, as many of you do, and if your tax preparer files the 5500SF form, I know exactly how much money you had in your account as of the end of last year.  And I’ll know again for this year very soon, too.

Do you think it’s safe to have that information out there, so easily available?  Of course not.  It’s a huge, huge risk.  It puts a huge bullseye on your retirement savings.

But remember – if you have a solo 401k, it is totally the choice of your tax preparer which form to use.

So, do this:  DEMAND that your preparer use the EZ form.  They might resist, because the SF form likely generates higher fees for them, and from what I can tell, the SF form may be easier to e-File.  But the convenience of your tax preparer really isn’t a consideration.  You should DEMAND that your data be kept private.

You should in no way think that these comments are an indictment of self-directed 401k plans, also know as solo 401k plans.  If you need a tax-favored retirement plan and you qualify to have a self-directed 401k, by all means, you should do that.  It’s my humble – but deadly accurate opinion – that the self-directed 401k is absolutely superior to every other option, including the self directed IRA.  There’s simply no comparison.

The only adjustment you need to make if you already are using such a plan or establish one in the future is to make sure your tax preparer uses the 5500EZ form.  That’s it.

My friends, that’s all for today… EXCEPT…

Please do make sure you’ve liked our Facebook page which you can reach at SDIRadio.com/fb.  I’d love to hear from you and answer your questions there, so please stop by right now at SDIRadio.com/fb

 

My friends… invest wisely today… and live well forever! 

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