Grow Control Direct My Solo 401k

Solo 401k Distribution Rules: Profit Sharing vs. Employee Salary Deferral

2015-06-16T00:46:00.001-07:00

A solo 401k plan consists of both employee contributions and profit sharing contributions and both have separate distribution rules.

Employee contributions under a 401(k) plan are subject to more restrictive provisions than profit sharing dollars. Elective deferrals generally may not be distributed including processing a transfer to an IRA before one of the following triggering events occurs:

attainment of age 59½,
plan termination

Employer profit sharing contributions can be distributed/transferred to an IRA after a 2 year holding period has met even if the participant is under age 59 1/2. However, if the participant is over age 59 1/2 the profit sharing contributions can be distributed/transferred to an IRA at anytime.

Lastly, the rules are more relax for amounts that have been transferred into the solo 401k from other IRAs or qualified plans. These amounts can be transferred out at anytime to an IRA or another 401k.

MORE RESOURCES

SOLO 401K FAQs

SOLO 401K DO'S & DON'TS

Result of Change in Self-Employment Status on Solo 401k

2015-06-11T15:30:00.001-07:00

QUESTIONS: If I were to change my federal tax status to be taxed as an S-corp (I have an LLC taxed as sole proprietor now), would that effect my solo 401k? If so how?

ANSWERS: It would effect how contributions are calculated. Please see the following.

The annual solo 401k contribution limits as determined by the type of entity sponsoring the solo 401k plan.

If the entity type is a Sole Proprietor, the starting figure for calculating the annual solo 401k contribution is line 31 of Schedule C.
If the entity type is a C-Corporation, the starting figure for calculating the annual solo 401k contribution is W-2 income.
If the entity type is an S-Corporation, the starting figure for calculating the annual solo 401k contribution is W-2 income.
If the entity type is a Partnership, the starting figure for calculating the annual solo 401k contribution is K-1 (Form 1065) line 14.

ANSWERS CONTINUED: It would also effect the solo 401k contribution deadline in the following fashion.

The self-directed Solo 401k contribution deadlines are driven by the type of entity sponsoring the self-directed solo 401k.

If the entity type is a Sole Proprietorship, the annual solo 401k contribution deadline is April 15, or October 15 if tax return extension is filed.
If the entity type is an LLC taxed as an S-Corporation, the annual solo 401k contribution deadline is March 15, or September 15 if tax return extension is filed.
If the entity type is an LLC taxed as a Partnership, the annual solo 401k contribution deadline is March 15, or September 15 if tax return extension is filed.
If the entity type is an LLC taxed as a Sole Proprietorship, the annual solo 401k contribution deadline is April 15, or October 15 if tax return extension is filed.
If the entity type is a Partnership, the annual solo 401k contribution deadline is March 15, or September 15 if tax return extension is filed.
If the entity type is an S or C-Corporation, the annual solo 401k contribution deadline is March 15, or September 15 if tax return extension is filed.

MORE RESOURCES

SOLO 401K FAQS

SOLO 401K VS SELF-DIRECTED IRA

Debit Card for Solo 401k and In-Plan Roth solo 401k Conversion

2015-06-06T10:19:00.000-07:00

Q 1. Is it OK to use a Debit card with the solo 401K?

ANSWER: While a debit card is allowed and a credit card is not, Fidelity does not offer a debit card for a solo 401k, but Wells Fargo does.

Q 2. I am planning to buy a rental property with the traditional SOLO 401K and would like to roll it over to the Roth 401K in the future. Can I transfer half on December 31 and the other half on January 1 so that I spread the rollover taxes over 2 years?

ANSWER: Yes you can process partial in-plan roth solo 401k conversions, but they must be formally documented using an in-plan roth 401k conversion form. Also, the property being converted must be appraised prior to the conversion so the correct solo 401k conversion amount is reported on Form 1099R.

How does the Solo 401k Owner/Participant Report the in-plan Roth conversion on his or her personal tax return?

If tax payer files Form 1040, report Roth Solo 401k conversion amount on line 16a and 16b.

If tax payer files Form 1040A, report Roth Solo 401k conversion amount on line 12a and 12b.

If tax payer files Form 1040RN, report Roth Solo 401k conversion amount on line 17a and 17b.

ADDITIONAL RESOURCES

Solo 401k FAQs

ROTH Solo 401k

The 20% mandatory federal tax applies to Solo 401k Distributions

2015-05-27T00:57:00.000-07:00

QUESTION: After I process a solo 401k loan, I need the remaining 1/2 of the solo 401k funds for less than 60 days. My understanding is that I can withdraw it and put it back as a roll over. Is that correct?

ANSWER: It is not quite that simple as a mandatory 20% for federal taxes must be withheld at the time of the solo 401k distribution with the funds wired to the Department of the Treasury; as a result, you only end up with 80% that can be rolled over, unless you can come up with the other 20% with outside funds. This rules is different when compared to an IRA, as IRAs are not subject to the mandatory 20% withholding.

See the following language from the following IRS website.

http://www.irs.gov/Individuals/International-Taxpayers/Pensions-and-Annuity-Withholding

Eligible Rollover Distributions

Withhold 20% of an eligible rollover distribution unless the recipient elected to have the distribution paid in a direct rollover to an eligible retirement plan, including an IRA. With certain exceptions, an eligible rollover distribution is the taxable part of any distribution from a qualified plan, governmental Internal Revenue Code section 457(b) plan, tax-sheltered annuity, or IRA. For more information, refer to Chapter 8 in Publication 15-A, Employer’s Supplemental Tax Guide.

MORE RESOURCES

Solo 401k FAQs
Solo 401k Distributions

Self-Directed Solo 401k for Lyft or Uber Drivers

2015-03-30T14:40:00.001-07:00

BACKGROUND & QUESTIONS: I have started the process of becoming an Uber driver. As an Uber driver, I would claim the income on a schedule C. If that would suffice for being able to start a Solo 401k, I'm interested in starting this process and moving one of my 401ks over to start investing.

With your guidance, I am ready to start the process with MySolo401k. Can I open my own bank account in DC? Also, when you purchase property with this type of account, under what name should real estate contracts be issued in? Am I able to negotiate the contract on my own, of course working through a real estate agent?

ANSWERS: Yes income generated through Uber or Lyft that is reported on a schedule C satisfies the self-employment requirement for participating in a solo 401k.

You can start the process by completing our on-line solo 401k account application.

http://www.mysolo401k.net/solo-401k/open-a-solo-401k-account/

Yes you can open your own bank account in DC.

Yes you can negotiate the real estate investments and see following procedure for how title is taken.

http://www.mysolo401k.net/solo-401k-real-estate-investment-procedure/

http://www.mysolo401k.net/reale-state-401k-purchase-methods/

Rollover as Business Startup (ROBS) vs Solo 401k Loan

2015-03-28T15:44:00.001-07:00

Some of the benefits of investing a 401k in your own business through an equity/stock purchase instead of a using a solo 401k participant loan are discussed in the following video. For example, because an equity investment is not a solo 401k loan, interest payments do not apply and the full 401k balance may be used to finance the business startup or existing business.

Solo 401k with Checbook Control | Self-Directed 401k

2015-03-26T20:40:00.001-07:00

Interested in self-directed 401k | ROBS 401k | Business Financing 401k

2015-02-23T17:13:00.001-08:00

QUESTIONS: I am interested in opening a self-directed 401k with some funds from a previous employer. My goal is to utilize some of the funds for real estate investment. A question that I have at this time though is that I would like to work through an LLC for investment purposes. Is it possible to roll a 401k over to a new self directed 401k that is set up as an LLC? Or instead would the self directed 401k need to buy shares in the LLC as a way to contribute funds?

ANSWER: First, you have to be self-employed to open a solo 401k. Here is what the IRS has published regarding the self-employment requirement.

Generally, you are self-employed if any of the following apply to you.

You carry on a trade or business as a sole proprietor or an independent contractor.
You are a member of a partnership that carries on a trade or business.
You are otherwise in business for yourself (including a part-time business)

ANSWER CONTINUED: The solo 401k can either be invested directly in real estate whereby title to the property is taken in the name of the solo 401k or the solo 401k funds can be invested in an LLC and title is then taken in the name of the LLC. It is important to note, however, that the solo 401k may not invest in your own LLC directly (that is your own business). If you want to invest retirement funds in your own real estate business, then the ROBS 401k may be an option. To learn more about the ROBS 401k click here. To learn more about the real estate operating company requirements click here, as these rules apply to the ROBS 401k.

MORE QUESTIONS: My second question is probably a no brainer but I would like to confirm this. Any profits that come out of real estate activities would need to go back into either the LLC or the 401k is that correct? Or is there a way to supplement my current income with income from investment activities?

MORE ANSWERS: Correct that if the solo 401k is invested in real estate, whether directly or indirectly using an LLC, the profits would need to flow back to the solo 401k or the LLC, not your personal bank account.

However, if a ROBS 401k arrangement is incorporated, you can take a fair salary because you would be an employee of the business funded with 401k funds. To learn more about drawing a fair salary, visit here.

Personally using Roth Solo 401k Real Estate Property

2015-01-26T22:43:00.001-08:00

QUESTION: Before I make the decision on the Roth solo 401k in-plan conversion, I have a few more questions, so bear with me. Are the rules the same in regards to use of the property? Since I will be paying the taxes on the total amount of the property value, does that remove the restriction on usage of the property? The last question I have is related to the deed of the property, do I have to change the designation of ownership to record the Roth Solo 401K as the new owner.

ANSWER: No you cannot use the property because it will still be owned by the solo 401k. Yes it is best that the deed is recorded to show that the Roth now owns the property, so title should reflect as follows if the Roth owns the entire property.

Solo 401k name (ROTH)

Additional Information

New Roth Solo 401k Conversion Rules

Roth Solo 401k Distribution Rules

Can you have an IRA and a Solo 401k Plan?

2015-01-26T21:58:00.000-08:00

QUESTION: Are the limitations between contributing to an IRA or a 401k confined only to contributions or are you only allowed to have one or the other. So, if we were to set up an IRA in the future and roll the assets of the 401k into it - are we then bound to only contribute to the IRA from that point forward or are we allowed to roll the assets into the IRA and then continue contributing only to the 401k?

ANSWER: An individual is allowed to participate in an IRA and a solo 401k at the same time; however, the tax deductible contributions to an IRA are affected if you are also contributing to a solo 401k plan. See following link for more on this.

http://www.mysolo401k.net/contribute-ira-llc-self-directed-401k-magi-rules/

Common Solo 401k LLC Questions

2015-01-26T21:21:00.001-08:00

1. Does the Solo 401 LLC operating agreement only permits real estate transactions or any other investments?

ANSWER: The operating agreement will include language that lists all investments not disallowed by the IRS regulations and will also list disallowed investments. Disallowed investments include collectibles, works of art and alcoholic beverages, to name a few.

2. Do you need to file any tax returns for the LLC?

ANSWER: A tax return is only required if the LLC has multiple members and it will be your responsibility in conjunction with your accountant to prepare and to file it.

3. For myself any wife will the LLC be single member or multiple with both of us funds coming from respective solo401k account?

ANSWER: The LLC will be deemed single member since both of you are participating in the same solo 401k plan since the solo 401k will be the member.

4. Can I also become a member of this LLC (apart from Trustee of solo401k ) using my own funds? Will that be prohibited?

ANSWER: Yes you can as long as it is done at the start; however, the LLC will be deemed a multiple member LLC.

5. What if LLC uses finance to buy real estate, will there be any UBIT tax? If finance is used by Solo401k trust there is no UBIT tax.

ANSWER: UBIT will not apply if debt financing is used to invest in real estate.

2015 IRA One-Rollover Rule

2014-12-14T21:02:00.000-08:00

The one rollover per 12-month period rule that applies to all IRAs in aggregate is discussed in the following court case, announcements and Pub 590.

Bobrow V Commissioner

Pub 590

Announcement 2014-15

Announcement 2014-32

IRA 12-Month Rule At a Glance

One rollover allowed per spouse, per 12-month period

The 12-month rule does not apply to Roth conversions

When does the 60 day clock start?

Day one is day after the IRA distribution.

Rollover is required by the end day 60.

COMPLIANCE NOTE 1: Direct-rollovers and trustee-to-trustee transfers are not affected by the 12-nonth rule.

COMPLIANCE NOTE 2: Qualified plans such as Solo 401k Plans and Defined Benefit Plans are not subject to the one rollover per 12-month period rule.

Partnership stock trading open self-directed solo 401k

2014-12-03T12:46:00.000-08:00

BACKGROUND & QUESTIONS:

My wife and I opened a partnership for stock trading. We would like to open a solo 401k. A few requirements and questions:
1. We want to have the solo 401k in interactive brokers. What type of accounts do we need to open in interactive brokers and what is the procedure to have the account under 401k?
2. We have IRAs in interactive brokers and would like to roll over those IRAs to this solo 401k. How easy can it be done and how long would it take to roll over those IRAs?

Let us know the procedure so we will start doing this and hopefully finish it in these couple of days.

ANSWERS: In order to open a solo 401k self employment is required. The partnership may not qualify as it is not considered earned income but rather passive income.

Please see following page for more on this:

http://www.irs.gov/publications/p560/ch04.html#en_US_2013_publink10008950

Self-employed individual. You can make contributions on behalf of yourself only if you have net earnings (compensation) from self-employment in the trade or business for which the plan was set up. Your net earnings must be from your personal services, not from your investments. If you have a net loss from self-employment, you cannot make contributions for yourself for the year, even if you can contribute for common-law employees based on their compensation.

Please see following blog about opening a solo 401k brokerage account at Interactive Brokers.

The IRA transfers can take anywhere form 3 to 10 business days, depending on how busy Interactive brokers is.

http://www.mysolo401k.net/solo-401k-brokerage-account-interactive-brokers/

ADDITIONAL INFORMATION

I just learned about the Solo 401K option from my CPA

2014-11-16T23:45:00.000-08:00

QUESTIONS: I just learned about the Solo 401K option from my CPA. She recommended that I look into switching my self-directed IRA into a Solo 401k plan using my business (I am a sole proprietor) as a tool. Is this possible? What are the restrictions? What are the advantages and disadvantages to make this move? I currently own an apartment building with my Self-directed IRA.

ANSWERS: Solo 401k plans are for the self-employed, so if you are a sole proprietor and don't have any other businesses that employee full-time employees other than yourself or business partner, you can open a solo 401k and process an in-kind transfer of the IRA owned real estate property to the solo 401k. The self-directed IRA custodian would report the movement of the property to the solo 401k as as non-taxable direct rollover.

Visit following link to learn more about the IRA to solo 401k direct rollover rules.

http://www.mysolo401k.net/solo-401k-rollover-explained-rollover-direct-rollover-transfer-whats-difference/

We would assist you with completing and/or drafting the IRA direct-rollover form.

To learn about the advantages and disadvantages of transferring an IRA to a solo 401k, please visit following link.

http://www.mysolo401k.net/use-solo-401k-plan-instead-self-directed-ira/

Many thanks,

Amy in Houston Texas

Solo 401k real estate purchase limitation question

2014-10-02T11:57:00.002-07:00

BACKGROUND: We are wanting to start investing our self-directed solo 401k trust in rental properties. Our major concern on the first one is the limitations around buying it within our 401k (we can't do any work on it, have our son mow, etc). This might not be a big deal for us but it would be nice to have more flexibility while we're learning.

I saw online that we should be able to borrow the lesser of 50k or 50% of our 401k balance personally. If this is true, we're thinking we could do that and then buy the property under an LLC.

Our thought is that doing that would keep us from having any prohibited transactions with the 401k and would also allow us to pay interest on the loan back into our 401k to increase its balance.

QUESTION 1: Does this sound right to you or would you have any hesitation in doing it this way?

ANSWER: You are correct that in order to physically do work on the properties, the properties would need to be purchased outside of the retirement account. Therefore, yes a solo 401k loan would be the solution since the borrowed funds would no longer fall under the solo 401k umbrella. To learn more about the solo 401k loan rules, click here.

QUESTION 2: Secondly, if we did buy another property 50% us and 50% 401k would we, at a later date, be able to buy out the 401k's ownership of it if we wanted to or would we be stuck at 50/50 until the time that we sold the property outright?

ANSWER: The transaction you are describing falls under the tenants-in-common category. Click here and here to learn more about this type of solo 401k investment transaction. If you as the trustee of the plan partner with the solo 401k to invest in a rental property under a tenants-in-common transaction, you can never buy out the 401k plan’s ownership portion because you are a disqualified party. Other disqualified persons include your spouse, children and parents, to name a few. However, you could take the property out of the 401k as an in-kind distribution and pay the taxes on the solo 401k owned portion (the 50%). So, instead of taking a cash distribution form the solo 401k, you would take the distribution in the form of an asset (the real estate). The deed would then be recorded to list you or the LLC as the full owner of the property.

I appreciate your incite,

Donna L. in Seattle Washington

Move money from a 401k to a Roth Solo 401k

2014-09-28T13:06:00.000-07:00

QUESTION: I understand I can move money from a normal 401k – including my self-directed one – into a Roth , pay taxes on the monies transferred now, then use that Roth for traditional investments. Is there a way to do the same but not be bound by common investing (stocks, brokerage houses, etc) within that Solo 401k Roth? The investment I have in mind is buying shares in a new company, but the shares are unregistered, non-traded, non-public company shares, which I plan to do with my Solo401k if I cannot find a way to do it within a Roth. (I have done this with my Solo401k in another company for restricted stock shares but that company is Exchange listed and their shares trade on the OTC, as my shares can after the vesting period expires – so a different situation.)

ANSWER: Yes just like Roth 401k funds can be invested in publicly traded companies, the Roth solo 401k may also be invested in private company shares. The following procedure sheds light on investing in private shares. The same procedure applies to investing a pretax solo 401k in private company shares.

http://www.mysolo401k.net/Self-Directed-401k-Self-Directed-Solo-401k-Private-Investment-LLC-Corporation-LP.html

Thanks,

Linda in Minnesota

Can I my self-directed solo 401k lend money to my corporation?

2014-09-01T18:10:00.002-07:00

QUESTION: I want to use my 401(k) to loan money to a company. This company is owned 100% by another company of which I own 45%. I also am an officer in that company. Question: Can I do that?

ANSWER: This would be a prohibited transaction because you are an officer of the company. See number 8 of following page.

http://www.mysolo401k.net/Solo-401k-disqualified-person.html

(8) an officer, director (or an individual having powers or responsibilities similar to those of officers or directors), a 10% or more shareholder, or highly compensated employee (earning 10% or more of the yearly wages of an employer) of a person described in (3), (4), (5), or (7)

Thanks, Fred in Maryland

More Useful Information can be found by visiting following links:

Solo 401k Do's & Don'ts

Purchasing Private Shares

Hire college students for self-employed S-Corp sponsored solo 401k plan

2014-08-19T09:25:00.000-07:00

QUESTION: I want to hire college students to develop iPhone application for my self-employed S-Corporation. Will that conflict with my Solo 401k plan?

ANSWER: As long as the college students do not work full-time for the company (1,000 hours or more per year) then a solo 401k will not need to be converted to a full-time employer 401k and offered to them. On the other hand, if they work full-time, they may do so as long as they are 1099 contractors. See IRS publication 560 for more information surrounding the self-employed solo 401k regulations.

ADDITIONAL INFORMATION

Calculating solo 401k contribution for an S-corp

Claim solo 401k contribution deduction

What is a solo 401k Plan?

Solo 401k Promissorry Note Loan to Car title loan business

2014-08-17T10:17:00.000-07:00

BACKGROUND & QUESTIONS: Hope you've been well. My wife and I established separate non prototype self-directed 401k accounts at Fidelity with your assistance. We are in possession of our checkbooks and looking for investments. When we identify a potential investment, do we need to do anything procedurally before or after mailing the check?

We are considering investing in a friend’s car title loan business in Georgia. He would pay us monthly interest and loan it out to his customers at a higher monthly rate. What documentation or procedures are needed if any for us to receive say quarterly interest payments? Can he just mail us a check and we deposit it back into the solo 401k fidelity checking account? See any land mines we need to avoid?

ANSWERS: When the solo 401k loans money to a third party, this process is treated as a promissory note investment. Therefore, the solo 401k promissory note investment rules apply. For example, the solo 401k must earn a fair interest return and note payments must flow back to the solo 401k account. Please click here to review a sample solo 401k promissory note procedure.

Lastly, since you have brokerage accounts at Fidelity for the self-directed solo 401k that we offer, the promissory note payments are deposited in these accounts. The note payments must be made payable in the name of the solo 401k and mailed to Fidelity for deposit into the solo 401k accounts.

Thank you,

John in Georgia

Additional Information

Solo 401k Dos and Don’ts

Solo 401k Investments

interest as joint tenant real estate with son and solo 401k

2014-07-17T21:38:00.000-07:00

BACKGROUND AN QUESTION: I am purchasing a fixer house with two other people, one of which is my son. I want to hold title as follows:

123 Gardens solo401K Trust, 1/3 interest and Jason Jay (my son), 1/3 interest as joint tenant and Pat 1/3 interest as tenant in common.

Will this work? Of course, title would draw the document to have the wording correct but my concern is can my 401k and my son have a joint tenancy.

ANSWER: Purchasing real estate with a solo 401k and a family member is not deemed prohibited provided the tenants-in-common solo 401k rules are followed.

Please read the following and then give us a call to discuss further at 800-489-7571.

http://www.isolo401k.com/tenants-in-common.html

http://www.mysolo401k.net/blog-for-mysolo401k.html?entry=purchase-property-with-solo-401k

Lisa in Ohio

Loan Solo 401k for flipping home or house

2014-06-16T09:19:00.000-07:00

QUESTION: I have an opportunity to loan $100, 000 to a fix and flip investor over 6 months at 14%. If I understand correctly I can use only $2500 from my Fidelity Solo 401k ($5000 balance) by writing a check? Then I plan to use $50,000 from my Fidelity Traditional 401k and $47,500 from my regular savings account for the balance. Is this in order?

ANSWER: If you are making the loan investment through the solo 401k, the full amount in the solo 401k can be used. Why is this? Because it would be considered an investment by the solo 401k. Therefore, the solo 401k would be listed as the lender. Further, all the promissory note payments would be deposited back into the solo 401k bank or brokerage account. Please click here to read our sample promissory note investment procedure. With regards to the rest of your questions, the other 401k plans would first need to be transferred to the solo 401k if you need the full balance to make the promissory note investment.

Thank you,

Brenda in New Jersey

contribute to 403b and 401k plan

2014-06-02T06:48:00.001-07:00

QUESTION: We are trying to find a way to get my wife's old 403b plan from a previous employer, and her existing standard IRA into a solo 401k, like the one you set up for me. If we set up a side business for her (she is an Rn who is making annual 403B contributions of $ 22,500 through her hospital employer that shows 5-10K on income, can she still do the another 22.500, or is the contribution amount even in the employee type 1 contribution limited to the net income. .Is it also affected by her ongoing 403b contribution.

Do you have any other possibilities?

Tim in Minnesota

ANSWER: Assuming your wife can setup a side business for self-employment purposes, she may open a solo 401k. However, her type 1 contribution cannot exceed $22,500 (this is the 2014 salary deferral contribution limit including the catchup) for both plans combined (her 403b and her solo 401k). We can discuss further over the phone when you are ready.

Additional Resources

Contribute To Multiple Employer Plans

FAQs

Loan to LLC owned solo 401k for property rehab

2014-05-16T09:32:00.002-07:00

QUESTIONS: Let’s say my solo 401(k) Trust is funding a company ABC for a property which they will buy and rehab. So in this case the property is owned by company ABC but my 401(k) may or may not have the lien on the property. Now if the ABC company needs $100,000 but the cash available in my 401(k) is only $70,000, can I as the business owner give loan to my 401(k) for $30,000 from my personal bank account? If so, then:

1.       What documentation I need to reflect this transaction?
2.       Does my 401(k) needs to give any ROI (or interest) for the loan it took from me or just the principal amount back?
3.       Are there any other strings or caveats?

ANSWER: Good questions. However, this proposed transaction would fall under the 401k prohibited transaction umbrella because the solo 401k owner may not loan money to a company in which his or her solo 401k invests in. Specifically, the solo 401k owner is deemed a disqualified person. What is more, the solo 401k owner cannot loan money to his own solo 401k as it is not allowed. Such a loan would be construed as an excess solo 401k contribution. On another note, the solo 401k may only obtain a non-recourse loan from an outside party if the borrowed funds are used for the purchase of the real-estate property directly by the solo 401k.

Additional Resources
Solo 401k Prohibited Transactions
Solo 401k Debt Financing
Solo 401k Do’s and Don’ts

How much can I lend from my solo 401k for an unsecured loan?

2014-05-13T18:02:00.001-07:00

QUESTION: How much can I lend from my solo 401k for an unsecured loan? My beginning balance is $208,000.

ANSWER: The self-directed 401k regulations do not place a dollar restriction on loan investments (aka promissory notes) as long as the loan is an investment and not a loan to the solo 401k owner. Also, the promissory note cannot be made to a disqualified party and the investment must be made with the intent to grow the 401k.

See following link for a list of disqualified parties.
http://www.mysolo401k.net/Investments.html

See following link for prohibited transaction rules.

http://www.mysolo401k.net/Solo-401k-prohibited-transactions.html

See following link for promissory note investment sample procedure.

http://www.mysolo401k.net/Secured-Notes.html

Thanks Linda in California

Can real estate agent represent himself in solo 401k real estate transaction?

2014-05-11T13:17:00.000-07:00

Can real estate agent represent himself in solo 401k real estate transaction?

QUESTION: I am looking to purchase a rental property with my 401k. Since I am a real estate agent, can I represent myself on the transaction? If so, are there any rules or restrictions I need to be aware of?

My solo 401k plan would be to not collect any commission but instead negotiate a reduction in price.

ANSWER: Yes the solo 401k owner may represent his or her own solo 401k in the real-estate purchase provided the solo 401k owner/trustee does not receive a personal benefit. In other words, the solo 401k owner may not receive a commission or any other credit for brokering the solo 401k real estate purchase. A price reduction would benefit the solo 401k and not the solo 401k owner/trustee personally.

Thanks you in advance, Francie from Michigan

Additional Information

401kreal-estate purchase procedure

Solo 401k do’sand dont's