Foreign Investments
While a solo 401k may invest in foreign investments such as foreign currency, foreign real estate, foreign stock, and other investments outside the U.S., special caution should be exercised. Therefore, it may be a good idea to work with an attorney in the home country where one plans to invest his or her solo 401k plan assets.
For instance, some countries may have special restrictions with respect to how title is taken on foreign real estate. As a result, an LLC or special purpose foreign bank controlled trust may need to be established in order for the Solo 401k to satisfy the foreign country's title to property rules.
Because the investment is made outside the United States, dealing with the foreign country's rules where the solo 401k investment is made may be a challenge and fraud may be an issue, so make sure to work with a licensed professional who understands the rules from the applicable country.
With respect to special reporting when investing a solo 401k plan in a foreign investments, IRS form 8938 does not currently apply. Form 8938 which is used to report foreign investments does not apply to a solo 401k plans; however, the Solo 401k trustee is required to live and hold the paperwork in connection with the solo 401k investment (e.g., the real estate deed) in the United States.
For instance, some countries may have special restrictions with respect to how title is taken on foreign real estate. As a result, an LLC or special purpose foreign bank controlled trust may need to be established in order for the Solo 401k to satisfy the foreign country's title to property rules.
Because the investment is made outside the United States, dealing with the foreign country's rules where the solo 401k investment is made may be a challenge and fraud may be an issue, so make sure to work with a licensed professional who understands the rules from the applicable country.
With respect to special reporting when investing a solo 401k plan in a foreign investments, IRS form 8938 does not currently apply. Form 8938 which is used to report foreign investments does not apply to a solo 401k plans; however, the Solo 401k trustee is required to live and hold the paperwork in connection with the solo 401k investment (e.g., the real estate deed) in the United States.