QUESTION: I am looking at your website.  I have an existing self-directed Roth IRA.  It is invested in a single member LLC that owns three rental properties and has a checking account with a local bank.  I would like to roll the Roth IRA account over to a Solo Roth 401K.  I operate a small law practice as a side job that earns $10K-20K a year, so I think I could set up a 401K for it.  I just don't know if I could roll the single member LLC asset in-kind to the 401K and, if so, what would be involved in that.  Is this possible and something you can help with?

Thanks,

Tom in Virginia

ANSWER: Unfortunately the IRS IRA rules do not currently allow for the transfer of a ROTH IRA to a Roth 401k including a ROTH Solo 401k. However, if this was Traditional Self-Directed IRA LLC, it could be transferred to a solo 401k and then an in-plan Roth conversion processed, resulting in a Roth Solo 401k.

QUESTION: If I have a TIC set up with my solo 401k, where I personally own 30% interest in an investment property and our Solo 401K owns 70%, is there a best way to make payment of expenses?

for example...

1.) Paying each and every bill in a 30/70 ratio is difficult, but I am sure is the best way.

2.) Can I pay 100% with personal funds and then reimburse my personal funds out of the solo 401k accounts?

3.) Can I pay 100% with solo 401k funds and then reimburse out of my personal funds?

Both of these look like self-dealing, so not sure if options 2 or 3 make any sense.

What is your suggestion?

Thanks,

Erik in FL

ANSWER: Either go with option 1 or consider setting up a separate bank account and title it as a property management account. The profits and expenses from the real estate investment property would flow to this bank account, with the net proceeds ultimately flowing to the respective property owners’ bank accounts (yours and the solo 401k).  In sum, the key is not to place the solo 401k funds in your personal bank account but instead that they flow through an escrow type of account before ultimately flowing back to the solo 401k bank account.