I have a few questions in regards to purchasing a home with a solo 401k

“Furthermore, the Solo 401k rules permit you to combine personal funds--this type arrangement is often referred to as Tenancy-in-common Ownership--with your Solo 401k in making the purchase. “



QUESTION: Does this mean, I can purchase the home partnering with my Solo 401k and list us both as Tenants-in-common?

ANSWER: Yes provided certain rules are met. The following links will answer your question about Tenants-in-common:

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

QUESTION: I had a broker ask me, if I can take the property with me listed as the Trustee? He was trying to see if we can lower the interest rate?


ANSWER: When investing the solo 401k in real estate, here is how title is commonly taken:

• ABC Solo 401k Trust F.B.O. Jane Doe, Trustee   OR   

• Jane Doe, Trustee of ABC Solo 401k Trust

• Purchases should be transacted under Solo 401k's EIN:XX-XXXXXXX

QUESTION: Do you have a list of lenders that work with lending to a Solo 401k/experience?

ANSWER: Yes the following banks specialize in non-recourse lending to retirement accounts:

North American Savings Bank

First Western Federal

Take care,
Rick in Georgia

I have just started the process of exploring whether a SD401k would be good for me and I have some questions.

QUESTION 1):  I currently work for Wells Fargo Bank and am enrolled in their 401k plan. Can I also enroll in a self-directed 401k?

ANSWER: The 401k rules allow for participation in multiple 401k plans. Therefore, theoretically an individual can contribute to his day-time employer 401k and his or her self-employed business 401k, commonly referred to as a self-directed 401k or solo 401k.  However, an individual can only open a solo 401k if he or she is self-employed, with part-time self-employment qualifying. Lastly, the self-employed business owner cannot have any full-time employees besides the business owner and his or her wife or a business partner.


QUESTION 2):  I would use the SD401k for the sole purpose of purchasing investment real estate in California. If I set up a SD401k and obtain an EIN (as required) does this mean that I will become liable for State of California annual license fee of $800?

ANSWER:  The EIN is assigned by the IRS for the solo 401k, not by the state of California. Nor is the solo 401k registered with the California Secretary of State since solo 401k plans are governed at the federal level. You appear to be confusing the annual California franchise fee applicable to LLCs or Corporations, which does not apply to a self-directed 401k since it is not filed with the state.


QUESTION 3): I would fund the SD401k through a rollover of funds from a traditional (non-Roth) IRA that I have. Is there any limit on how much I can rollover from the IRA into the SD401k?

ANSWER: One can transfer unlimited amounts. The IRA rollover/transfer rules do not place a cap on what amounts an individual may transfer from his or her Traditional IRA, SIMPLE IRA or SEP IRA.



Thanks,
AW in CA