QUESTION 1: Solo 401k (possibly roth) with checkbook control under my existing LLC. The LLC is a real estate investment company and will own 3 houses. My 401k will own a 4th home itself.
I am also a full time employee of another company, but was told this is OK.
Any issues with this so far?
ANSWER: You may not qualify to open a solo 401k if the LLC is only a passive income generating business. See IRS Publication 560 for more on this. The only way you will qualify to set up a solo 401k through your existing LLC real-estate operating company is if the following IRS solo 401k requirements are met:
QUESTION 2: I’ve read many things at your site and others, but I’m still fuzzy about the legal frameworks, titles, restrictions and responsibilities. In what official facet does GCD serve (administrator, fiduciary..)? What is/are my titles (as both LLC owner and 401k member)? Who is the trustee? Who is the bank?
A breakdown of who is what and what their responsibilities are would be greatly appreciated.
ANSWER: Mysolo401k serves as the solo 401k provider. Further, Mysolo401k services also include solo 401k annual return preparation, solo 401k loan document preparation, Roth in-plan conversion processing and reporting, 1099R preparation to report outgoing transfers, rollovers or distributions once distributions commence (usually at retirement), and annual solo 401k plan updates, to name a few. Please click here to view a list of all our services.
With respect to your roll (assuming you qualify to set up a solo 401k) regarding the solo 401k plan, your role is extremely important because you will be serve as the solo 401k trustee (click on solo 401k trustee to learn about your important role as trustee). Lastly, the bank’s role with respect to the solo 401k is to hold the solo 401k liquid funds.
QUESTION 3: Do I need another EIN in addition to my current LLC EIN?
ANSWER: Yes a separate EIN for the solo 401k is required. Visit solo 401k EIN to learn more.
QUESTION 4: I have tax free contributions to my military ira. Does this plan accept tax-free sums? If not, I can roll over the other funds in there and receive the tax-free portion.
ANSWER: If the funds are held in a Roth IRA the answer is no as the Roth IRA rules do not permit for the transfer of Roth IRA funds to a qualified plan such as a solo 401k. See IRS Publication 590.
QUESTION 5: I also have another civilian IRA-- any issue w rolling those funds into the same account?
ANSWER: As long as it is a traditional IRA and not a Roth IRA then the funds can be transferred to the solo 401k pre-tax account.
Thanks, Joe in South Carolina
I am also a full time employee of another company, but was told this is OK.
Any issues with this so far?
ANSWER: You may not qualify to open a solo 401k if the LLC is only a passive income generating business. See IRS Publication 560 for more on this. The only way you will qualify to set up a solo 401k through your existing LLC real-estate operating company is if the following IRS solo 401k requirements are met:
- You are actively performing services (e.g., managing the properties or fixing the properties) for the LLC.
- You are reporting earned income to the IRS for your self-employed services performed under the LLC.
- The LLC does not have any other full-time employees (defined as any common-law employees working 1,000 hours or more) besides you or your spouse, or business partner.
- You are not the majority owner of any other active businesses. This is known as the control group rules.
QUESTION 2: I’ve read many things at your site and others, but I’m still fuzzy about the legal frameworks, titles, restrictions and responsibilities. In what official facet does GCD serve (administrator, fiduciary..)? What is/are my titles (as both LLC owner and 401k member)? Who is the trustee? Who is the bank?
A breakdown of who is what and what their responsibilities are would be greatly appreciated.
ANSWER: Mysolo401k serves as the solo 401k provider. Further, Mysolo401k services also include solo 401k annual return preparation, solo 401k loan document preparation, Roth in-plan conversion processing and reporting, 1099R preparation to report outgoing transfers, rollovers or distributions once distributions commence (usually at retirement), and annual solo 401k plan updates, to name a few. Please click here to view a list of all our services.
With respect to your roll (assuming you qualify to set up a solo 401k) regarding the solo 401k plan, your role is extremely important because you will be serve as the solo 401k trustee (click on solo 401k trustee to learn about your important role as trustee). Lastly, the bank’s role with respect to the solo 401k is to hold the solo 401k liquid funds.
QUESTION 3: Do I need another EIN in addition to my current LLC EIN?
ANSWER: Yes a separate EIN for the solo 401k is required. Visit solo 401k EIN to learn more.
QUESTION 4: I have tax free contributions to my military ira. Does this plan accept tax-free sums? If not, I can roll over the other funds in there and receive the tax-free portion.
ANSWER: If the funds are held in a Roth IRA the answer is no as the Roth IRA rules do not permit for the transfer of Roth IRA funds to a qualified plan such as a solo 401k. See IRS Publication 590.
QUESTION 5: I also have another civilian IRA-- any issue w rolling those funds into the same account?
ANSWER: As long as it is a traditional IRA and not a Roth IRA then the funds can be transferred to the solo 401k pre-tax account.
Thanks, Joe in South Carolina
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