QUESTION: Can a participant invest $40k from her solo 401K in the Company for a short period, with an agreement with the Company that whatever profits that Company makes from the venture be split equally between the Company and the participant’s solo 401k trust account?
ANSWER: It is prohibited for a solo 401k to invest in the solo 401k owners' business. However, the solo 401k owners may take participant solo 401k loans and invest the funds in the business since they would no longer be deemed solo 401k funds. Of course, the solo 401k loan(s) would need to be paid back over a 5 year period.
ADDITIONAL INFORMATION
Solo 401k Loan Facts
Solo 401k Prohibited Transactions
401k Business Financing
ANSWER: It is prohibited for a solo 401k to invest in the solo 401k owners' business. However, the solo 401k owners may take participant solo 401k loans and invest the funds in the business since they would no longer be deemed solo 401k funds. Of course, the solo 401k loan(s) would need to be paid back over a 5 year period.
ADDITIONAL INFORMATION
Solo 401k Loan Facts
Solo 401k Prohibited Transactions
401k Business Financing
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