I came across your website and your 401K solo program looks very promising to me. I feel like real estate may be a much better investment right now for my 457 funds.
I was hoping you might be able to provide me some preliminary guidance?
My goal is to roll-over money from my governmental 457K plan to a new 401K solo to invest in a real estate rental property.
- I am 55-years-old and I am currently still employed and contributing to the 457 plan that is currently at $112K. Out of that amount, $81.5K was from rollovers from other employers. Am I correct in that I can only roll-over the funds from the other employers ($81.5K) while I am still employed with this company? Assuming you are eligible to open a Solo 401k then generally that would be correct. However, you will need to confirm that with your current plan Administrator if they would allow you to transfer the rollover portion of your current Governmental 457 plan to a new qualified employer plan.
- Since one cannot intermingle personal funds with the investment, how does it normally work with financing a property using a 401Ksolo fund? Is the amount typically accepted as a 20% down payment and allow it to be financed by the 401Ksolo plan? Or does the property have to be bought outright (in which my amount would be severely limiting in what I would be able to purchase). A Solo 401k can obtain an non-recourse loan. Those loans generally require more down then 20% because the only recourse is the property securing the loan. Please see the links below for Information Regarding Investing a Solo 401k Plan in Real Estate: For more information please see the following link:
- · Non–recourse financing: Find lenders that specialize in non–recourse loans to solo 401k plans: CLICK HERE
· Real Estate Investment Procedure: Click Here
· Real Estate FAQs: Click Here
· Invest in Real Estate: Click Here
· Prohibited Transactions Self-Directed 401k Click Here - If you purchase real estate using the 401Ksolo, what happens if you need a significant amount of cash for an emergency repair but don't have enough cash reserve in 401K? (i.e boiler blows up). can personal funds be loaned to the plan? No. this is a great question. That is something you need to keep in mind when purchasing real estate in a Solo 401k Plan or retirement plan. All income and expenses need to be paid from the Solo 401k Plan. Therefore you will need to have enough money in the plan to cover expenses and emergencies. The only way to get money in the plan to make contributions based on your self employed income or to rollover funds from qualified retirement plans with the exception of Roth IRA (Roth IRA cannot be transferred to a Solo 401k Plan).