About Author

Kevin Perk

Kevin Perk is co-founder of Kevron Properties, LLC with his wife Terron and has been involved in real estate investing for 10 years. Kevin invests in and manages rental properties in Memphis, TN and is a past president and vice-president of the local REIA group, the Memphis Investors Group.


    • Dmitriy Fomichenko

      Paul, you are correct: leveraged real estate inside of a Solo 401k is exempt from UBIT. This, and several other major benefits such as ability to take a personal loan from it, higher contribution limits (up to $59,000/yr), and no need for a custodian and built-in Roth sub-account make it superior to a self-directed IRA.

  1. Brandon Hall

    You can contribute up to $53k per year via employer contributions.

    When you are flipping properties, you are self-employed (i.e. the employer) and can contribute a percentage of your net profits into the IRA for a maximum of $53k.

      • Dmitriy Fomichenko

        No Gautam, there is certain formula you have to apply when calculating your contributions to a Solo 401k. The contributions are based on your net self-employment income and there are two ways you can contribute:

        1) Employee Elective Deferrals – up to $18,000 (plus $6,000 catch up for those who are over 50), this can be up to 100% of your earnings.

        2) Profit sharing – up to 25% of your compensation.

        The combine total of two is $53,000 (plus $6,000 catch up for those over 50 or $59,000)

      • Shan Shan Stevens

        Thank you for your response. I’m a RN by profession. I’m wanting to open a care home with my friends. I want to transfer my old IRA/401k for the down payment for purchasing a facility. How can I investing without violating the IRS rules or triggering tax liability?

        • Dmitriy Fomichenko

          Investing in a business where you are a part owner maybe complicated. Please be sure to consult with an attorney who is practicing in this area of law to ensure that you don’t violate any rules. If you need a referral please PM me.

  2. jim chung

    there are many custodian who would open the account for you. the problem i know is the fee/ mainteance charge from the custodian and is vastly difference from one custodian to another…
    do anyone have recommendation for a custoidan who does self directed/ solo IRA?
    i tried vanguard/ fidleity . but they dont offer that


  3. Julie Schellberg on

    This article doesn’t mention the fees associated with self directed IRA. The fees to hold real estate in one of these account are huge and will eat away your returns (they are a % of the asset).

  4. Frank Sanchez

    I’m very curious on the typical fees when using this system.

    Can someone provide feedback on percentages and annual fees? What other charges are there?

    Index funds – the best option for equity investments- should remain at 0.20%, retuns could be at 5%/6% pre-inflation including bonds.


    • Dmitriy Fomichenko

      Frank, here is an example of fees from one custodian:

      There are many custodians out there and their fees vary significantly. You should contact few different companies and check their fees. What is more important than the fees is the quality of service you can expect to receive and the expert advise. Here is a list of custodian that BP had put together:


      One other thing to keep in mind, which was not mentioned in the article, is truly self-directed Solo 401k plan. With such setup a custodian is not required so all the custodian and transaction fees are completely eliminated. All of the transactions are done inside of a trust and the account holder has total control over his retirement moneys as plan trustee. The catch is that this plan is not for everyone – only those are are self-employed or own a small business can benefit from it.

      • Joan Brown

        I am interested in setting up a Solo 401K for my Property Management of my rental real estate holdings. As far as I have researched, this is an allowable pathway to getting a Solo 401K – as long as I am actively managing the properties. I am not sure what type of company I need to have, but I think I can have an LLC for the Property Management and the LLC can have a Solo 401K.
        Am I on the right track? How do I go about getting these entities set up?

  5. Victor Peluso

    My girlfriend owns a small parcel of unimproved land, in a subdivison with controlled access. The parcels on both sides of hers had cabins built and sold for double and triple what she paid for her land.

    So would I be able to direct my IRA to loan her the money to build a cabin, with the idea of selling it at a big markup? If so, am I prevented from helping her, furniture staging, minor maintenance, etc, in preparation for sale?

    Great article,
    Thanks for sharing

    • Dmitriy Fomichenko

      Victor, depending on your relationship and several other factors you may or may not lend to her from your IRA. And if you do – you will be prohibited from personally engaging in the transaction with the activities you mentioned (staging, maintenance, etc.). Feel free to reach out to me and we can chat about this.

  6. Julie Marquez

    So with this IRA, or any IRA, you can only gain benefit of the funds when you retire. Is that the government’s retirement age, or my goal of retiring at the age of 48?
    I want to live off all the passive income of my rental properties, but if they are in an IRA, then I can’t realize the money until I’m 59 1/2? So is this still a good option for me and the goal to live off passive income of rentals?

    • Dmitriy Fomichenko

      Julie, the age at which you can start pulling out distributions from any IRA is 59 1/2, and is set by the IRS. Great goal you have of retiring at 48, to help you achieve that you can’t use tax-deferred accounts for the period from 48 to 60 years of age. But retirement accounts can also be part of your overall wealth building strategy since you will need an income after 60 as well.

Leave A Reply

Pair a profile with your post!

Create a Free Account


Log In Here