Solo 401K vs. ROBS
Greetings,
After browsing and reading BP I still don't a clear idea which route to go. In my situation, my wife will be a retired teacher by June 1ST @ 52. She has 403b and 401a plans which she can rollover from VALIC and STRS.
We would like to rehab RE to rent and/or flip whatever the property and the market dictates. At the same time GENERATE income. We would like to use part of the money for RE investment while the rest rolled over in mutual funds.
My understanding and partial summation of the pros and cons and please CORRECT me if I'm WORNG:
- Solo 401 cheaper to set up ($500-$800) and maintain ($100-$200 annually) vs. 4K -5K and 1K+.
- Solo distributions under 59 1/2 years subject to 10% penalty + income tax. ROBS salary distributions/salary are tax deductible.
- ROBS not a good idea to rehab and rent since it generates a passive income which is an additional 20% tax. Solo is good to hold and shelter up to 59K/ year.
While trying to sort out everything to figure the better direction, does the Solo 10% penalty + income tax outweigh the headache of ROBS, Corp C, taxation, annual testing and maintenance?
I've been an entrepreneur since college without having any full time employees and don't anticipate on starting now. However, RE is new to me and I'm glad I found BP.
Thanks in advance.