Solo 401k Expert · Anaheim Hills, CA · Member since 2012 · 18k+ posts · 6k+ votes
8y
Absolutely not, you are disqualified person to your husband's 401k. IRS rules are pretty clear: no transaction is allowed between qualified plan and disqualified person.
But even if you could do so, what would be the advantage to you transferring assets from your spouses's retirement account to your retirement account? I'm just trying to understand your thought process.
An IRA may use non-recourse financing, just as a Solo 401(k) does. The issue and difference between the plans is that the IRA is subject to UBIT taxation on Unrelated Debt-Financed Income (UDFI). This tax is generally not a big cost, and the IRA will definitely receive a higher cash-on-cash return via the use of leverage, even with the tax and tax-prep cost. Sure, it is simpler to use leverage in a SoloK when that is an option, but an IRA can successfully use leverage too.
Have you spoken with the primary non-recourse lenders; First Western Federal Savings and North American Savings Bank? They will sometimes do portfolio loans where they cross-collateralize multiple properties. Yes, smaller individual properties are not worth their time, but perhaps bundling all 4 would be something they could do.
Investor · Thousand Oaks, CA · Member since 2016 · 126 posts · 47 votes
8y
@Brian eastman
thanks for your reply. yes, I contacted several lenders including the two you mentioned. No hope with our 40k SFR. My plan is to sell those rentals and buy more expensive properties to qualify for loan. I'll look into the UBIT taxation on UDFI. Could you kindly direct me to more information on those?
An IRA may use non-recourse financing, just as a Solo 401(k) does. The issue and difference between the plans is that the IRA is subject to UBIT taxation on Unrelated Debt-Financed Income (UDFI). This tax is generally not a big cost, and the IRA will definitely receive a higher cash-on-cash return via the use of leverage, even with the tax and tax-prep cost. Sure, it is simpler to use leverage in a SoloK when that is an option, but an IRA can successfully use leverage too.
Have you spoken with the primary non-recourse lenders; First Western Federal Savings and North American Savings Bank? They will sometimes do portfolio loans where they cross-collateralize multiple properties. Yes, smaller individual properties are not worth their time, but perhaps bundling all 4 would be something they could do.
Here is a list of lenders offering non-recourse loans to retirement accounts. There are several banks as well as few brokers who have access to private money and might have lower loan amount requirements. You'd have to contact each lender directly and inquire about their terms:
Here is a list of lenders offering non-recourse loans to retirement accounts. There are several banks as well as few brokers who have access to private money and might have lower loan amount requirements. You'd have to contact each lender directly and inquire about their terms: