Real Estate Agent · Athens, TX · Member since 2020 · 10 posts · 2 votes
I know there are a thousand post on this subject. I have read so many post my head is swimming. A lot of them or 8+ years old. I want to make sure I have current info.
As the title said I am looking for the best method of converting my 401K for Real Estate investing, SDIRA LLC, Texas SDIRA Series LLC or Solo 401K.
From everything I have read I am leaning toward the Series LLC but it seems the Solo 401K has some advantages although I am not sure about liability protection.
@Damon Holley Not everybody qualifies for the Solo 401(k), but if you do that is {generally} the best available option. As an employer sponsored plan, it has some advantages over an IRA based structure in terms of contribution limits, capacity for tax-deferred and Roth money, and an exemption from taxation on leveraged real estate investments. Qualification involves being both self-employed and having no full time employees in any business you control.
The Checkbook IRA LLC is also a great vehicle for diversifying retirement savings.
The best thing to do is speak with a few professionals who offer checkbook control plans of both types and determine what the best fit for your situation both today and for the long term may be.
Hi Damon, If you are a self employed individual generating earned income and no employees the solo 401k would be a great tool to consider. I am no attorney and in no position to provide advice however I can touch on some advantages to the solo 401k as I work with them quite frequently. With the solo 401k you would be able to control your 401k funds as trustee with complete checkbook control. You also would have an exemption from a tax called UDFI when you take on debt leverage property. If your goal is to continue to contribute to a 401k plan you could potentially contribute up to $57,000 a year with a portion of that even being Roth money (growing tax free). In situations like the year we are in, loans to the participant come in handy as well and this plan allows for that.
If you are an eligible individual for a solo 401k I would consider it over the LLC solely because you have similar access to the funds as you do with an LLC without the fear of having to justify being a manager of your IRA owned LLC and entering into a prohibited transaction. As Brian mentioned, seeking professional help to weigh out your options is the way I would go first.