Solo 401k investments into a syndicate

Multi-Family and Apartment Investing
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Solo 401k investments into a syndicate

DongHui Patel
Member since 2021 · 95 posts · 30 votes

I am a w2 earner with a schedule C doing real estate activities.

I am thinking of opening up a solo 401k for a investment into a syndicate (with a k-1). 

I would roll over some of my old 401k to the solo401k to start the funding.

I just dont know how the k-1 negative ordinary income would flow into the Schedule C and how the cap gains at the end would flow? 

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Michael Le
Developer · Houston, TX · Member since 2015 · 1k+ posts · 1k+ votes
4y

I'm not a CPA and you should talk to yours... but the answer is it shouldn't flow into it at all. The Solo 401k is a separate entity from you and there should not be an intermingling of funds. While you are the trustee, everything you do should be an arms length transaction that should be benefiting solely the trust and not benefit you.

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  • Michael Le
    Developer · Houston, TX · Member since 2015 · 1k+ posts · 1k+ votes
    4y

    I'm not a CPA and you should talk to yours... but the answer is it shouldn't flow into it at all. The Solo 401k is a separate entity from you and there should not be an intermingling of funds. While you are the trustee, everything you do should be an arms length transaction that should be benefiting solely the trust and not benefit you.

    1Reply
  • Justin WindhamPro Member
    Banker · Nationwide · Member since 2015 · 4k+ posts · 1k+ votes
    4y

    @DongHui Patel

    I agree with @Michael Le. Your Solo 401k investments will be maintained separately from your own investments. Solo 401k activities will not affect your Schedule C, and any K-1 will be issued to your Solo 401k and not to you personally. 

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  • Todd Dexheimer
    Rental Property Investor · St. Paul, MN · Member since 2016 · 3k+ posts · 3k+ votes
    4y

    It should be the same as what your current 401k is. No taxes paid until you start tapping into the money when you retire. 

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  • Basit SiddiqiBusiness Member
    Accountant · New York, NY · Member since 2015 · 8k+ posts · 3k+ votes
    4y

    @DongHui Patel

    401K is a separate entity from yourself. Income earned by a retirement account will not be reported on your individual return.

    The way it will impact your return is when retirement account funds get distributed to you personally. 

    [email protected]917-280-8544
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