Setting Up Solo 401k

Investor · Encinitas, CA · Member since 2013 · 83 posts · 18 votes

Today I'm working on taxes and finalizing my Solo 401k set up, yes tons of fun...not my favorite way to spend a sunny 75 degree Saturday in San Diego!

That said, I need some guidance on next steps.

Step 1) Have had sole propriatorship for a couple of years (unprofitable)

Step 2) Applied for and received my Tax EIN

Step 3) Gave self-employment info to foxnfox.com's Bruce Fox (great guy, most affordable) who processed the paperwork, and sent me a binder of legalise; this is for a solo 401k only, they do not act as custodians, or admin

Step 4) Acting as custodian, I will need to set up a bank account somewhere (any recommendations on which bank is best?); bank account will be exclusively for Solo 401K. (Will I need a bookkeeper if all transactions are tracked in/out of this bank account?)

Step 5) Roll over my previous employer's IRA and my wife's IRA (is that allowed since she and I are the only 2 employees?) into this new bank account (Hopefully the bank will help me do this?)

Step 6) Can I simply start investing in approved assets/transactions with checkbook control? (Mortgage Notes, and Turn Key SFR's)

Step 7) Can depreciation from properties be accounted on the standard schedule (straight-line, or accelerated)?

For all tax experts, accountants or attorneys, am I missing any steps? Also, I thank you all in advance for answering my "Bolded Questions".

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Dmitriy Fomichenko

Solo 401k Expert · Anaheim Hills, CA · Member since 2012 · 18k+ posts · 6k+ votes

12y

@Josh Rich

The bank account for the Solo 401k can be set up at any bank, however, it must be established following proper procedure, we found that most bankers are not educated enough to do it correctly that is why we have relationship with couple people that are trained and know how to do it properly. If you use a bookkeeper or not is up to you, but yes, you have to account for every single transaction. This is quite simple to do with the help of numerous accounting software available (many free) or even excel spreadsheet.

Your wife would be allowed to have an account under Solo 401k is she is also participating/working in the business. In which case she can have an account under the plan, but you can't just lump all together, you need to account for those funds separately - therefore you will need a separate bank account.

As soon as your account is funded, you can start investing out of your Solo 401k checking account.

Please consult a tax professional regarding an tax consequences when using 401k for investing.

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Dmitriy Fomichenko
Solo 401k Expert · Anaheim Hills, CA · Member since 2012 · 18k+ posts · 6k+ votes
12y
@Josh Rich

The bank account for the Solo 401k can be set up at any bank, however, it must be established following proper procedure, we found that most bankers are not educated enough to do it correctly that is why we have relationship with couple people that are trained and know how to do it properly. If you use a bookkeeper or not is up to you, but yes, you have to account for every single transaction. This is quite simple to do with the help of numerous accounting software available (many free) or even excel spreadsheet.

Your wife would be allowed to have an account under Solo 401k is she is also participating/working in the business. In which case she can have an account under the plan, but you can't just lump all together, you need to account for those funds separately - therefore you will need a separate bank account.

As soon as your account is funded, you can start investing out of your Solo 401k checking account.

Please consult a tax professional regarding an tax consequences when using 401k for investing.
6 Reply
Mike McDermott
Real Estate Investor · Sun Prairie, WI · Member since 2014 · 68 posts · 100 votes
12y
@Dmitriy Fomichenko Great advice as always.

If I may make a suggestion. I would say you do not need separate accounts for your funds. You DO need excellent accounting for those funds. Let's say you have $30,000 and your wife has $60,000. You could deposit all those funds into a single bank account. If you earn a whopping 1% on those funds, your accounting must show that your wife's account is now $60,600 and your account is $30,300. Think of mutual funds: everything is done with accounting - your discretionary account, my account, your traditional IRA, my Roth, his 529 plan, all invested in the same investment, just accounted for differently.

The big risk of this would be in the case of a checking account. You have a deal that requires $72,000. You write one check. OOPS! That check doesn't delineate how much and of which participant contributed. Did $60,000 come out of your wife's money and $12,000 come out of yours? $40k from her and $30k from you? A good ledger, some accounting software, and the advice of an excellent CPA can simplify this process.

Dmitriy is right. Most banks don't know their foot from their elbow when it comes to 401Ks. If you go to a bank who has never worked with one of these before, they'll throw you into their "TRUST" department. That's the misnomer they have for their brokerage services. When the "TRUST" department finds you want to self direct, they'll tell you they can't do it, which is true, they can't.

If you can find a bank officer to listen to you, tell them you need a business savings and checking account similar to the ones they set up for A-B revocable trusts. These are the trusts your parents or grandparents set up instead of wills. Banks do these all the time, so they should be familiar. I can't tell you how many times I've had to walk banks through the process.

My other experience is that local banks are usually easier to work with than national banks. I was actually called by someone at Chase's headquarters to tell me they wouldn't set these up for me. No explanation, just "NO." BMO Harris did the same thing. Your mileage may vary, but that was my experience.

Good luck with this! You'll do great!
4 Reply
Dmitriy Fomichenko
Solo 401k Expert · Anaheim Hills, CA · Member since 2012 · 18k+ posts · 6k+ votes
12y
Originally posted by @Mike McDermott:
@Dmitriy Fomichenko Great advice as always.

If I may make a suggestion. I would say you do not need separate accounts for your funds. You DO need excellent accounting for those funds.

Technically that is correct, however, for most people this would create an accounting nightmare. That is the reason we recommend separate accounts for each participant - in which case accounting can be much easier.
2 Reply
Josh Rich
OP
Investor · Encinitas, CA · Member since 2013 · 83 posts · 18 votes
12y
Originally posted by @Mike McDermott:
@Dmitriy Fomichenko Great advice as always.

If I may make a suggestion. I would say you do not need separate accounts for your funds. You DO need excellent accounting for those

Thank you both for your information. With my lack of admin/accounting strength, I think I'll need to go with 2 separate accounts.

As long as all withdrawals/deposits are accounted for on the bank transaction records, do I still need separate accounting? If so, what are some good (affordable/accurate/user-friendly) accounting software programs?

On another post, I read that it was a prohibited activity to self-administer the account, is that true? Is it also a prohibited activity to do ones own accounting?

What I want to do (now that my Solo 401k is established) is set up the bank accounts, be sure to keep track of all transactions in/out, pick & choose my own approved investments, and invest. Is this possible, and as easy as that?

How should I rollover my Roth IRA's into my Solo 401k funds?

Last question, if my sole proprietor company takes a while to become profitable, will I only be able to add these initial rollover funds? My understanding is that no profits = no contributions (even from an outside source, i.e. W2 income). Is that right?

Thanks again, Josh

1 Reply
Doreen Chaisson
Professional · Portsmouth, NH · Member since 2014 · 175 posts · 108 votes
12y
Hi - Unfortunately, you cannot roll Roth IRA funds into a Solo(k).

And you are correct, any salary deferrals must come from your 1099 income, not from another income source,
1 Reply
Dmitriy Fomichenko
Solo 401k Expert · Anaheim Hills, CA · Member since 2012 · 18k+ posts · 6k+ votes
12y
@Josh Rich

bank transaction record simply shows withdrawal or deposit, in addition to that you need to use your own accounting system (example: Quicken, Quick Books, or here is a free, good, web-based software www.mint.com) to track the details, what was particular expense/deposit for.

No, it is not a prohibited transaction to self-administer your own 401k (or to do the accounting for it). This is your responsibility as the plan administrator.

IRS does not allow Roth IRA to be rolled over into Solo 401k.

You can only make contributions from your self-employed earned income (W2 or other income can not be counted for contributions). However, you may fund your Solo 401k by transferring funds from another qualified account.

Yes, you can establish bank account, fund it and begin investing.

These are the questions that you should be asking the company that established the plan for you. They don't provide any service or support to you after the plan is established?
2 Reply
Mike McDermott
Real Estate Investor · Sun Prairie, WI · Member since 2014 · 68 posts · 100 votes
12y
@Josh Rich

The easiest way to think of managing your account AND any property you buy is this: White collar activity is fine, Blue collar activity is prohibited.

So whether you're managing your account, making transfers, consulting your accountant, writing checks, paying bills, arguing with contractors, you are fine ... as long as you don't reimburse yourself for any of these activities. You have become an unpaid consultant for your plan.

The same holds true for properties you own. You can hire contractors, you can fire them when they don't perform, you can call them up and cuss them out all you want. You can place ads on backpage and Craig's List, but if you buy ads anywhere, the money must come from your 401K. You can screen tenants, collect rents, and do evictions. (You are crazy to do that, not because its restricted, it's just a pain in the butt.) Consequently, your 401K can hire a property manager, and then you get to interact with them the same way you do your contractors.

You cannot slop paint on the walls, shovel the snow, cut the grass or sweep the walk. These are all Non-Cash Contributions and they are restricted.

So remember: White Collar - Yes; Blue Collar - No!
4 Reply
Mike McDermott
Real Estate Investor · Sun Prairie, WI · Member since 2014 · 68 posts · 100 votes
12y
@Josh Rich

Josh,

Sorry, I don't mean to monopolize your thread. Your last question was about funds from another source. @Dmitriy Fomichenko hinted at what you can do, but here's the process.

You can save any money you want in a traditional IRA. There are no restrictions on the source of the income for these plans. It could be rental income, W-2 Income, it could be a gift or an inheritance. IRAs have no restrictions on source of income. At some point you can roll your IRA over to your 401K. So indirectly you have contributed funds. You CANNOT contribute those funds directly and to do so incurs stiff penalties. You MUST jump through the IRA hoop.

@Doreen Chaisson is absolutely correct. You cannot roll Roth IRAs into Roth 401Ks. So do this. Perform some business activity. I cannot tell, but I'm assuming from your first post that your 401K was established by your sole proprietorship. Regardless, if you have formed another entity such as an S-Corp or LLC, just do some business there. Baby sit your neighbor's kids, mow a lawn, delivery newspapers - it doesn't matter. You now have some income from your business which can legitimately be contributed to your 401K. Because you'll be contributing it to your Roth provisions, you won't be able to tax deduct it.

With this contribution, you will have seed money for whatever unrestricted activity you want. I contributed $130 to my Roth, then bought five properties using leverage.

A client of mine took a participant loan from his newly formed 401K, then lent it as hard money to a friend's project. He loaned $20,000 at 10% for three months. He then contributed the $1,790.69 he made on this transaction to his Roth 401K. (The difference between the $2,000 he earned and his contribution, $209.31, was the interest he had to pay his 401K on the participant loan. He did, however, get to deduct that interest payment.)

So you can see that even though there is no ability to roll Roth IRAs to 401Ks, you can still use your traditional monies to generate ordinary income. You now have seed money for your Roth. Or you can do some baby sitting.

Keep up the good work!
1 Reply
Josh Rich
OP
Investor · Encinitas, CA · Member since 2013 · 83 posts · 18 votes
12y
@Doreen Thanks for the Roth clarification and income sources.

@Dimitriy Great guidance here on software, I much appreciate your postings. No, once the attorney's office set me up, I'm on my own... I guess I get what I pay for, and it was a great deal!

@Mike Fantastic clarification and examples!

Last question to all...how about converting a Roth into an IRA, then rolling it over to the 401K?
1 Reply
Dmitriy Fomichenko
Solo 401k Expert · Anaheim Hills, CA · Member since 2012 · 18k+ posts · 6k+ votes
12y
Originally posted by @Josh Rich:

Last question to all...how about converting a Roth into an IRA, then rolling it over to the 401K?

Josh, Roth IRA consist of after tax contributions, and traditional with pre-tax. You can't convert Roth into Traditional (unless you did a conversion of Traditional into Roth recently, in which case you could undo it within certain period of time, but I'm assuming that is not the case for you).
0 Reply
Josh Rich
OP
Investor · Encinitas, CA · Member since 2013 · 83 posts · 18 votes
12y
Originally posted by @Dmitriy Fomichenko:

Originally posted by @Josh Rich:
Last question to all...how about converting a Roth into an IRA, then rolling it over to the 401K?

Josh, Roth IRA consist of after tax contributions, and traditional with pre-tax. You can't convert Roth into Traditional (unless you did a conversion of Traditional into Roth recently, in which case you could undo it within certain period of time, but I'm assuming that is not the case for you).

Unfortunately, that is not the case. Thanks again for sharing your insights.
0 Reply
Mike McDermott
Real Estate Investor · Sun Prairie, WI · Member since 2014 · 68 posts · 100 votes
12y
@Josh Rich

Depending on how much you've contributed to your Roth IRA, you have two choices. One is to file and forget about it until a future date when you might need it. If you concentrate on growing your Roth inside your 401K, you may need a Roth IRA that is five years old or older. You'll use this IRA to establish a 72t Distribution with all that wonderful Roth 401K money you've amassed. (How's that for opening a can of worms?)

The other reason you'll need this Roth IRA is to act as the final depository for your Roth 401K funds when you turn 70 1/2. 401Ks have Required Minimum Distributions, which is where the government will tell you when and how much to take from your 401K. If you roll your Roth 401K to a Roth IRA, you'll never have to take anything you don't want to, and you can pass your Roth IRA along to your kids, grandkids or any descendant. You'll, of course, have to contend with estate taxes for all that money, but that's a whole different thread.

Option two is to co-invest it with your other plans. Your Roth IRA can co-invest with your traditional 401K. You need excellent accounting, but that shouldn't scare you. As long as you keep all your expenses and profits proportional, your little Roth IRA can piggyback on larger investments made WITHIN your 401K.

So if it's a small amount of money in your Roth IRA, my advice is to file and forget. To co-invest with your 401K involves your custodian, and their process may cause unnecessary delays. Just put it somewhere that fees don't cause the account to self destruct.

If it's a larger amount, say $10,000+, then it's probably worth your while to co-invest it on 401K deals. I don't know who your custodian is, but I would suggest Kaaren Hall at uDirect. She has an incredible knowledge base and is hugely competent. uDirect is also one of the few custodians that will work with Health Savings accounts. If you want to become totally tax deferred, you could establish a Health Savings Account for your health insurance, Coverdell ESAs for your kids' education, and your Roth IRA, then they all can co-invest with your 401K.

The world gets to be a better place when we can live tax free!
0 Reply
Josh Rich
OP
Investor · Encinitas, CA · Member since 2013 · 83 posts · 18 votes
12y
@Mike thanks for the tips, I will likely keep the Roth IRA separate as it is not much and not worth the accounting hassle. Good to know about the retirement strategy, let's see if I can remember that when it takes effect...in 40 years!
0 Reply
Sam Leon
Investor · Fort Lauderdale, FL · Member since 2012 · 1k+ posts · 465 votes
12y
Originally posted by @Mike McDermott:
@Josh Rich

The easiest way to think of managing your account AND any property you buy is this: White collar activity is fine, Blue collar activity is prohibited.

So whether you're managing your account, making transfers, consulting your accountant, writing checks, paying bills, arguing with contractors, you are fine ... as long as you don't reimburse yourself for any of these activities. You have become an unpaid consultant for your plan.

The same holds true for properties you own. You can hire contractors, you can fire them when they don't perform, you can call them up and cuss them out all you want. You can place ads on backpage and Craig's List, but if you buy ads anywhere, the money must come from your 401K. You can screen tenants, collect rents, and do evictions. (You are crazy to do that, not because its restricted, it's just a pain in the butt.) Consequently, your 401K can hire a property manager, and then you get to interact with them the same way you do your contractors.

You cannot slop paint on the walls, shovel the snow, cut the grass or sweep the walk. These are all Non-Cash Contributions and they are restricted.

So remember: White Collar - Yes; Blue Collar - No!

Very interesting and informative.

So here I see a potential issue. So let's say you purchased a property with your solo 401k funds and then turn around and rented the property out.

Are you saying any mickey mouse tasks you can't do at all? So if the window is leaking and all it needs is a bead of caulk or the tenant has a clogged toilet that requires a plunger...stuff like that you need to call in a pro to do a 5 minute job and pay them $100 an hour? Assuming you don't have a property manager, or I guess you have to if you use solo 401k money for the property?
1 Reply
Gautam Venkatesan
Investor · Dallas, TX · Member since 2013 · 619 posts · 128 votes
12y
It has to be arms length transaction so it is highly advisable to have a PM company manage the property and repairs.
0 Reply
Mike McDermott
Real Estate Investor · Sun Prairie, WI · Member since 2014 · 68 posts · 100 votes
12y
@Sam Leon

You asked about any Mickey Mouse activities in your 401K, so I'll answer this. There are NO Mickey Mouse activities in your 401K. The fines and penalties make any of these activities profound. So the next question usually is: "How would I get caught? Are there IRS agents lurking everywhere?"

My answer to the second question pretty much answers the first: "No and Yes!" Are there IRS agents everywhere? Not right now, but any person can turn into one at a moment's notice. The IRS will pay informants 10% of any taxes and fines they collect. So the guy who's renting from you that you get along fine with now reports you when he gets mad at you. Or your property manager, or your goofy sister-in-law who sees an easy way to pay for her divorce from your brother, or .......

My advice is this - if you're going to hold rentals in your IRA or 401K, you need to buy them at a price so that they cash flow like crazy, which will allow you to pay a property manager to do the Mickey Mouse stuff.

My first rule of being profitable is to stay legal. The IRS is an organization not to be messed with.

Buy right - cash flow like crazy - have a PM - cash checks - be happy.
5 Reply
Randy King
Investor · Madison, AL · Member since 2013 · 93 posts · 28 votes
12y
@Mike McDermott or @Dmitriy Fomichenko

For clarification, let's say my wife has an LLC taxed as a S-Corp and a solo 401K of which she and myself are participants. The LLC's taxable income is 100K. She pays herself W2 income of 30K and I get paid 0. What are the max contributions for both of us? Is it correct that there will be an individual contribution based on her income and a company contribution that can be split between both of us? Thanks guys, this has been very informative!!!
0 Reply
Sam Leon
Investor · Fort Lauderdale, FL · Member since 2012 · 1k+ posts · 465 votes
12y
@Mike McDermott thank you for your detailed response. I haven't set up a solo-401k yet but will be in the near future so now I am learning as much as I can to make sure I don't step into mud without knowing it.

I believe based on your post, I really do need to hire a property manager to handle everything from assessment to executing a solution to whatever problem might creep up.

My original thinking was as the 401k fund custodian I can't do any physical work but I would be able to take calls from tenants, as well as going there to assess the issue, for the purpose of determining which pro to call in to resolve the issue.

However I also know while assessing the issue often time I might end up having to do physical work - such as reaching inside the cabinet to turn off the water valve, or flush the toilet to see what's happening, or opening and closing a window, or even turning on or turning off a light, those are technically all physical work right? I believe there is no way to avoid ANY physical work during an assessment of a problem, unless I am able to instruct the tenant to do such work - such as "hey Bob, do me a favor here, can you crank that window open slowly for me? Slowly...yes...right there, stop". Or sometimes I would call a plumber out, while on the phone, the plumber might ask "what happens when you turn just the hot water on?" I would have to say I can't do that.

Or if the tenant complained that the door squeaks when you open or close it and you know it is going to be two squirts of WD40, it would be crazy to call out a pro to perform such action.

Based on that I believe one MUST have a property manager to handle everything. You can't inject yourself into the process of handling any tenant complaints unless the compliant is about rent too high or lease renewal etc...UNLESS you can talk the tenants themselves into performing the physical work necessary for the diagnosis of a problem, while you sit back, cross your arms, sipping on a beer while giving the instructions.
0 Reply
Dmitriy Fomichenko
Solo 401k Expert · Anaheim Hills, CA · Member since 2012 · 18k+ posts · 6k+ votes
12y
Originally posted by @Randy King:

For clarification, let's say my wife has an LLC taxed as a S-Corp and a solo 401K of which she and myself are participants. The LLC's taxable income is 100K. She pays herself W2 income of 30K and I get paid 0. What are the max contributions for both of us? Is it correct that there will be an individual contribution based on her income and a company contribution that can be split between both of us? Thanks guys, this has been very informative!!!

Your wife can defer up to $17,500 of her salary into her 401k (plus additional $5,500 if she is over 50). Company can contribute 25% of her compensation as profit sharing ($7,500).

Since your compensation is zero - zero goes to your 401k.
0 Reply
Jane George
Residential Real Estate Agent · Fort Worth, TX · Member since 2013 · 59 posts · 17 votes
12y
This is a great thread! So informative! Thank you @Mike McDermott for your excellent insight and direction!
0 Reply
Jesus R.
San Antonio, TX · Member since 2014 · 13 posts · 4 votes
11y
Let me start by saying this site was God sent for me!
A few days ago I first heard about Self Directed IRA. I purchased/read a book about it and was researching a couple of custodians, had my list narrowed down to one company and was ready to invest. I am the type of person who does INTENSE research before making a big investment decision. Through the posts on this site (especially those who have contributed to this particular thread to whom I am extremely grateful) I learned about Solo 401k so as you can imagine, my research was not done.
I work in the real estate business and came across a really good deal, but because I do not want to use financing to buy the property I was looking into rolling some of my retirement accounts to a Solo 401K, which seemed to be a better deal for me when compared to a SDIRA; they seem to have the same "disqualified person" and "prohibited transaction" rules, but has the option for Roth "employee" and employer" contributions for myself and my spouse. A key detail I discovered on posts here is that I would not be able to roll from my Roth type retirement (which is the majority of my retirement). I currently have a 401K with my current employer (not the real estate firm, but another full time job that I have) that has a balance large enough to purchase this property and also cover the approx $15k needed for upgrades before putting the property on the market for lease.
I am not sure if my current employer will allow for me to use some of my current 401K money to use it for a Solo 401K and wanted your opinion on the "right" question(s) to ask when I call them.
Again, I appreciate the great information shared here and thank you in advance for any comments/advice. God Bless!
0 Reply
Dmitriy Fomichenko
Solo 401k Expert · Anaheim Hills, CA · Member since 2012 · 18k+ posts · 6k+ votes
11y
Originally posted by @Jesus R.:

...has the option for Roth "employee" and employer" contributions for myself and my spouse.
A key detail I discovered on posts here is that I would not be able to roll from my Roth type retirement (which is the majority of my retirement). I currently have a 401K with my current employer (not the real estate firm, but another full time job that I have) that has a balance large enough to purchase this property and also cover the approx $15k needed for upgrades before putting the property on the market for lease.
I am not sure if my current employer will allow for me to use some of my current 401K money to use it for a Solo 401K and wanted your opinion on the "right" question(s) to ask when I call them.
Jesus, the ability to contribute to the Roth account under your Solo 401k is only available as employee in the form of 'Salary Deferral'. Employer contribution potion is called 'Profit Sharing' and can only be done pre-tax. Also keep in mind that while your spouse can participate in the same Solo 401k plan she can only do so if she is also involved in the business and receives compensation.
Unfortunately Roth IRA can not be rolled over into Solo 401k, however Roth 401k can be rolled over into Roth Solo 401k.
Typically if you have 401k with the current employer in most cases you will not be allowed to move the funds out. There are few exceptions to that, you should contact your 401k plan administrator in inquire about 'In-services distribution'. In addition to that if you reach normal retirement age you will be able to rollover your employer 401k even if you are still employed there.
Hope this helps!
1 Reply
Jesus R.
San Antonio, TX · Member since 2014 · 13 posts · 4 votes
11y
Thanks @Doreen Chaisson @Mike McDermott @Dmitriy Fomichenko
and other for your inputs; I have learned quite a bit in this website. I have read here the difference between the Roth SDIRA and the Roth 401K and two that understandably keep coming up is the UBIT tax and the LLC setup fees. If I understand it correctly UBIT tax only applies if I borrow money to buy a real estate investment property, correct? I only have a small amount on a Roth 401k from my previous employer (close to 15k) so at this time my only option would be to use part of my Roth IRA to purchase a piece of property I recently came across out right, without borrowing money. Thanks in advance for any input/advise and God Bless!
0 Reply
Doreen Chaisson
Professional · Portsmouth, NH · Member since 2014 · 175 posts · 108 votes
11y
If I understand you correctly, you are planning to combine personal funds and your Roth IRA funds as tenants-in-common on the purchase of investment property? This is allowable, with the following caveat: there is a prohibited transaction called "enabling". Enabling means using IRA funds to enable a personal investment. Since your IRA is putting down such a small amount, and your personal funds are financing the lion's share of the investment, if you are ever audited you will be asked to prove you did not need the IRA's money to make the investment - that you had other personal cash/assets on hand you could have used, but chose to use the IRA to include it in a good investment opportunity. If, on the other hand, you've scraped together every last personal penny you have, and are just falling shy of the amount needed, so are using your IRA funds to bridge that gap, then it would be considered enabling.
If enabling is a non-issue, there are a couple of other things to keep in mind: First, expenses generated by the property must be paid proportional to ownership. If the roof or furnace need fixing, or there's a tax bill due, those bills have to be paid by you and your IRA, proportional to ownership percentages. Similarly, any income generated by the property need to be split proportionally between you and your IRA's ownership. If you don't have a property manager collecting the rent, your tenants will have to write out TWO rent checks each month - one to you and the other to your IRA.
You and any disqualified parties are prohibited from using the property, living in the property, or making any repairs or doing maintenance or upkeep on the property. You'll need to hire outside vendors for these items.
0 Reply
Mark Nolan
Professional · Carlsbad, CA · Member since 2012 · 12k+ posts · 1k+ votes
11y
The solo 401k contribution limits have increased for 2015:
Salary Deferral/Employee Contribution: 18,000 in 2015, or $24,000 if age 50 or older.
Employer Contributions/Profit Sharing: 25% of compensation as defined by the plan.
Source:
http://www.irs.gov/Retirement-Plans/One-Participant-401%28k%29-Plans
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