SD 401k

6 Replies

Hello, I am new and have a newbie question. I am self employed with an S Corp. It is a non real estate business and I am paid as a 1099. I also have a rollover IRA from a previous job. I would like to use the rollover IRA funds to start an investing career in real estate. I have been researching SD IRA vs SD 401k and my understanding is with the IRA the LLC will own the properties and any profits will need to be put back into the IRA not to me. To use now. With the 401k I may borrow up to 50k use it, pay it back and keep profits to invest further. This is more appealing to me and my situation. Any thoughts?

With either of these situations I see there are multiple places on line to start the process. But, I am in need of an attorney and need to change accountants. I feel I am in a which comes first, the chicken or the egg situation? Find a new accountant and turn this over to him/her or is choosing an online service acceptable? Also, any recommendations for an accountant in the western chicago suburbs?

Thanks so much!

Hi Lynn:

The first thing I did with my 401K is to open a Solo 401K. This is great for self employed. This enables me  to use my retirement fund to invest in real estate and I have control of my funds. The company I opened with is Sense Financial. They were very helpful and answered all my questions and concerns. You can talk to Dmitry Formichenko at 949.228.9393. He runs the company. He will walk you through.

I research and talked to about 5 custodians prior to choosing Sense Financial. I felt that they are right for what I'm looking for. Let me know if you have additional questions for me. I'll be happy to answer them.

Best,

Paula

Lynn:

Here's the info on the company:

Dmitriy Fomichenko

Sense Financial Services LLC

Retirement Accounts with Checkbook Control

There are many threads on retirement plan's here, @Lynn Maher . As you read, you'll learn that many of us have rolled our IRA's into self-directed 401k's. There are many reasons, but chief among them is that an IRA limits your contribution to roughly $6k per year, depending on your age, but an SD 401k allows you to shelter over $50k per person, or more than $100k per couple. If you can pay the tax up front, these become Roth contributions and are tax-free forever!

You'll also read that owning real property already has many tax advantages when held outside of a retirement plan that you lose in an IRA or 401k. In this case, many prefer to hold their hard RE assets in taxable accounts and notes, liens, and other paper, which are not tax efficient, in their self-directed plans. Plus, a $50k loan might not buy much real estate. There's no right or wrong answer, but be careful whom you use as an advisor.

When choosing any professionals to help you with your real estate investments, make sure they too invest in real estate. Finding a CPA with both real estate and retirement plan experience shouldn't be too difficult. Attorneys are a different matter. Even real estate lawyers can be very specific, focusing on anything from landlord-tenant law, foreclosure, evictions, property disputes, lending, and securities. This is not the place for a generalist, so wait until you have a specific need in this case.  Good luck.

Thank you @Paula Schafer  I will look into Sense Financial. 

And thank youJeff S Na   You're right there are many threads on this subject and I've been reading through them. Lots of good information and trying to find what fits for me. 50k may not be a lot but there are some properties out here around that price range for a fix and flip. Thanks for the advice regarding an attorney, too!

Always learning :) 

You're welcome Lynn. 

If you roll over a traditional 401k to a Roth 401k what is the charge to do that?

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