Rollover 401k to fund Real Estate business

5 Replies

I've read through the other solo 401k threads but so far I haven't found an answer to my situation.

I have a current 401k plan through my full-time employer.  I also have a small business on the side as a sole proprietor.  Can I rollover the 401k with my current employer to a solo 401k that I start with my business?  Or can you only rollover from a 401k from a previous employer?  

Thanks to everyone who replied to my earlier question about repair costs.

I don't think you can do what you are asking. However, you should contact your 401k custodian and ask them directly. My current 401k limits me from transfering funds to a different 401k. But back in 2004, my company was bought out and I rolled over my funds into a self directed IRA, and used that to purchase real estate.

With that said, even if you had the option to roll over into another 401k, I would advise against it. A self directed IRA is what you really want. Also, you should consider starting a Roth self directed IRA and consult with a CPA. The tax benefits are way better with a Roth. Just don't roll your 401k into a Roth, otherwise you will be hit with taxes.

Bottom line.... Consult with a CPA.

@Mimi Booker

Unless you are age 59 1/2, you will most likely not be able to transfer your existing employer 401k funds to a solo 401k  for the following reasons.

Employee contributions under a 401(k) plan are subject to more restrictive provisions than profit sharing dollars. Elective deferrals generally may not be distributed including processing a transfer to an IRA before one of the following triggering events occurs:

  • attainment of age 59½,
  • plan termination

Employer profit sharing contributions can be distributed/transferred to an IRA or another 401k such as a solo 401k after a 2 year holding period has met even if the participant is under age 59 1/2. However, if the participant is over age 59 1/2 the profit sharing contributions can be distributed/transferred to an IRA or a self-directed solo 401k at anytime.

However, if you have any funds in your existing 401k that you transferred from other IRAs or former employer 401k plans, you will most likely be able to transfer those to a solo 401k plan.The following IRS website sheds light on participating in multiple 401k plans.

I just checked you can roll part or all of your 401k to any traditional ira then set up your solo 401k and take a distribution as long as you put money in solo 401k with-in 60 days no tax issues. Make sure you contact ira provider let them know you intend to put into another qualified plan and not to with hold the 20% tax withholding they will make sign several forms to promise your putting in another qualified plan. It's common for low level customer service to insist they have to withhold 20% it's a way to pressure people from not taking money out so you might have to go a few levels up. Good luck

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