Solo 401(k) and LLC partnership

[Greg Pugh]

So, I'm looking at creating an LLC, with a financial partnership between my solo 401(k) and myself. So, if I find a place that needs rehabbing, can I pay myself for labor out of the LLC since I have at times done lots of the work myself? Or am I a disqualified person despite the partnership?

[Dmitriy Fomichenko]

@Greg Pugh

I would advise you against this idea of creating an LLC where you and your Solo 401k are members. While simply creating a two-member LLC like this is not a prohibited transaction, what you will do with it may easily lead to a prohibited transaction.

Just focus on growing your 401k independently, invest in a trust deed, buy a rental property, become a private lender, etc. And personally stay away from any transactions involving your 401k.

But at the same time use your personal savings and resources to invest as well, flip, rehab, etc.

I understand it can be tempting to pull the funds together and do a bitter and better deal but in my opinion the risk is not worth it. 

The wise man once said: “Wealth from get-rich-quick schemes quickly disappears; wealth from hard work grows.” (Proverbs 3:11). Be patient and just do what you can for right now and you will see your wealth grow over time.