I'm really confused with the whole self directed IRA/Solo K

[Account Closed]

I've been doing some reading online, and I'm really confused with the whole checkbook writing Solo 401K. I thought I read it somewhere that you can transfer your Roth IRA to a checkbook writing Solo 401K (I don't remember where I read it now), but then I just read somewhere else that you can't do it. So which is it?

When my husband left his previous jobs, he rolled his 401K into a Roth IRA and a Traditional IRA. I was wondering if we can roll those accounts over/transfer it to a check writing Solo 401K. My husband is doing some consulting job on the side right now so I believe he can open up a Solo 401K instead of a SEP.

Can you roll a SEP IRA into a Solo 401K? We are not quite ready to invest yet so should my husband open up a Solo 401K so he can make contributions into it for this year (to help lower his taxes) even though we aren't ready to invest yet.

[Dmitriy Fomichenko]

Helen,

If your husband doing consulting on the side he is considered self-employed and as such he is eligible to open a truly self-directed Solo 401k plan. He then can rollover almost any other type of retirement account into it with the exception of Roth IRA. IRS does not allow Roth IRA to 401k rollover.

If you wish to self-direct Roth IRA it can be rolled over into self-directed Roth IRA. 

Both Traditional IRA and SEP IRA can be easily rolled over into Solo 401k. And you are right, Solo 401k has really high contribution limit comparing to a Traditional IRA (up to $60,000 per year per participant) so this can also be great tax sheltering vehicle.

When you say "we are not quire ready to invest yet" I'm assuming you are talking about real estate investing? Well, with the truly self-directed Solo 401k your investment options are virtually limitless! You can invest in non-traditional investments such as real estate as well as traditional such as stock, bonds and mutual funds. And while you are waiting for the right investment opportunity you can always deploy your funds into short term private lending, that is what I do, most of my retirement funds are invested in short term or long term trust deeds. You may also consider trust deed fund. The benefits of private lending is it is totally passive, low risk and predictable returns.