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Tax, SDIRAs & Cost Segregation

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Christa S Rickard
  • Tampa, FL
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using solo 401k to invest in real estate business

Christa S Rickard
  • Tampa, FL
Posted Nov 7 2017, 07:04

I currently have a self-directed IRA through Etrade. However, I want to use some of that to start investing in real estate. I know I can't do that directly with Etrade, but will need some special documents to set it up. My question is about real estate investment options using a solo 401k.

I'm starting an investment company with my best friend - either an S corp or LLC. We are both contributing money and will share costs/profits.

I understand the main restrictions on using a solo 401k and keeping the money trail very clear/clean. What I'm not clear about is if I can invest the cash from my solo  401k into the new company while she also invests cash, possibly from her solo 401k, into that same company. When the company starts drawing a profit, each solo 401k gets an equal share (proportional to the percent of cash invested) paid back into the account through the business the same way an investor would receive profits. 

Is this allowed if I'm the trustee of the solo 401k as well as owner/partner of the business in which it's investing?

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