Rental Property Investor · Austin, TX · Member since 2016 · 18 posts · 14 votes
My father set up a solo 401k in which he owns a paid for duplex. No mortgage. We’re trying to figure out how we can get access to capital that we can use to purchase more real estate outside of the solo 401k without pulling money out of the 401k and paying taxes.
Is it possible to get a HELOC on a paid for property that is owned by the solo 401k and then use that HELOC to purchase properties outside of a retirement account?
I have not seen any of those lenders offering HELOC, it would be a loan, check the terms at the link above. This would be done inside of the 401k, the cash you pull out by refinancing would belong to the 401k. The only way to pull the cash out of the 401k is to take a distribution, which of course would be taxable event, plus penalties if the distributions is taken prior to normal retirement age.
Your (or your father's) 401k can get financing on a property it owns, but that doesn't help you (or your father) get access to funds for investment outside of the plan.
Using your 401k assets or loan proceeds personally would be a prohibited transaction unless a participant loan was taken from the plan.