If a rental property that you owned had been sold and you had the opportunity to buy it back using your Solo 401k, is there any sort of time limit between transactions so that it would not be considered prohibited?

Neil, your 401K can’t buy the property that you personally owned, ever.

Hi, is "Solo(401k) for small business" that opened with TDAmeritrade and "Self Directed solo 401(k)" are same thing.

also is "Self directed IRA" is another name for this... these 3 things are same or different?

Very good and thank you. 

@Raj G.

TD Ameritrade as custodian for your Solo 401k has limited investment choices, all confined to the stock market.

Truly self-directed Solo 401k does not have investment limitations other than those imposed by the IRS, you can use it to invest in alternative assets such as real estate, trust deeds, etc. 

No, self-directed IRA is not another name for it, it is an IRA that allows alternative investments. IRA is an individual account, anyone can have it. Solo 401k is employer sponsored plan, you need to have small business or legitimate self-employment activity in order to be eligible for it.

@Dmitriy Fomichenko

Is it fair to say that you cannot fund your own LLC with your solo 401k because that flows back to your personal tax return, but you could buy shares in a C-corp?

Neil, you can't fund you LLC with your 401K because it is "disqualified party" to your 401K. All transactions involving your 401K must be arms length.

@Neil Copeland

At issue is that there may not be an direct or indirect transactions or provision of benefit (in either direction) between a tax exempt retirement plan and a disqualified party as defined in IRC 4975.  Disqualified parties include:

Account holder

Spouse if married

Lineal antecedents; parents, grandparents, etc.

Lineal descendants; children, grandchildren, etc.

The spouse of a descendant

An entity such as a business or trust where one or more of the above have control via equity or directors role

A self-directed IRA or 401(k) cannot be used to do something that "you" want or need to accomplish. It is purely a means to diversify the retirement plan with the potential of creating better results for plan savings.

@Raj G.

A self-directed Solo 401k typically refers to a plan that allows for investment into alternative assets such as real estate. A Solo 401k with TD Ameritrade or other brokerage firms would be much more restrictive. A self-directed IRA is similar to a self-directed Solo 401k, but the 401k carries many advantages. Compared to an IRA, Solo 401k contribution limits are roughly 10x higher and there is no custodial requirement for the 401k. You can take participant loans from the 401k, you don't need the additional expense and administration of an LLC to have checkbook control, and there is a built in-Roth component. A spouse can also participate in the same Solo 401k plan, there are additional tax benefits compared to an IRA when investing into leveraged real estate, and there is generally greater privacy. Finally, the plans are often quicker to setup and cost less money over time especially compared to most IRA LLCs.

Thanks @Justin Windham @Dmitriy Fomichenko and all

since I have "Solo 401k with TD Ameritrade" , should I open a new "Solo self directed 401(k) account so that I can invest in real estate.

can I rollover my money from "Solo 401k with TD Ameritrade" to  "Solo self directed 401(k)"

for 2019 if I open new Self directed solo 401(k) then should I invest here directly or first in TDAmeritrade solo and then rollover.

Thanks again.

@Raj G.

You will need a self-directed Solo 401k from a specialty firm in order to invest your retirement funds into real estate. I'd recommend reaching out to a few of the providers who regularly post to these forums. You would be able to move your current Solo 401k funds over to the self-directed Solo 401k. Usually when people do this, the self-directed plan is setup as a restatement of the previous plan and subsequent contributions are made directly to the self-directed plan.

@Raj G.

If you already have existing Solo 401k plan you can't setup a new one. If your goal is to gain control over your retirement assets you can convert your current TD Ameritrade Solo 401k plan into "self-directed" by amending and restating plan documents. Feel free to PM me for details. 

@Dmitriy Fomichenko @Brian Eastman

Thank you both.  Someone should make a simple, clear, 3rd grade level video of "what you want to do with your Solo 401k, but can't".  Moving on.

Ok then, is it allowable to say buy a boat, a piece of land, a lawnmower for that matter, and then lease that equipment to an operating company to which I have no interest?  You have no active part in the operations of those assets but receive passive income from those assets.  I guess like buying a rental property, hiring someone to manage the property, and you just receive the income from the property.

Neil,

It’s not as simple as it may seem. First, as disqualified person you are not allowed to touch that boat or lawnmower. So it might be difficult logistically to have a third party handle all of what is involved. Second, owning boat lawnmower leasing business in your 401K would result in UBIT tax. 

I personally think that being a private lender and invest in notes with your 401K is the best investment. You can start relatively low, it’s completely passive, double digit returns and low risk.

So confused.  So I can buy a rental property and lease it to someone, but I cant buy a lawnmower and lease it to someone?

Neil, you can. Buying a property in your 401K is pretty straight forward, I've done it, hundreds of my clients done it. This is passive investments, property manager handles all issues and interacts with the tenants, collects the rent and pays the bills. All income is sheltered.

Never bought a lawnmower to lease, and don't know anyone who has, therefore can't really provide you any guidance on that. Just trying to analyze is hypothetically: you need someone to pick up those machines from the dealer/store, you need to store them somewhere, you need to service them, etc. etc. You can't do it yourself and I don't know if there is any company out there that offers "lawnmower property management" service. Also it seems like an active business to me (not passive investment), which means that all income will be subject to Unrelated Business Income Tax, up to 37%, inside of your 401k. Then when you take distribution from your 401k - you will have to pay ordinary income tax. Such investment doesn't make sense to me.

Thanks for playing along. I am not doing this as an academic example, but more to see what else is possible besides traditional real estate. I saw a video of yours today ( well done by the way) and understand you are an engineer as well. Maybe this helps with how I think. 

The lawnmower is an extreme example to make a point. Someone wants to start a lawn care business, for example, but cannot purchase the equipment. I buy it, but they pick it up, service it, and lease it from me.  They finish the lease and I sell it.

One other thing. Did I catch a clip in one of your videos about where you could invest in a C corporation?

You can own shares of C-corp with your 401k, or you can lend do it. 

@Dmitriy Fomichenko

Dmitriy, thank you for all of your help, and everyone else as well.  I am thinking I can know move beyond the legal issues and on to some real strategy....

Originally posted by @Neil Copeland :

The lawnmower is an extreme example to make a point. Someone wants to start a lawn care business, for example, but cannot purchase the equipment. I buy it, but they pick it up, service it, and lease it from me.  They finish the lease and I sell it.

 You might be able to make something like this work, but the simpler method would likely be to loan money to this person from your 401k. That would be clearly passive and would avoid some of the logistical issues that would otherwise needs to be ironed out.