Selling an asset to a self directed 401K

4 Replies

I own a tri-plex with a partner 50/50.  i plan to sell her my half interest for the debt plus 100K with no cash changing hands.  I will then sell a property owned by my 401K.  With those funds I will purchase the property I sold to my partner taking out the full debt and giving her 100K.   These are two separate transactions.  will this be allowed under the rules for self directed 401k's

@Monte Young

What you propose would not be allowed.  Ultimately you are transferring your personal interest to the Solo 401k.  The IRS rules prohibit any direct or indirect transactions between your plan and a disqualified person.  This would clearly be an indirect transaction.

@Monte Young

When dealing with the prohibited transaction rules, staying in compliance often requires considering the "spirit" of the law in addition to the "letter" of the law. This is why the separation you mention would not allow you to be compliant with the rules. Unless you are contributing funds to your plan from self-employment earnings, you cannot take an asset you own currently and put it into your Solo 401k.