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Tax, SDIRAs & Cost Segregation

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Manuel Segarra III
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  • Denver, CO
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SOLO 401(K) instead of Self Directed IRA

Manuel Segarra III
Pro Member
  • Denver, CO
Posted Oct 8 2019, 20:23

Greetings BP !

Want to use some of my retirement funds to invest !

Wanted to go with Self Directed IRA but that seems cumbersome and having someone between me and money is slow and I don't feel like I am in control of my money ... Found the Solo 401(k) plan which gives me direct control of the checkbook without needing someone else's control or permission !

Does anyone have experience with Sense Financial ?  I know they are a "preferred" business, listed here in BP under the Pro forums.

However, doing my own Due Diligence, hope someone can share an experience or opinion on this company.  They are not accredited with the BBB .... Hmmm ... Looking for some insight !

Thank you in advance !


Respectfully,

Manny3

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Brian Eastman
Pro Member
  • Self Directed IRA & 401k Advisor
  • Wenatchee, WA
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Brian Eastman
Pro Member
  • Self Directed IRA & 401k Advisor
  • Wenatchee, WA
Replied Oct 8 2019, 20:52

@Manuel Segarra III

Are you self-employed with no full time employees?  That is required in order to establish a Solo 401(k) plan.

If not, you can establish a self-directed IRA LLC that also offers checkbook control and is much more efficient for most real estate investors than utilizing a 3rd party custodian as the processing layer.

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Manuel Segarra III
Pro Member
  • Denver, CO
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Manuel Segarra III
Pro Member
  • Denver, CO
Replied Oct 8 2019, 21:09

Thanks for the reply Brian !
I'm currently a full time W2 employee ... 
Setting up an LLC so I can be 'self employed' in the real estate field, with no full time employees.

Was not sure if the LLC owns the Solo 401(k) or vice versa ?

Meeting with a company that sets up Solo 401(k) tomorrow for initial consultation
Have an appt. with a CPA to setup my LLC on 18 Oct, so I will be getting pro advice ...
what do you think Brian ?

Manny3

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Manuel Segarra III
Pro Member
  • Denver, CO
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Manuel Segarra III
Pro Member
  • Denver, CO
Replied Oct 8 2019, 21:23

something like this setup ... look legal and/ or doable ?

Thanks for the guidance Brian !

Manny3

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Brian Eastman
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  • Self Directed IRA & 401k Advisor
  • Wenatchee, WA
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Brian Eastman
Pro Member
  • Self Directed IRA & 401k Advisor
  • Wenatchee, WA
Replied Oct 8 2019, 21:53

This could work.

Put the business activities (flipping and wholesaling) in a separate entity from passive rental holdings.  These activities have different tax and risk profiles and should therefore be segregated.

If you personally run a LLC engaged in flipping and wholesaling, that creates self-employment capable of sponsoring (not owning) a Solo 401(k). Businesses sponsor retirement plans as employee benefits.

You can rollover existing tax-deferred savings into the Solo 401(k) as well as make new contributions into the plan based on income via your flip/wholesale LLC.

The Solo 401(k) can invest passively in real estate, so long as those investments are kept very separate from the other personal investments you are making with non-retirement funds.

When it comes to Solo 401(k) providers, there are document mills and true advisors.  Be sure you find a firm that falls into the latter category.

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Jason Graves
  • Rental Property Investor
  • San Diego, CA
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Jason Graves
  • Rental Property Investor
  • San Diego, CA
Replied Oct 10 2019, 16:58

Yes I used Sensei Finacial to roll over my Adobe 401k to a solo 401k via an s Corp.   


Their pricing is straight forward and simple.  The yearly maintenance cost is 1/2 other companies.  The thing I like most is the fact they are willing to answer questions even after they have our money 

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Manuel Segarra III
Pro Member
  • Denver, CO
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Manuel Segarra III
Pro Member
  • Denver, CO
Replied Oct 10 2019, 17:34

Thanks for the insight Jason ! I'm setting up my LLC next Friday, then I can setup my 401(k) ... Can you take one more moment and share any lessons you have learned , using your 401(k) ? For instance, once you get your money rolled over into the new 401(k), do you then get a bank account and tie it to your 401(k) account ? I understand the prohibited actions ...

Respectfully,

Manny3
Newbie

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Dmitriy Fomichenko
Tax & Financial Services
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#1 New Member Introductions Contributor
  • Solo 401k Expert
  • Anaheim Hills, CA
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Dmitriy Fomichenko
Tax & Financial Services
Pro Member
#1 New Member Introductions Contributor
  • Solo 401k Expert
  • Anaheim Hills, CA
Replied Oct 10 2019, 18:36

@Manuel Segarra III

When you receive a rollover check you would have to open a new bank account in the name of 401k trust and deposit rollover check in this new account. 401k plan assets can't be held in your personal or business account, you must keep them separate.