Physician and Solo 401 as Real Estate Agent

[James Meyer]

Hi,

I am a physician employed at a university hospital with W2 income. I have 403 and 457 retirement accounts through my employer.

I plan to get my real estate broker license this year and I wonder if I am eligible for solo 401 as a real estate agent. 

I would appreciate your input. Thanks.

Jim


 

[Brett Synicky]

Quote from @James Meyer:

Hi,

I am a physician employed at a university hospital with W2 income. I have 403 and 457 retirement accounts through my employer.

I plan to get my real estate broker license this year and I wonder if I am eligible for solo 401 as a real estate agent. 

I would appreciate your input. Thanks.

Jim


 

 Hello Jim, you need legitimate self employment activity and no w2 employees (other than spouse) working more than 500 hours annually.  The business that sponsors the Solo 401k would need to be in business and earn money.  IRS expects people to have up and down years in business but the intent would need be to make money.  Also as others have stated you would not be able to take advantage of the employee and employer contributions if the business doesn't make money.  You could however roll over your 403 and 457 into the Solo and start make investments.  

If you don't intend to operate an actual real estate sales business even if super part time then you're better off looking at a Self Directed IRA. The downside is if you invest in real estate the income from the financed portion of the real estate will be subject to UBIT TAX.

Talk to a qualified tax professional before doing anything of course.