Self directed 401 (K) vs Solo (K)

[Timothy Wallace]

Newbie here. My strategy is twofold: 1) Buy and hold using BRRRR method and 2) Private money lending. Which vehicle is better suited for this strategy, a Self-Directed 401(K) or a Solo(K)?

[Justin Windham]

@Timothy Wallace

Sometimes the terms can get a bit confusing, especially with some brokerage-type accounts being referred to as "self-directed" because you can choose which stocks and other traditional assets you want to hold. In a more general sense, "self-directed" refers to the types of plans that can invest into alternative assets such as real estate. These plans can offer checkbook control, but some custodians setup Solo 401k plans that can invest into real estate, but do not offer checkbook control.

A self-trusteed, self-directed Solo 401k is the type often discussed on these forums and the type that can be setup by the providers who have responded to your question here. With you serving as trustee, no custodian is required and you can hold the checkbook to your Solo 401k funds. This maximizes your control and flexibility with the account and typically serves to minimize fees as well. Welcome to Bigger Pockets!