Solo 401k for passive real estate investors who works full time?

3 Replies

Hello,

I work full time and have a 401k through my employer.

I also invest in real estate and own 6 properties which are rented out.

I wonder if I qualify for “Solo 401k”?

Any help/thoughts will be appreciated.

Thanks!

Originally posted by @Neel Shah :

Hello,

I work full time and have a 401k through my employer.

I also invest in real estate and own 6 properties which are rented out.

I wonder if I qualify for “Solo 401k”?

Any help/thoughts will be appreciated.

Thanks!

 You cant. Rental Income is not qualifying income to establish the Solo 401k plan. 

If you were flipping, that would be different story. 

If retirement saving is your main goal, you could structure a property management company to funnel some of your rental income to the PM company and look into establishing the solo 401k. If you do that, you will be converting non-self-employment income to self-employment income and pay extra tax. 

There are other things you can do before going that route if you are concerned about the retirement savings. You need to talk to a CFP for your retirement needs and keep CPA in loop for tax implications.