401k Self Directed Checkbook Profit Sharing SOLO CHIME IN PLS

Dmitriy Fomichenko
Solo 401k Expert · Anaheim Hills, CA · Member since 2012 · 18k+ posts · 6k+ votes
8y
Mark, check out this discussion, I'm sure you can learn a ton there:
https://www.biggerpockets.com/forums/51/topics/527...
2 Reply
Mindy JensenPro Member
BiggerPockets Money Podcast Host · Longmont, CO · Member since 2014 · 7k+ posts · 10k+ votes
8y
Hi @Mark Robinson . Are you self employed right now with no employees other than a spouse? If not, then the SD solo 401k is not available to you.
I think the SDIRA is the only option. @Dmitriy Fomichenko can share the requirements on this one, I don't have a SDIRA, only the solo k and can't remember what that one entails.
The good: an excellent way to invest in real estate. The Bad: I can only invest each dollar once, so many deals, so little time... The ugly: haven't found it yet.
[email protected]Podcast Guest on Show #261
1 Reply
Mark Robinson
OP
Rowlett, TX · Member since 2018 · 19 posts · 6 votes
8y
I will go to the link @Dmitriy Fomichenko sent out and read. I have read allot of blogs in here on this but figured someone lost there shirt somewhere sometime. Thanks for the reply @Mindy Jensen.
0 Reply
Dmitriy Fomichenko
Solo 401k Expert · Anaheim Hills, CA · Member since 2012 · 18k+ posts · 6k+ votes
8y
Mark, I'm sure there are those who lost their shirt but keep in mind that you can also lose your shirt if you invest your personal savings. It all comes to what you are investing in, what is your experience with that, and proper due diligence...
When it comes to investing with self-directed IRA or Solo 401k - you can also lose your shirt to penalties and taxes if you don't follow the rules so it is important to understand and abide by the rules before diving in.
2 Reply
Justin WindhamPro Member
Banker · Nationwide · Member since 2015 · 4k+ posts · 1k+ votes
8y
@Mark Robinson
You've received some good info so far. I'd suggest reaching out to a few providers of self-directed accounts to see which type will be a good fit for you and get a feel for some of the variations in pricing, support, etc. The Solo 401k is usually the best choice for those who are eligible. Whether you use a Solo 401k or a self-directed IRA, understanding prohibited transactions is important. The flexibility these accounts offer can really make a huge difference for those who used to be restricted to the stock market.
1 Reply
Carl FischerPro Member
Rental Property Investor · Ambler, PA · Member since 2015 · 2k+ posts · 1k+ votes
8y
@Mark Robinson
Good- builds and preserves wealth
Bad-signing personally on a plan loan.
Ugly-The biggest thing that blows up a solo 401k is not running the plan like a 401k- not following the regulations and reporting requirements. Get proper help.
[email protected]215-283-2868
2 Reply
Mark Robinson
OP
Rowlett, TX · Member since 2018 · 19 posts · 6 votes
8y
Thanks @Dmitriy Fomichenko, @Justin Windham, and @Carl Fischer.
Sorry Dmitriy what I meant by loosing their shirts was by doing something wrong according to the IRS or loosing money due to being penalized by the IRS, I could have stated it much better.
I think that's basically what the 3 of yall are collectively saying.... How would one know or find out if the firm, person, Broker, or Entity is guiding you correctly? If they guide you wrong they are not penalized - the investor is.... When I go to a doctor for surgery - I like to know how they are rated with patients and there are ways to find out about lawsuits against them or malpractice... normally I use referrals for things like this. If I hire a contractor - I want to see past work and talk to past customers and see ongoing job sites.
How does one know if they are working with a entity is doing everything right.... what is the recourse if something goes wrong that's not the 401k owners fault?
0 Reply
Mark Robinson
OP
Rowlett, TX · Member since 2018 · 19 posts · 6 votes
8y
Sorry @Mindy Jensen I am a w2 wage earner but I also maintain my church 2 acres, bushes and flower beds for money for 22 weeks out of the year and put in some color during winter. I also mow a ladies home of 2 acres for 22 weeks a year as well.
I do own and personally manage 2 rental properties - it does take time to do that and we recently sold a rental property that depreciated out. I am married.
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Justin WindhamPro Member
Banker · Nationwide · Member since 2015 · 4k+ posts · 1k+ votes
8y
@Mark Robinson
You are right, ultimately it is your responsibility to make sure you are following the rules with your plan. Using referrals and reviewing testimonials can help make sure you are working with a reputable provider. A good firm will not only be able to explain what you can and can't do with a plan, but they'll also be able to show you why certain actions are not allowed by linking you to official guidance and the specific parts of internal revenue code that the guidance is based on. It is always recommended that you seek advice from a qualified professional if you are in doubt about the laws or how they boil down to what you can and can't do with your retirement savings.
0 Reply
Carl FischerPro Member
Rental Property Investor · Ambler, PA · Member since 2015 · 2k+ posts · 1k+ votes
8y
@Mark Robinson
@Mindy Jensen questions are pertinent as the contributions come from your salary and the company and it seems the lawn business only provides so much is one concern I see.
Plan provider, plan administrator, plan trustee/owner can all be the same person which would be you. However you can higher help to provide expertise which is almost mandatory if the plan has employees under ERISA. We recommend you use an professionals even for solo 401ks.
In any case the business owner is ultimately in charge and the one penalized. The buck always stops at the owner. Sure you can suit everybody, show you paid professionals, and did your best and correct anything that was done incorrectly but if it wasn’t fraud there should be minimal consequences.
[email protected]215-283-2868
0 Reply
Joe Tomko
Specialist · Easton, PA · Member since 2018 · 136 posts · 48 votes
8y
Mark, I have a full time job and also a solo 401 (k). I started the plan off of my business, which is an LLC taxed as a C-Corp. while I'm not contributing a lot, I'm really able to better invest the principle better than I could when it was with my previous employer.
While not specifically prohibited, many have advised me that you cannot roll over Roth moneys. However, when contributing, you can designate moneys as Roth. I think you can also convert to Roth once the money is in the account, but I'm not sure.
1 Reply
Mark Robinson
OP
Rowlett, TX · Member since 2018 · 19 posts · 6 votes
8y
I appreciate all the excellent comments. I am sure the text for what one can and cannot do from the IRS and any other governing bodies is long and difficult to totally understand and may be open to interpretation - I know many things with the IRS are.
I am not a dirty harry and just whipping my guns out and firing away with my 401k - I would use it as it was explained to me. If it was explained wrong or explained correctly but interpreted wrong is where my worries are.
Anyone have any clients get audited or go off the rails and not follow advice and get spanked by the IRS? What was the consequences?
0 Reply
Justin WindhamPro Member
Banker · Nationwide · Member since 2015 · 4k+ posts · 1k+ votes
8y
@Joe Tomko
Roth IRA funds cannot be transferred to a Solo 401k (or anything besides another Roth IRA). Other Roth fund types may be transferred, so it depends on the specific account type. If the plan allows for it, Roth 401k funds may be contributed and non-Roth funds may be converted to Roth within the plan.
1 Reply
Justin WindhamPro Member
Banker · Nationwide · Member since 2015 · 4k+ posts · 1k+ votes
8y
@Mark Robinson
Most transactions that you would consider are either clearly allowed or clearly prohibited under the rules. There are some areas that could be considered "gray" but I don't think you'd spend much time in that zone based on how you've described your 401k use. Still, it's easy enough to stay conservative and avoid any transactions that fall within uncertainty.
https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-tax-on-prohibited-transactions
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