All Forum Posts by: Derek Bennetsen

If the profits are from passive investments such as real estate then there will be no UBTI. However, if the income is from an active business and passed on to the 401k then it will be subject to Unrelated Business Income Tax.

Is using the Solo 401k LLC to invest in real estate crowd funding considered passive and therefore exempt from UBTI?

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Originally posted by @Brian Eastman:

@Derek Bennetsen

To clarify, a Solo 401k is specifically exempted from taxation on Unrelated Debt Financed Income (UDFI) when the plan acquires real property using a mortgage. If the LLC is wholly owned by the plan and used to acquire property, then that exemption will remain in place.

I believe UDFI exemption requires non-recourse funding be used when done through a Solo 401k.

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New to the website. Great forum!

I have a Solo401k Trust and am in the process of creating an LLC that is owned and operated by the Solo401k Trust. The LLC will be used to purchase real estate with funds from the Solo 401k Trust. The hope is the LLC will shield the greater assets of the Solo401k Trust in the event of litigation.

When investing in real estate with a Solo401k, profits are not subject UBTI. If profits are realized by the LLC and passed back through to the Solo401k, are they now exposed for UBTI?

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All Forum Posts by: Derek Bennetsen

Derek Bennetsen has started 2 posts and replied 13 times.

Post: Solo 401k -> LLC -> UBTI

Post: Solo 401k -> LLC -> UBTI

Post: Solo 401k -> LLC -> UBTI