All Forum Posts by: Derek Gruening

@Brian Eastman

In which case the C-Corp would still have to pay corporate taxes on that rental income. Correct?

@Brian Eastman

Is there a possibility of putting that asset in an LLC to avoid corporate taxes on rental income? Similar to put investors do with single family residences?

@Brian Eastman

I'm thinking of a situation where my company (a general contracting and development firm) produces a new construction build (single-family or multi). My business specializes in high energy performance, pre-fabricated homes. I could see a scenario where the pre-fab homes stay on the market for quite some time. I'm wondering if there's a possibility to rent out these homes or do lease to own. In that regard, these homes would still be company assets. 

@Mark Nolan, @Brian Eastman

Would either of you two gentleman care to explain why the ROBS C-corp is a bad investment vehicle for passive rentals (buy and hold investments)? I realize that the C-corp must be an "operating company". Could you provide a clearer definition of what that entails? Also, would a "real estate operating company" be more suitable in avoiding potential taxes if the ROBS REOC invested in passive rentals?

@George Blower

Hoping you'd be able to clarify my last question here. 

@George Blower, 

What happens if you own real estate in a Roth SOLO 401k (avoiding UBIT and financed with a non-recourse mortgage) then rollover that asset to (In-Kind service distribution I believe is the technical way of explaining it) a Roth IRA before the mortgage is paid off and is owned free and clear? --Are you then exposed to UBIT since it's in a SDIRA?

Sorry @George Blower I forgot to link you here. 

To resurrect this topic and for me to think in the theoretical...I'm wondering if someone can bring more clarity to this topic. 

Let's say I own 78% of Company A and business partner 1 owns the other 22% of Company A. Company A is an engineering firm with multiple full-time W2 employees. Company A offers a SEP ira plan to the employees. I am also the CEO and president of Company A. 

I start company B with four other business partners with an even 25% split stake in the Company B. Company B is a consulting business with no other full-time employees other than the business partners. See that each business partner are the only employees we have chosen to have Company B sponsor a solo 401k plan. 

Is this all correct? Or am I violating a control group rule (parent-subsidiary, brother-sister, or combined)? Do these percentages matter at all? 

Oh and the plan allows for in-plan Roth conversions. If I didn't say that already

Ok here's another tough topic for me to wrap my head around...

I've recently found out about the mega backdoor roth option for a solo 401k. If the plan allows for me to make after-tax contributions, and I can make roth contributions, I'd like to learn how to set up accounts within the solo 401k. 

Much like this discussion on mysolo401k.net: 

"QUESTION:

Can we make after tax contributions into the Roth 401k account, or only the regular 401k account? If only the regular 401k account, can we move or convert the contribution from regular to Roth? I understand we can roll an after tax contribution to a Roth IRA, but I'd prefer to just leave it in the 401k as a Roth contribution.

ANSWER:

The after-tax contributions will have to be deposited into a separate holding account labeled after-tax. Since both spouses are participating in the same solo 401k plan, and both want to make after-tax solo 401k contributions, two separate brokerage/bank accounts will need to be opened to list their respective solo 401k after tax contributions, and will need to be labeled “after-tax.”

Once the after-tax contributions have been made, the funds can then be converted internally into the Roth solo 401k brokerage/bank accounts for each participant. In sum, after-tax contributions can either be converted internally into the the Roth solo 401k 401(k) accounts or externally into a Roth IRAs." -https://www.mysolo401k.net/mega-back-door-roth-usi...

So what I'm looking to do is make the normal employee contribution of $18K a Roth contribution and the rest would be after-tax contributions into a separate account. Then, if you can explain, how does it work if I want to "convert internally into the Roth solo 401k"? Stop me if I'm understanding this incorrectly. Feasibly, could I make my normal employee $18K Roth Contribution and then $36K of after-tax contributions and convert it interally so that the $36K would grow tax-free/deferred and I wouldn't pay taxes on it when I take distributions?? 

As a somewhat related note... I notice that this backdoor roth option involves typically rolling over to a Roth IRA. What happens to your real estate assets in this rollover? If I'm avoiding the UBIT/UDFI tax in financing real estate with my solo 401k, do I incur penalties or taxes if those assets were moved to a roth ira?