All Forum Posts by: George Blower
George Blower has started 0 posts and replied 3584 times.
Post: Non-recourse loan concerns

- Retirement Accounts Attorney
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If you are self-employed with no full-time w-2 employees, you can set up a Solo 401k which allows for investing in real estate. Unlike an IRA, there is an exception to UDFI for income derived from real estate owned by the Solo 401k and acquired with non-recourse debt.
Post: What Questions Should I Ask the Self Directed IRA Provider??

- Retirement Accounts Attorney
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Originally posted by @Zach Lemaster:
@Brian Eastman Thank you for clarifying. So just to make sure I understand you completely. For buy and hold RE, a SDIRA would be subject to UDFI tax, but a solo 401(k) would not correct? I appreciate you breaking this down for me and everyone else interested in this.
If you are self-employed with no full-time w-2 employees, you can set up a Solo 401k which allows for investing in real estate. Unlike an IRA, there is an exception to UDFI for income derived from real estate owned by the Solo 401k and acquired with non-recourse debt.
Post: Using a Solo 401k to buy Rentals

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@Chuck Bartowski
You can have a Solo 401k even if you have a w2 job provided that you are separately self- employed with no full-time w2 employees (e.g. if you are reporting self employment income on Schedule F).
Post: Why Buy Real Estate in Your (IRA) Retirement Accounts?

- Retirement Accounts Attorney
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@Account Closed
Congrats and great post!
Keep in mind: If you are self-employed with no full-time w-2 employees, you can set up a Roth Solo 401k which enjoys certain advantages over a Roth IRA.
Higher Contribution Limits:
- Roth Solo 401k accounts enjoy much higher contribution limits than Roth IRA accounts.
- For example, if you select a Solo 401k provider which allows for voluntary after-tax contributions and in-plan conversion to a Roth sub-account (and you have sufficient self-employment), you would be able to make a combination of Roth and voluntary after-tax contributions for 2019 which would result in up to $56,000 (or $62,000 if you are 50 or older) in your Roth Solo 401k sub-account.
Exempt from Unrelated Debt Finance Income Tax:
- While investment income from real estate that is acquired with debt (which must be non-recourse financing) and held in a Roth IRA is subject to UDFI tax, the same property held in a Solo 401k is generally exempt from UDFI tax.
Post: Using a Solo 401k to buy Rentals

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1. First, I gather that (i) you and your spouse are self-employed; and (ii) you do not have any full-time w-2 employees (i.e. working 1000 hours or more per year) working for your self-employed business or otherwise working for you. Given this understanding, you would be eligible to establish a self-directed Solo 401k which allows for investing in real estate.
2. If you are self-employed with no full-time employees, you can set up a Solo 401k through a 401k provider which allows for investing in real estate. In that case, you can simply have the account at a bank or brokerage where you will have direct checkbook control.
3. All of the income and expenses will need to flow in and out of the retirement account.
4. If you will you debt to acquire the real estate, it must be non-recourse financing. See more at the following link: https://www.biggerpockets.com/blogs/9552/70408-ira...
5. You can't live on the property or otherwise use it for personal use.
6. You can't work on the property as it must be a passive investment (e.g. you must hire someone to fix the toilet and can't pay the expense with non-retirement funds).
7. You must purchase/sell real estate from/to an unrelated person and the real estate can't be titled in your name personally (e.g. in the case of the 401k, it would be titled in the name of the 401k and you would sign as trustee of the 401k).
8. You should verify that you are eligible to transfer the funds from your existing retirement account (e.g. if the funds are in your current employer 401k, you will likely not be able to transfer until you quit your job).
Post: TD Ameritrade's QRP and ROBS

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In short: TD Ameritrade's plan is not compatible with a ROBS and while plan compability is certainly essential it is just one of many important considerations in choosing a ROBS provider.
Here is a good outline of important considerations in choosing a ROBS provider: https://www.nerdwallet.com/blog/finance/how-to-choose-the-right-robs-provider-when-financing-a-business/
Post: HELOC on a SFH owned in your Solo 401k

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- While the contributions can be withdrawn from a Roth IRA before the earnings, any early withdrawal from a Roth 401k is subject to the pro-rata rules which means that you must take both the basis and the gains.
Post: Start a business just so I can have a Solo 401(k)?

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A 401k allows participants to save earned income - so you can't save more than you earn (i.e. you can't contribute inherited funds).
Post: Starting out in Oklahoma

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While it is certainly possible to invest in real estate via a Self-dircted IRA or 401k, please keep in mind that there are important rules to follow - for example, you can't work on the property, can't use the property for personal use, etc.
Post: Successful experiences with Self Directed IRA for buy and hold

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I suggest that you interview a few providers and as you do so here are some issues to consider:
1. In order to have checkbook control, the IRA account will need to be at a trust company that will allow the IRA to invest in an LLC (where you will be the manager and your IRA will be member - an as manager you will have checkbook access to the LLC bank account). Therefore, you will want to confirm that the trust company allows for investing in an LLC and the associated fees and minimim balance that applies to the IRA account.
2. Confirm that the IRA LLC provider will prepare all of the documents needed to not only form the LLC (articles of organization, SS-4 to obtain an EIN) but also the documents needed by the trust company to process the investment of IRA funds in the LLC.
3. Confirm that the provider has experience with the particular investments in which you intend to invest your retirement funds as you very likely will have questions in terms of the mechanics (e.g. how do you invest in real estate, etc.).
4. Confirm that the provider has a pristine reputation (e.g. Better Business Bureau reviews, etc.).
5. In addition, if you are self-employed with no full-time employees you may wish to consider opening a Solo 401k instead of a self-directed IRA as it has several advantages over an IRA LLCsuch as much higher contribution limits, direct checkbook control (i.e. no need to have the account at a speciality trust company), ability to take a 401k loan, exclusion from unrelated debt finance income tax with respect to investment in real estate acquired with non-recourse financing, etc.