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All Forum Posts by: Mark Nolan

Mark Nolan has started 1 posts and replied 12375 times.

Post: Flip with Hard Money

Mark NolanPosted
  • Professional
  • Carlsbad, CA
  • Posts 12,855
  • Votes 1,381

It also may be best to process the investment inside a solo 401k plan instead if you qualify. 

Following are the similarities and differences between the solo 401k and the self-directed IRA.

The Self-Directed IRA and Solo 401k Similarities

  • Both were created by congress for individuals to save for retirement;
  • Both may be invested in alternative investments such as real estate, precious metals tax liens, promissory notes, private company shares, and stocks and mutual funds, to name a few;
  • Both allow for Roth contributions;
  • Both are subject to prohibited transaction rules;
  • Both are subject to federal taxes at time of distribution;
  • Both allow for checkbook control for placing alternative investments;
  • Both may be invested in annuities;
  • Both are protected from creditors;
  • Both allow for nondeductible contributions;
  • Both are prohibited from investing in assets listed under I.R.C. 408(m); and
  • Neither may be invested in your own business.

The Self-Directed IRA and Solo 401k Differences

  • In order to open a solo 401k, self-employment, whether on a part-time or full-time basis, is required;
  • To open a self-directed IRA, self-employment income is not required;
  • In order to gain IRA checkbook control over the self-directed IRA funds, a limited liability company (IRA LLC) must be utilized;
  • The solo 401k allows for checkbook control from the onset;
  • The solo 401k allows for personal loan known as a solo 401k loan;
  • It is prohibited to borrow from your IRA;
  • The Solo 401k may be invested in life insurance;
  • The self-directed IRA may not be invested in life insurance;
  • The solo 401k allow for high contribution amounts (for 2016, the solo 401k contribution limit is $53,000, whereas the self-directed IRA contribution limit is $5,500);
  • The solo 401k business owner can serve as trustee of the solo 401k;
  • The self-directed IRA participant/owner may not serve as trustee or custodian of her IRA; instead, a trust company or bank institution is required;
  • When distributions commence from the solo 401k a mandatory 20% of federal taxes must be withheld from each distribution and submitted electronically to the IRS by the 15th of the month following the date of each distribution;
  • Rollovers and/or transfers from IRAs or qualified plans (e.g., former employer 401k) to a solo 401k are not reported on Form 5498, but rather on Form 5500-EZ, but only if the air market value of the solo 401k exceeds $250K as of the end of the plan year (generally 12/31);
  • When funds are rolled over or transferred from an IRA or 401k to a self-directed IRA, the amount deposited into the self-directed IRA is reported on Form 5498 by the receiving self-directed IRA custodian by May of the year following the rollover/transfer.
  • Rollovers (provided the 60 day rollover window is satisfied) from an IRA to a Solo 401k or self-directed IRA are reported on lines 15a and 15b of Form 1040;
  • Pre-tax IRA contributions on reported on line 32 of Form 1040;
  • Pre-tax solo 401k contributions are reported on line 28 of Form 1040;
  • Roth solo 401k funds are subject to RMDs;
  • A Roth 401k may be transferred to a Roth IRA (Note that from a planning perspective, it may be advantageous to transfer Roth Solo 401k funds to a Roth IRA before turning age 70 ½ in order to escape the Roth RMD requirement applicable to Roth 401k contributions including Roth Solo 401k contributions and earnings.);
  • Roth IRA funds are not subject to requirement minimum distributions (RMDs);
  • The fair market value (FMV) of assets held in a self-directed IRA is reported on form 5498;
  • The fair market value of assets held in a solo 401k are reported on Form 5500-EZ;
  • At termination, the solo 401k is required to file a final Form 5500-EZ and 1099-R; and
  • At termination, the self-directed IRA is only required to file a form 1099-R.

Post: Old 401k to Solo 401k or Old 401k to New 401k transfer?

Mark NolanPosted
  • Professional
  • Carlsbad, CA
  • Posts 12,855
  • Votes 1,381

@Anna L.

If you are unsure about the solo 401k, you could always look to borrow from your existing 401k plan and then invest those borrowed funds in real estate, our you could transfer the funds to the solo 401k and then borrow from the solo 401k plan. You may also be able to process a partial transfer from the 401k if it is a former employer plan. 

Post: New Investor in Greater Seattle Area Looking to Network and Learn

Mark NolanPosted
  • Professional
  • Carlsbad, CA
  • Posts 12,855
  • Votes 1,381

@Colt Savage

Welcome to Bigger Pockets. Make sure to check out the very informative blogs.

https://www.biggerpockets.com/blogs

Post: newbies from salt lake city utah

Mark NolanPosted
  • Professional
  • Carlsbad, CA
  • Posts 12,855
  • Votes 1,381

@Courtney Harris

You have come to the right place to connect with the wide array of real estate professionals and investors. Make sure to view the Bigger Pockets book store: https://www.biggerpockets.com/store

Post: Hello everyone. Looking forward to getting to know you all.

Mark NolanPosted
  • Professional
  • Carlsbad, CA
  • Posts 12,855
  • Votes 1,381

@Ben Booker

Welcome to Bigger Pockets. A great resource is the webinars section of the website. https://www.biggerpockets.com/proreplay

Post: New Investor Out of Nashville, TN

Mark NolanPosted
  • Professional
  • Carlsbad, CA
  • Posts 12,855
  • Votes 1,381

@Enrique Selman

Welcome to Bigger Pockets. Make sure to listen to the podcasts. They are very informative, and contain ample information. https://www.biggerpockets.com/blogs/

Post: New to BP from Midland, Virginia (Fauquier)...got the itch!

Mark NolanPosted
  • Professional
  • Carlsbad, CA
  • Posts 12,855
  • Votes 1,381

@Adam Wise

Welcome to Bigger Pockets. The Bigger Pockets book store if full of great books: https://www.biggerpockets.com/store

Post: Newbie from Carteret, NJ!

Mark NolanPosted
  • Professional
  • Carlsbad, CA
  • Posts 12,855
  • Votes 1,381

@Navjot Banwait

Welcome to Bigger Pockets. Make sure to check out the very informative blogs.

https://www.biggerpockets.com/blogs

Post: Newbie from Wilmington, North Carolina

Mark NolanPosted
  • Professional
  • Carlsbad, CA
  • Posts 12,855
  • Votes 1,381

@Jajuan Thomas

You have come to the right place to connect with the wide array of real estate professionals and investors. Make sure to view the Bigger Pockets book store: https://www.biggerpockets.com/store

Post: Moving to Sacramento and getting into small multi family rentals

Mark NolanPosted
  • Professional
  • Carlsbad, CA
  • Posts 12,855
  • Votes 1,381

@Brandon B.

Welcome to Bigger Pockets. Make sure to read the Beginner’s Guide: http://www.biggerpockets.com/real-estate-investing