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Updated over 8 years ago on . Most recent reply
Combining 401k with cash
Can one cover the shortfall of a self directed 401k for property purchase with a cash infusion?
Most Popular Reply
#1 New Member Introductions Contributor
- Solo 401k Expert
- Anaheim Hills, CA
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#1 New Member Introductions Contributor
- Solo 401k Expert
- Anaheim Hills, CA
Whenever you mix your retirement funds with your personal funds to make an investment, you open the door for the IRS to come in and argue that you violated the self-dealing and prohibited transaction rules (according to the Internal Revenue Code 4975(C)(1(D)(E)&(F). Since you are using the retirement funds together with your personal funds benefited you personally, if you were not able to pull this investment on your own (and in most cases that is the reason why people want to do joint investment).
Remember that the burden is always lies on you (the taxpayer) to prove that you didn't violate the rules. Are you up for that challenge? Do you want to take such risk? Remember the KISS principle when it comes to self-directed investing, it will help you stay out of trouble.
- Dmitriy Fomichenko
- (949) 228-9393
