Using a self directed 401k.

[Curtis Deckard]

I have learned about this solo 401k in which you can use some of your 401k to invest in real estate as long as you pay it back with interest within 5 years.  My question is once you pay back the amount you borrow, do you have to continue to feed the 401 k or can you then start using the rent from the investment for other purposes?  I have a small 401 k that I would like to use as a down payment but I don't want the property to always be tied to the retirement account.  I would like to have a few eventually tied to the account but right now I need to free up funds as much as possible.  Any help would be appreciated.

[Justin Windham]

Originally posted by @Bryan O.:

Hi @Justin Windham. A solo401k requires an entity to host it (solo proprietorship, LLC, Corp). If @Curtis Deckard is a standard w-2 worker then he may not be able to sponsor a solo401k.

Oh, ok. You're just referring to needing valid self-employment activity, which is correct. Many folks with interpret "valid entity" to mean an LLC or Corp which is not required. Self-employment activity is adequate whether via a sole proprietorship or a formal entity.