401k owns LLC that invests in real estate?

[Brant Richardson]

I talked to a representative about making my 401k self directed to invest in real estate this morning. He said I can not invest directly in real estate with a sd401k but I can invest in an LLC with the sole purpose of owning real estate. This seems like it would defeat the purpose of tax deferred investing. The LLC would still have to pay income tax right? Only the profit that the 401k made from the LLC would not be taxed right?

I couldn't find this specifically with a search of the archives.