Solo 401k and SDIRA Consultant · Orange, CA · Member since 2013 · 873 posts · 497 votes
2y
@James Lee a few thoughts. Do you want checkbook control or custodial? Check the reviews for companies you’re considering. Get a good understanding of disqualified parties and prohibited transactions. Here are some helpful articles on bigger pockets you can review. Solo 401k
Solo 401k and SDIRA Consultant · Orange, CA · Member since 2013 · 873 posts · 497 votes
2y
@James Lee a few thoughts. Do you want checkbook control or custodial? Check the reviews for companies you’re considering. Get a good understanding of disqualified parties and prohibited transactions. Here are some helpful articles on bigger pockets you can review. Solo 401k
@James Lee a few thoughts. Do you want checkbook control or custodial? Check the reviews for companies you’re considering. Get a good understanding of disqualified parties and prohibited transactions. Here are some helpful articles on bigger pockets you can review. Solo 401k
Accountant · NH · Member since 2019 · 269 posts · 288 votes
2y
You might be asking the wrong questions at Fidelity (not sure if they do or do not allow this), but you aren't technically investing directly in real estate, you are investing in private equity partnerships that are investing in real estate.
They might not want you buying direct interests in real estate, but are okay with private equity investments.
Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
2y
@James Lee
speak with @Brian Eastman
He can get you all setup
Most large institutions like fidelity will not allow you to invest in a private syndication unless the Sponsor is registered on their platform and you go through a registered rep - so odds of that being the case are super low
Lender · Los Angeles, CA · Member since 2009 · 1k+ posts · 2k+ votes
2y
If you qualify, @James Lee, you're almost always better off with a self-directed 401(k) plan than a self-directed IRA. Chiefly, contribution limits in an SD 401(k) plan are nearly ten times higher than in an SD IRA for you and your spouse. A self-directed 401(k) plan offers the small business owner one of the last significant tax benefits. Understand that at least three SD 401(k) plan sources exist.
1) Many firms that offer SD IRAs also offer SD 401(k)s. Some of these, like brokerages such as Schwab and Fidelity, limit you to only the products they sell. You found this out. Though self-direct rules allow a broad range of investments, these companies restrict you to their stocks, bonds, mutual funds, etc. Fortunately, you don’t need a brokerage to open an SD 401(k) plan.
2) Many self-directed retirement companies that offer SD IRAs also offer SD 401(k) plans. In this case, though, they will want to be your custodian. (The fact that many of these companies are not regulated custodians but unregulated administrators is a different topic, but something you should understand, research, and be wary of.) Those that are custodians will hold your funds or send them to a custodian if they are only an administrator, and help you with compliance and administration.
Though as an investor, you should fully understand the rules behind prohibited transactions and disqualified parties, which are few, these companies will give you advice and hopefully keep you out of trouble. They are not required, though.
3) You don’t need anyone to hold or manage your SD 401(k) plan. Instead of a brokerage or custodian/administrator, find a facilitator. These specialized companies, easily found online or here, will create your company's SD 401(k) plan. Despite the hoopla and perceived confusion, a self-directed 401(k) plan is nothing more than a trust. In our case, we used our CPA, who creates SD 401(k) plans for his clients, though I’m sure he obtains them from a facilitator.
You'll receive a disarmingly simple one-inch-thick three-ring binder containing your plan documents. That's it. Really. It will include an approval letter from the IRS. You bring this to any bank and open a trust account with you as the trustee. Then you transfer your existing IRA funds (except Roth money) into the checking account associated with your trust. As the trustee, you can now place this money into any investment that follows retirement plan rules (no artwork, collectibles, alcohol, insurance, etc., and no disqualified parties). Any form of real estate is fine. Lending, which is what we do, is also fine.
It's super simple, but if this option makes you uncomfortable, then use a custodian. As a real estate investor, a brokerage will not give you the options you need.
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