Providing "services" to SDIRA

[Larry Flanagan]

I was told that I can not provide "services" to my SDIRA like doing repairs to a rental property.  But where do you draw the line?  Can I manage the property?  Can I do the books?  Can I negotiate to buy/sell property?

[Justin Windham]

@Mike Reynolds

If you use the participant loan feature to purchase a property with borrowed funds, the prohibited transaction rules will not apply and you could work on the property. This is because borrowing the funds from the plan makes that money yours and not plan funds, at least until the loan is repaid to the plan. As such, that property would be an investment "outside" of the plan and the plan would not be the owner of the property. The profits would belong to you and not the plan. They could be used as a basis for repaying the loan which would add a small amount of value to the plan. Again, the profits would be yours and would not go back directly to the plan. 

Profits would go back to the plan if you invested the plan funds directly into the property instead of taking the participant loan. Many people feel it's nice to have both options with the Solo 401k, though it is important to understand the pros and cons of each method.