How can I fund flip projects from an i401k

[Timothy Sturgis]

I have recently formed an LLC with a business partner to flip properties. I have a couple 401k’s from past employment with nice balances that I would like to tap in to use as funding for our projects. The LLC is a 50/50 where we intend to contribute equally to initial investment (property acquisition) and for rehab costs. As I understand it, I need to first convert it to an i401k. Once that is done, how much of the balance can I use and how do I go about setting this up. Keep in mind that the LLC is a 50/50 between me and my biz partner. Also - does all of the profit from the flip have to go back in to the i401k or can some of the profit be appropriately taxed held outside the i401k? Suggestions?

[Remigio M.]

You can use 100% of the money once you convert to a solo 401k however there are prohibited transactions.

Investing in an existing LLC you own might be one of them. I think you need to research some more,

All profits need to go back to the 401k. You can’t make a penny on the investments. (Your 401k can buy those gains are untouchable until your retire) The investments with others like your biz partner are allowed but the investment purchase and rehab has to be equally funded by 401k and the partner. Doesn’t mean it has to be a 50 to split but the % has to be the same. If the 401k invests %60 for the purchase then the same applies to rehab investment. You partner has to do the same.

Make sense?