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Updated over 5 years ago on . Most recent reply

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Bob Malecki#5 Tax Liens & Mortgage Notes Contributor
  • Investor
  • Kingston, WA
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Solo 401k income as facilitator on FSBO?

Bob Malecki#5 Tax Liens & Mortgage Notes Contributor
  • Investor
  • Kingston, WA
Posted

I'm selling one of our apartment buildings owned outside of our retirement accounts to another investor as a private sale with no RE agents or commissions involved. We own the building in a LLC, lets call this "LLC A" and it produces passive, taxable income to us. I have another "LLC B" that is set up with my solo 401K and has occasional earned income. I am the sole member of both LLCs.

I would like to defer some of the profit from the apartment sale to my solo 401k. I am a full time self employed investor and not a licensed RE agent, fyi. My thinking is to have LLC B charge a facilitation fee to LLC A and have the fee paid at closing from net distributions from the sale, then contribute that amount to my SoloK.

So 3 questions: 

1. Would there be any issues from a compliance perspective doing this? 

2. Can I pass through the full $24K (with catchup, I'm >59.5 yrs old) to the soloK? 

3.Can I just draft an agreement between both LLCs to agree to the fee? 

Any perspectives on this is appreciated @Dmitriy Fomichenko or @Bryan Hancock or others, thanks.

Bob

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