Solo 401k or paying the additional tax??

[Cassidy Burns]

Hi BP,

Had an interesting convo with someone the other day debating the Solo 401k option for self employed individuals or taking the annual tax hit but keeping your cash more liquid to actually purchase rental real estate to reduce your taxable income with every additional acquisition .  

What are you doing?  

A little background, for my taxes this year I was able to save $12,500 in taxes if I contributed $28,000 to my solo 401k account.  No brainer right? 

Sometimes not.  It takes the "rainmaker" or the person I trust the most (ME), out of the deal.  You cannot be involved with the transaction at all, if you want to obide by the rules (which I know a lot of people do not follow when it comes to these self directed accounts). 

I think the key is having someone you truly trust to lend the monies to, or obviously finding a bank to do a non-recourse loan.

Curious what everyone else would do? 

Cheers,