LLC to hold rental properties in Texas for Solo 401K Investment??

[Patrick Ma]

I'm reading that a Solo 401K Trust is already protected from creditors and bankruptcy in Texas. That said, does it protect you in the case of a tenant sueing the owner if the Solo 401K owns the rental property? I'm considering whether I need to create an LLC to hold the rental property on behalf of the Solo 401K trust and like to hear other's opinion. Is this prudent or a wasted layer for Texas rental properties?

[Brian Eastman]

@Patrick Ma

The Solo 401(k) is separate from you and does insulate you from liability in the event someone sues related to a 401(k) held property.

If the large majority of the Solo 401(k) holdings are the property, then a LLC inside the 401(k) does not necessarily add much benefit. Good quality insurance would be valuable.

If the plan itself has significant other holdings of cash or other non-liability producing assets, then isolating a property with a LLC held by the plan could be beneficial. In that case, a litigant would be going after the LLC, and the plan itself (and other non-LLC assets within the plan) would be shielded.