Popular Self-Directed Solo 401k Alternative Investment Types

Popular Solo 401k Alternative Investments include the following:

Click on Real Estate to learn more (quick tips)

• Title to property is taken in the name of the .
• All income and expenses are paid with solo 401k funds.
• Solo 401k owner can only manage (for example, look for tenants and hire contractors) the property but not perform sweat equity work (e.g., fix the toilet, paint, etc.)
• Solo 401k owner cannot use the property for personal use, whether one day out of the year or daily.
• Non-recourse/debt financing may be incorporated and generally not subject to UBIT.

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• Allowable metal types that may be held in a solo 401k include gold, platinum, silver and palladium.
• Bullion coins and bars are allowed in solo 401k plans as long specific purity requirements are satisfied: Gold = 99.5%; Silver = 99.9%; Platinum = 99.95%; Palladium = 99.95%
• The solo 401k trustee may safe-keep the coins but not the bullion--bullion is required to be stored with an approved depository institution such as Delaware Depository.

Click on Promissory Note to learn more (quick tips):

• The business owner's solo 401k assumes a banking roll because solo 401k funds are loaned to a third-party such as an individual or a business, and the solo 401k receives a return on the investment. 
• The promissory note can be structured as secured--generally by real-estate, inventory or precious metals--or it can be structured as an unsecured note; however, if unsecured, the interest rate that the solo 401k receives is generally higher because of the higher investment risk.

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• One way a solo 401k can invest passively in a private company is by purchasing equity as long as it is not the solo 401k owner's/trustee's own business or a business controlled by the solo 401k owner's relatives such as spouse, parents and children.
• Title to the equity investment is taken in the name of the solo 401k plan. 
• If the solo 401k plan invests in a business that offers goods or services (an active business), the gains are subject to UBTI; however UBTI does not apply to passive, private company investments.