Transfer SEPIRA to Solo 401k Non-Recourse Loan

QUESTION 1: I have both a rollover IRA from a previous employer and a SEP IRA. Can I combine these into a solo 401K?

ANSWER: Presumably you are self-employed if you are already participating in a SEP IRA, but to clarify, here is how the IRS defines self-employment:

• You carry on a trade or business as a sole proprietor or an independent contractor.
• You are a member of a partnership that carries on a trade or business.
• You are otherwise in business for yourself (including a part-time business)

To finish answering your question, yes the IRS rollover rules permit the transfer of SEP IRAs and Rollover IRAs to a self-employed 401k such as a solo 401k plan.

To see a full list of retirement account types that may be transferred to a solo 401k plan click here.

QUESTION 2: Also, is it possible to purchase real estate using a non-recourse loan plus a down payment from the solo 401K?

ANSWER: Yes a solo 401k may incorporate non-recourse loan financing when investing in real estate, whether domestic or international real estate properties.

Some of the rules that apply when using debt financing in conjunction with a self-directed 401k to invest in real estate properties include the following:

The non-recourse loan is to the solo 401k, not the solo 401k owner/participant;

the lender, whether a bank or an individual, can only look to the property for repayment in the event of non-recourse loan default, not any other asset of the solo 401k; and

The non-recourse loan does not show up on the solo 401k trustee’s credit report. 

Visit solo 401k non-recourse loan for a full breakdown of the rules, and visit solo 401k real-estate purchase methods to learn about others ways to invest a self-directed solo 401k into real estate.