All Forum Posts by: Christa S Rickard

I have been a GIS consultant the past 20 years. I specialize in Telecommunications, but if you have coordinates I may be able to put them on a map for you. I say "may" because you said that the county mapping department is unable to help you, which means the coordinates you're referencing may be incomplete. If you want me to take a stab at it, go ahead and DM me whatever formation you have and I can take a look at it in the morning for you.

Susan, I rolled my former company's 401k to an Etrade IRA when I left the company. I Diversified into several different funds as well as a few individual stocks. For the past 10 years it only grew about 5 or 6% per year. Really pathetic. That's one of the main reasons I'm turning my E-Trade 401K into a solo 401k with a Roth option. I plan to take advantage of the tax-free earnings by transferring what's currently in my IRA into the Roth. I'll pay taxes now but then I'm going to use that to invest in real estate with the goal being to substantially increase the growth over the next five years or so depending on how the property does. I'm also going to use the additional funding that I can do with a solo 401k. I just got the paper work for this started with Dmitriy yesterday.

Thanks for the details, George. That is my plan. I want to use a solo Roth 401k to invest in real estate. My goal with that investment strategy is purely retirement, so I'm not touching it until after I'm 60 years old. I'm just imagining a pretty decent Nest Egg by the time I retire and it boggles my mind that it will all be tax-free, 

That is freaking awesome. I thought it was correct, but it almost seems too good to be true, which is why I asked.  

Thanks for the quick reply Dmitriy!

I read through the first 12 pages of comments on this thread so I don't know if this is still active or not but I do have a question. I've been self-employed for 18 years (have my own S Corp with no employees) so I know I qualify for a solo 401k. About 10 years ago I had rolled over a previous employer 401K into a self-directed IRA through E-Trade. So I believe I can take that money and transfer it into a solo 401k.

My goal is to buy-and-hold rental property using my solo 401k and a non-recourse loan. I have read Dmitriy's explanations/definitions of self-directed IRA, solo 401K, Roth IRA, and a solo Roth 401k (or whatever it's called). My understanding is that contributions going into a solo 401k are tax-deferred like a regular 401k. While contributions going into a solo Roth IRA or solo Roth 401k, whatever it's called, are taxed when they go in just like a regular Roth IRA.

Assuming my understanding above is correct, can I convert my current self-directed Ira into a solo Roth IRA so that I pay taxes on it now. Then use the solo Roth as a down payment on a non-recourse loan for a long-term rental. I will collect rent from the property, understanding that all income goes directly into the solo Roth account. After 5 to 10 years, or whenever market conditions look good, I decide to sell the rental property and let's say I make $100,000 in profit on the sale, which also goes into the solo Roth.

My question is this: if I start the solo Roth with $50,000, on which I pay taxes, and the rents collected over the years plus the proceeds from the sale of the property add an additional $150,000 to the solo Roth account, when I am of legal age to withdraw from the solo Roth without penalty, is that $150,000 profit tax free?

@Brian Eastman and @Justin Windham, thanks. I was exploring possible options for this method. It sounds like currently I need to keep the solo 401k as purely personal retirement. I can buy and sell real estate with it, but not to myself or any entity in which I have ownership interest. 

Thanks to everyone who has responded. I greatly appreciate the help.

I've just done some reading on ROBs and it doesn't look like that will work for the reasons most have mentioned, as well as I need to be a full-time employee in the company. That is the eventual goal, but it won't happen for about 2 years.

So, owning rental property with a solo 401k is fine and maybe that's what I do to start. Buy a rental property through the solo 401k, all costs/profits go in/out of the 401k. Once I have cash built up (outside of the 401k) and the new company is established, the company can then buy the rental property from the 401k, correct? Understood that the transaction needs to be at fair market value.

Thanks again for all of the help with this!

Thank you for the quick replies.  @Carl Fischer I hadn't heard of a ROBS before, so I'll need to do some research in to that.

@George Blower thank you for the link to ROBs. Again, I'll need to read/talk to someone, but the summary in that link sounds like what I want to do. The only difference I see at first is that the company needs to be a C corp as opposed to an S corp or LLC. I also hadn't realized that I could only withdraw up to $50k for investing. That was a bit of a bummer, to be honest.

I currently have a self-directed IRA through Etrade. However, I want to use some of that to start investing in real estate. I know I can't do that directly with Etrade, but will need some special documents to set it up. My question is about real estate investment options using a solo 401k.

I'm starting an investment company with my best friend - either an S corp or LLC. We are both contributing money and will share costs/profits.

I understand the main restrictions on using a solo 401k and keeping the money trail very clear/clean. What I'm not clear about is if I can invest the cash from my solo  401k into the new company while she also invests cash, possibly from her solo 401k, into that same company. When the company starts drawing a profit, each solo 401k gets an equal share (proportional to the percent of cash invested) paid back into the account through the business the same way an investor would receive profits. 

Is this allowed if I'm the trustee of the solo 401k as well as owner/partner of the business in which it's investing?

My understanding is that there is no tax if the gains are < $250k single or (I think) $500k married.