All Forum Posts by: Derek Grue

Thank you @Brian Eastman and @Daniel Dietz for putting that into perspective for me. That is a much better way of looking at things. 

Another follow-up question for those who have invested in rental properties inside their retirement plans, is it better to use pre-tax or post-tax dollars considering the potential tax deductions immediately versus the RMDs later on in retirement?

Hello BP,

I’ve read in a variety of places on these forums that it is financially more advantageous to own real estate in your own name as opposed to your solo 401k. Let it be said that I’ve primarily interested in small to midsize Multifamily properties. (10-40units) I’ve yet to see someone write a blog post explaining this ideology so therefore I want to challenge the status quo on this topic. There’s a few things I want us to keep in mind: 1.) The reductions on your taxes due to depreciation and interest, etc when owned in your own name. 2.) In a solo 401k those reductions are not allowed. Although all of the income received from rent goes into the solo 401k and can grow tax-deferred. 3.) Has anyone ran the numbers to see if it’s finacially advantageous to own real estate in the Roth component of your Solo 401k and all that income would grow tax-free for life? 4.) one final thought is to take into effect how a Required Minimum Distribution (RMD) will play when it comes time to pay taxes when you reach 70 1/2. 

If none of this makes sense, let me know and I’ll try to clarify some more. 

@Justin Windham

So you'd only avoid the UDFI if the asset was owned free and clear before the rollover to an IRA?

Follow up question then for you George,

What if I owned 78% of both Company A and B and they still don’t engage in business together? 

Any violations yet?

Ah gotcha! So in other words there’s no back door to contribute the maximum to the solo 401k by transferring from IRAs because across all IRAs the maximum I can contribute is the $5500 a year. What have others done that aren’t making much being self employed? Any other suggestions to try to increase the dollar amount of contributions if my self employment career isn’t terribly profitable?

@Brian Eastman

I’ve read from another internet source that I can have multiple traditional IRAs (ex. One from fidelity and one from vanguard,etc if I wanted) the most I can contribute to one Ira in a year is $5500. So let’s say I had three IRAs (3x5500=$16500) that I can contribute to those IRAs in one year. Then is it still permissible for me to continually roll over or transfer those contributions each year into the solo 401k? Does that make sense?

Thank you gentleman. This is getting down to what I was intending. Essentially I can have an open traditional IRAs, even multiples to reach a contribution limit similar to a solo 401k, and then make on going rollovers from the IRA to contribute to the solo 401k. Effectively this allows me to contribute W2 income to a solo 401k via on going rollovers or transfers until my self employment income can contribute the fullest amount to the solo 401k. Is that correct?

I guess I should clarify. Instead of a traditional 401k can I make ongoing transfers from traditional IRA to self directed roth solo 401k?

Trying to resurrect this thread....

I'm looking to start my own llc or s corp in the state of Minnesota fairly soon to technically be self-employed. Currently I do not have any retirement plans as I'm a young guy. However, if I'm understanding this correctly, you can only contribute to a solo 401k from the income received as being self-employed. My difficulty with that is I may not be making as much as I do now as a W2 employee. 

So one option I'm considering is opening up a traditional 401k with Fidelity, vanguard, etc. And making continuous transfers from that traditional 401k to my self-directed Roth Solo 401k, this way my Solo 401k continues to grow as quickly as possible until my self-employment compensation builds. Is there anything illegal or wrong with this transaction? Which tax forms would I need to fill out? What happens if my business doesn't generate profit within a number of years, would the IRS come after me for having this solo 401k? 

Thanks for educating us young guys