All Forum Posts by: Minna Nah

Curtis, 

if you have a wholesaling business you can use that to sponsor a 401k plan and use income from the business to make contributions to it. But it has to be legitimate business, something that you continue to do (if you just do two deals and you are done this is not a legitimate business for the purposes of establishing the plan). 

This link to the IRS website will help you better understand what self-employment is:

https://www.irs.gov/businesses/small-businesses-se...

Curtis, in order to open a Solo 401k plan you need to have legitimate business or self-employment activity. Contributions to the plan can be made from the earned income of the business sponsoring the plan. Fundraiser is not a business. Lemonade stand sounds like a hobby not a legitimate business...

You should speak with the expert to determine your eligibility.

@Curtis H.

Contributions can only be made from the earned business income. You have to have enough funds in your Solo 401k plan to make the investment. You can also partner with someone else who is not a Disqualified Person or use leverage.

Curtis, if you have a 401k with your current employer they will not allow you to roll it out while you are employer there. When you leave that employer at that time you will be able to move those funds into an IRA or Solo 401k.

The max term on the loan from the 401k is 5 years (unless used to purchase primary residence) and the payment must be amortized, can't be interest only with balloon on the back. 

Yes Yohannes, there is no incentive for them to help you move your funds out...

@Yohannes Kifle

we have seen this with some custodians, they have their owns forms but this is uncommon. In most cases receiving custodian would provide a transfer request form.

@Adam Sipherd

converting passive rental income into self-employment income will result in self-employment taxes to be due on that income. Are you sure you want to do that? I agree with Brian, get some expert CPA advice.

@Shane M.

keep things simple: just use your IRA as private lender to your friend. This way you don't have to worry about any tax issues related to UBIT.

@Hament Raju Mahajan

perhaps you are explaining it incorrectly or you didn't get the correct setup. The LLC is the sponsor of the plan has an EIN, but the PSP (the trust) should have it's own EIN. Those are two separate entities and can't be using the same EIN.