All Forum Posts by: Dmitriy Fomichenko

@Bryan H. welcome to the BP community!

@Justin Trudell, in order for you to receive "match" from the employer, you would have to contribute to your current 401k account with Vanguard.

@Justin Trudell

not sure if I understanding your correctly, but if you continue to participate in your company 401k, unfortunately you will not be able to move it elsewhere, it will remain there...

The excess of contributions you can direct into SD IRA and with those funds you will have the freedom to invest as you wish. The fact that it is SD IRA does not change any IRS rules, the same contribution, distribution and income rules apply to it regardless.

You may need some help of the professional (accountant) to help you sort through the numbers, unfortunatelly I am not qualified to help you with that.

@Justin Trudell great question!

First of all, I totally agree with you that you should contribute to your employer 401k up to the employer match. I think it is foolish not to do so because if for example your employer matching 50%, you are getting 50% guaranteed return on your money, you can't get that elsewhere.

You should not contribute to the 401k more than that because with employer 401k your investment options are very limited. So the question is what do to with the rest of the money. One option would be pay taxes and invest in real estate under your name. The other option to consider is to use self directed IRA or 401k. If you make pre-tax contributions you still getting tax advantages but will not be limited on your investment choices. You may also consider investing under Roth IRA or Roth Solo 401k, here you are paying taxes upfront, but will never have to pay taxes on any gains or profits.

If you use Solo 401k, even though it is retirement account, you still could access your funds up to $50K any time for any reason via Participant Loan feature.

And I agree with Guatam that you should investigate other investment options such as notes, etc.

Do your due diligence, you've got several things to consider here, but there are surely some good options available to you.

@Rodney Walker welcome to the BP community!

@Nathan Hearns welcome to the BP community!

@Shawn O'Shea welcome to the BP community!

@Victor Ayala welcome to the BP community!

@Amber Schenck welcome to the BP community!

I agree with @Doreen Chaisson that there is no UBTI tax on leveraged real estate and significantly higher contribution limit (nearly 10 times more) when you compare SD IRA and SD Solo 401(k). However, in addition to these great benefits there are couple others that many are unaware of:

• Solo 401k offers Participant Loan Feature which allows you to access your retirement funds any time for any reason (example would be investing in a transactions that would be otherwise prohibited). It's like creating your own bank that will never turn you down. Many may never use this feature, but it is sure great to have this option.
• Roth Solo 401(k) - you can maintain additional, separate 'bucket' under your Solo 401(k) plan where you could make after tax contributions, thus, investing tax free for the rest of your life. The limit on Roth contribution in Solo 401k is up to $23,000 (compared to $6,500 in Roth IRA) and there is no income restriction unlike with Roth IRA. Also, pre-tax portion could be converted into after-tax (Roth). (Tax professional should be consulted prior doing so).
• With Solo 401(k) custodian is not required. The plan can be self-administered which could mean significant savings $$ on custodian, transactions and asset based fees that would be there in a case of SD IRA. You also have a “checkbook control” and don’t have to obtain custodian consent when making investments. This could be huge on time-sensitive investments and give great level of convenience. But like I said earlier before doing self-directed 401k (or SD IRA), you need to educate yourself so that you won’t do something stupid and put your retirement account in jeopardy.

Disclosure: My company in the business of establishing Self-Directed 401k and IRA accounts.