All Forum Posts by: Zehua Zhou

where do you find property managers for a mobile home park? Regular property managers for single houses and condos may not be willing to take them.

I don't want to self manage either.

Do the tenants have a higher rate of default than condos and single homes?

Quote from @Jason Malabute:

I had a potential investor face a similar situation, and I've found that there are often more restrictions when investing from a 401k compared to an IRA. Based on what I remember, it gets even more complicated if the 401k is from a previous employer.

In your case, since Fidelity is declining the account due to the nature of the retirement funds, one option might be to consider rolling over a portion of your 401k into a self-directed IRA, which typically offers more flexibility. This could potentially help you avoid the restrictions you're encountering with Fidelity. However, it's essential to consider the trade-offs, especially with the difference in interest rates between uDirectIRA and Fidelity.

I’d recommend talking to a custodian who specializes in this because they would be more knowledgeable about the nuances. Let me know if you’d like a reference!

 I have migrated my account from uDirectIRA to SenseFinancial and I am very happy about it so far. 

solo 401k do not require custodians. uDirectIRA was the custodian and everything was very slow and frustrating. They needed 3-5 business days to review and approve my wire transfer request that was just two pages long.

Now SenseFinancial helped me restate the 401k plan and have no custodians. I am the 401k admin and trustee so I have full control.

I can buy a property directly under my 401k trust and sign on behalf of my trust. Or if I still want to have the 401k Invest in an LLC, I believe I can open an LLC business account, have a form that says it is a private equity investment from the 401k, and then operate the LLC to hold a rental property.

Fidelity has reps that don't understand things. It is much easier to use their online business account application and just put my name there as the indirect account owner, and put in the 401K's EIN instead of the LLC's EIN. (I haven't tried this so don't hold me onto it. I did try submitting an LLC business account application for another LLC that's directly owned by us and it was approved quickly. The rep confirmed that the W9 form has whatever EIN we put into the application.)

I think it is a bad idea to move 401k funds to IRA because IRA has less protection, and subject to UDFI tax if you buy a rental property with debt.

Quote from @Account Closed:

Quote from @Zehua Zhou:

Quote from @Account Closed:

Quote from @Zehua Zhou:

I set up the solo 401k and I am the admin and trustee. I opened Fidelity's non-prototype retirement account and funded it. If I directly hold rental properties under the 401k, and only use this account for operating activities, I need to be able to send out wires for property earnest money and down payments, and also provide the account number to my property manager if I need to make a contribution or if they give me monthly rental distributions. I would prefer not to write a check though I know this account allows check writing.

Has anyone used Fidelity's account for the solo 401k and find it sufficient? I would prefer not to open a conventional bank account if I can keep things simple.

 Have had a great experience with Fidelity so far. Would recommend! 

 I am getting some conflicting info from different Fidelity reps so I'd like to ask real customers of Fidelity here for suggestions. One Fidelity rep says this account cannot be used to do ACH transfers, so I cannot use it to take rental payments from  my property manager. Also I cannot use this account to make ACH payments to my lender.

Another Fidelity rep said I can.

Since you have been using it and liked it, can you please let me know if you are able to use this account to take rental payments and make ACH payments to your lender?

 That feature I haven't looked into, the check writing is enough for me! 

 Got it. Do you have rental properties in this retirement account? How does your account get paid each month?

Quote from @Account Closed:

Quote from @Zehua Zhou:

I set up the solo 401k and I am the admin and trustee. I opened Fidelity's non-prototype retirement account and funded it. If I directly hold rental properties under the 401k, and only use this account for operating activities, I need to be able to send out wires for property earnest money and down payments, and also provide the account number to my property manager if I need to make a contribution or if they give me monthly rental distributions. I would prefer not to write a check though I know this account allows check writing.

Has anyone used Fidelity's account for the solo 401k and find it sufficient? I would prefer not to open a conventional bank account if I can keep things simple.

 Have had a great experience with Fidelity so far. Would recommend! 

 I am getting some conflicting info from different Fidelity reps so I'd like to ask real customers of Fidelity here for suggestions. One Fidelity rep says this account cannot be used to do ACH transfers, so I cannot use it to take rental payments from  my property manager. Also I cannot use this account to make ACH payments to my lender.

Another Fidelity rep said I can.

Since you have been using it and liked it, can you please let me know if you are able to use this account to take rental payments and make ACH payments to your lender?

Quote from @Dmitriy Fomichenko:

@Zehua Zhou,

You can use a Fidelity non-prototype account to manage the rentals, but it will have some of the features available with the bank's checking accounts, such as having a debit card, mobile deposit, and bill pay. Those are nice features to have, but they are not must-have, and you should be OK. If you later decide that you do need a bank account - you can always open one. 

 Thank you!

I set up the solo 401k and I am the admin and trustee. I opened Fidelity's non-prototype retirement account and funded it. If I directly hold rental properties under the 401k, and only use this account for operating activities, I need to be able to send out wires for property earnest money and down payments, and also provide the account number to my property manager if I need to make a contribution or if they give me monthly rental distributions. I would prefer not to write a check though I know this account allows check writing.

Has anyone used Fidelity's account for the solo 401k and find it sufficient? I would prefer not to open a conventional bank account if I can keep things simple.

Quote from @Dmitriy Fomichenko:

@Zehua Zhou, the setup would make sense if it was an IRA. But with the 401k, you don't need a custodian or third-party administrator (TPA). Moreover, you don't need an LLC to get the checkbook control. What you need is a truly self-directed Solo 401k plan!

Once established, you will be designated trustee of the 401k and will have full control over it, without any middleman. Simple, convenient, and cost-efficient! Again, remember the KISS principle (keep it simple)!

Could you tell me if there is a way to maintain anonymity when owning properties directly in 401k trust? The property would be titled as "XYZ 401k plan, FBO (my name)". So if a slip and fall happens, tenants could look up that in their lease, and sue both me and my 401k trust. If we have a 401k checkbook LLC then it could fix the anonymity problem but it adds a layer of complexity. If we don't have the 401k checkbook LLC, is there a way to do it?

I saw a comparison of IRA Trust vs IRA LLC from another website and found the following. I wonder if the same applies to 401K trust vs 401k LLC?

I am very confused what a 401k trust is because I don't see it listed in the types of available trusts below.

https://wyomingllcattorney.com/Wyoming-Asset-Protection-Trus...

I know land trusts don't offer liability protection if the tenant sues the trust's beneficiary. For 401k trusts, the property would be titled XX Custodian FBO (owner name). So can the tenant continue to sue the beneficiary which would be me?

Quote from @Dmitriy Fomichenko:

@Zehua Zhou, call me on Monday and I will clarify it for you.

 Thank you! I left you a voicemail. Please call me back.

Quote from @Dmitriy Fomichenko:

@Zehua Zhou,

We're hosting a webinar on supercharging your Roth soon; watch for it!

Regarding your questions about IRA LLC. The structure is known as "Checkbook IRA". When using this structure for investments, the key is to complete IRS Form W9 properly. The correct way is to use the EIN of the IRA custodian instead of EIN of the LLC. As a result, any income reported will be tax exempt.

I see! Thank you for the clarification!

But if I directly own 100% of an LLC, should I use the EIN of the LLC or my SSN for the W9? Or it probably doesn't matter?