There are many exemptions where the penalty is waived-the latest is the covid19 cares act which allows Up to a $100k penalty free distribution no matter what age you are.

@Mark TannerYou're right, the Solo 401k is generally exempt from UDFI tax on leveraged real estate.

Those activities will be fully tax sheltered.When a tax exempt is acting as a business and therefore competing with tax-paying businesses, then taxation applies so as to protect tax-paying businesses from unfair competition.

@Matthew Creel529 plans are definitely worth consideration.While you don't get a federal deduction for contributions, you do generally get a state deduction on contributions, tax deferred growth, and eventual tax-exempt withdrawals for qualified expenses. 

Good advice above....get a securities attorney.Some states have other exemptions that will make things easier.  

Any gain in value of "shares" in such a venture would not, however, be subject to UBIT.See IRS Publication 598 for more information.Solo 401(k) plans are exempted from UDFI taxation on debt financed real estate investments, but are not exempted from UBIT.  

State and federal regulations can restrict who can participate and increase the cost to issuers by requiring audited financial statements, additional disclosures and on-going reporting.A couple platforms leverage state exemptions which permit non-accredited investors who reside in that state.

I have heard that one before but really like mentioned above she needs to talk to her council.at least she gets either 250 or 500k tax free.. on the owner occ exemption if in fact she lives there.

@Zach LemasterA Solo 401(K) does not provide exemption from UBIT. 

I don’t know if I want to stay until the 2 year mark for the exemption.