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Paying for marketing to find a seller

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Can my Solo 401k pay for marketing to find sellers to buy a home to rehab within the plan, such as Google PPC, website, direct mail, hiring someone to put out bandit signs, etc?  Can the plan pay for an "advisor" - who is not a disqualified person - to mentor/advise on all aspects of acquisition/rehab/sales of a real estate asset the plan would be owning?  If this is a gray area, how would I make this work to the satisfaction of the IRS?  Again, I would never jeopardize the legality of the plan, however, I would like to use it to its max.

Answer:

The activities that you are describing seem like an running active business in your plan. Your 401k can invest in passive investments.  However, if you engage in an active business with your plan, you are opening yourself up to issues such as Unrelated Business Income Tax (UBIT) and more. If you intend to pursue this, you will need a knowledgeable CPA to guide you through the complexities of running an active business within your 401k.

I suggest you keep with the main purpose of the plan- investing for the long term. You can work with a wholesaler and have someone else do the marketing, etc. Acquiring the property and holding on to it as long term rental would be the safest and simplest for the plan.

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