Understanding prohibited transactions
The 401k is designed for passive investing, to benefit and grow the 401k. Prohibited transaction rules prevent the 401k from being used in ways that would benefit the individual, instead of the 401k. Prohibited transactions You are considered a disqualified person with respect to the investments of the 401k. Other disqualified persons include a company […]
Running a business owned by the 401k
Can I use my Solo 401k to acquire a business? Can I run it myself? Designed to be invested passively The 401k is designed for passive investing, to benefit and grow the 401k Using the 401k to invest in an active business will result in Unrelated Business Income Tax (UBIT) of 40% on the income […]
Personal involvement with 401k investments
How much can I be personally involved with my Solo 401k investments? Can I manage properties owned by my 401k? What can I do and not do when it comes to managing the properties? You are a disqualified person with respect to the investments of the 401k, so you want to be careful as to […]
Is the 401k trust revocable or irrevocable?
Your Solo 401k is a qualified retirement plan trust. As a qualified retirement plan trust, it is not the same as a personal trust, e.g. one that is set up by an individual for estate planning. The 401k has features of both revocable and irrevocable trusts: Similar to an irrevocable trust in that once contributions […]
Sense Financial as document sponsor
Sense Financial Services is a document sponsor for your Solo 401k. We have a prototype document for the 401k that is approved by the IRS The IRS Opinion letter states that our prototype document meets the IRS guidelines for a qualified 401k plan and thus establishes a qualified 401k plan We create plan documents for […]
Rolling over funds from a 401k with an outstanding loan
Can I rollover funds from a 401k with an outstanding loan? Please check with your current 401k plan administrator: Whether your current plan allows for in-service distributions If not, your plan will not allow you to transfer any cash or assets out of the plan unless the plan or your employment with the company is […]
Late payment on a participant loan
What if I am late with a repayment to my Solo 401k participant loan? Are there penalties for late payment on a participant loan? Your Solo 401k allows for a cure period, which allows you to make a missed payment up until the last day of the calendar quarter after the calendar quarter in which […]
Financing for asset purchase in Solo 401k
If I am investing in real estate with my Solo 401k, but don’t have enough funds in my Solo 401k, what are my options? Funds can be added to your plan via: Rolling over additional funds from another retirement account Contributing to the plan from your compensation from the adopting business Or, financing can be […]
Distributions from the Solo 401k
Can I take a distribution from my Solo 401k? Will I owe taxes? At what age can I distribute from my Solo 401k without penalty? Distributing funds out of the Solo 401k is called an “in-service distribution” when the Solo 401k plan and its adopting business are still active. Determine your eligibility to take the distribution […]
Living trust as primary beneficiary
Is there a way to make my living trust the primary beneficiary of my Solo 401k? Yes. On the beneficiary designation form, you can name your living trust as the primary beneficiary.