I have located two condos in downtown San Diego California and a house in Coronado California that I would like to purchase with my Solo 401k; however, E-TRADE, my current Solo 401k provider, told me that their Solo 401k does not permit investments outside stocks and mutual funds.
Do you know how I go about switching to a Solo 401k provider that will allow me, as the trustee of the Solo 401k plan, invest my Solo 401k in real estate including San Diego CA real estate and how the real estate purchase process would work within the Solo 401k?
You will need to open Solo 401k with a provider that will allow for Self-Directed Solo 401k, a type of 401k subject to the same rules as traditional 401k but, as the name implies, will allow you as the trustee to direct the plan in investments such as real estate including San Diego California or Coronado California real estate.
It is relatively easy and effortless to make the switch from E-TRADE to a self-directed Solo 401k provider because you already have a Solo 401k plan established. You will simply need to notify your new Solo 401k provider to restate your existing solo 401k with E-TRADE. In turn the new solo 401k provider will prepare updated solo 401k prototype plan documents. You will next open Solo 401k checking account at your local bank under the name of the Solo 401k and newly established EIN. However, you will need to take your newly drafter Self-Directed Solo 401k plan documents (Adoption Agreement and Trust Document) to your local bank branch in order to open solo 401k checking account. Once the checking account is open in the name of the Solo 401k, you will complete E-TRADE 401k transfer out forms. They can either wire the funds to the new solo 401k checking account or make check payable in the name of the Solo 401k fbo your name as the trustee (for example, if your new solo 401k plan’s name is Palm Trees Solo 401k, the check would be made payable to Palm Trees Solo 401k, John Doe, Trustee) and have it mailed to your business address as the trustee of the Solo 401k. After you deposit the check, you can begin investing in San Diego, CA real estate.
Lastly, click on Solo 401k Real Estate to learn about the process of investing in San Diego California real estate with Self-Directed Solo 401k.
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