Can I transfer personal asset to Solo 401k?

 

QUESTION:

I have currently finished setting up my bank acct and EIN#. I have formed my LLC and even purchased one tax lien certificate (which has not paid yet). I would like to Open Solo 401K before that tax-lien pays or is it too late?

QUESTION:

Also, I work for the federal government, and have a TSP acct of course. I’m a current fed employee can I still roll that money into my Self-Directed Solo 401K?

Thank you

Barry

ANSWER: Please clarify: Is the tax lien certificate owned by you or your business? If either, you cannot transfer it to your Self-Directed Solo 401k, nor may the proceeds be deposited in the Solo 401k as it would be deemed a prohibited transaction.  

ANSWER: Yes the 401k rules permit the transfer of TSP to Solo 401k. However, because you are still employed you may be restricted from transferring the TSP out to a Solo 401k or an IRA. Ultimately, you need to contact your TSP administrator to see if they will permit you to transfer out your TSP to Solo 401k.

Barry: Well yes I purchased the tax lien last month through my LLC.
The money I used to fund my acct for my LLC is a loan from my TSP.
At any rate I would still like to do the solo 401K for my LLC.

MySolo401k.net Question: Is the LLC your self-employed business? Reason being, to open solo 401k you must be self-employed with no full-time employees. Passive income does not generally qualify as self-employment income either.

Barry: Yes --I have that business which I purchase tax lien certificates/deeds, & other real estate & other investments with. I'm also fully employed by the Dept of Veterans Affairs as a social worker/therapist.

ANWER: It doesn't appear that you qualify for Solo 401k because your business is for passive investment purpose.  To qualify and make contributions to Solo 401k, you must be self-employed, have not full-time employees and have earned income from self-employment activity.

Passive income generally does not qualify as self-employment income unless:

“Earned income only includes net earnings derived from the individual's personal services. Gains (other than capital gains) and net earnings derived from the sale or other disposition of property, or the licensing of the use of property, constitutes earned income if the individual’s personal efforts created such property.”

Please visit Self-Employment Compensation to learn more about qualifying for Solo 401k.