Thanks for
taking my call and explaining the way to approach this project. Please can you
share some links to educate myself about "tenant in common".
ANSWER: Please click here to learn about using a solo 401k to invest in real estate under a tenants in common and to see a list of scenarios.
ANSWER: Please click here to learn about using a solo 401k to invest in real estate under a tenants in common and to see a list of scenarios.
Below
are some questions I have about this transaction.
1)
What should be the name in the contract (deed) to represent solo 401k. Below is the name we used to
open the bank account.
ABC LLC Solo 401k Trust; EIN 46-xxxxxxx FBO Jane Doe; Trustee
ANSWER:
Following is sample way to list the solo 401k and
a business as the buyers on the real estate:
Method 1: Jane
Doe, Trustee of the ABC LLC Solo 401k Trust, undivided 20%, and (list the name of the
business), an undivided 80% interest
Method 2: ABC Solo 401 LLC Solo 401k Trust f/b/o Jane Doe, Trustee, an undivided 20%, and (list
the name of the business), an undivided 80% interest
2) Should the company and the 401K
sign a Joint Venture agreement?
ANSWER: A joint venture
agreement would not apply because the real estate will be owned directly by the
solo 401k and the business; therefore, the recording would be listed under a
tenants in common arrangement.
3) Is there
any other document I need to fill?
ANSWER: You will need to
complete the typical documents applicable to a real estate purchase, such as
purchase contact, settlement agreement, escrow instructions, etc. You may also use
our real estate purchase form to help document the purchase. Here is the link.
4) The
company is paying 2,500/- Earnest Money Deposit to secure the contract. Should
Solo 401K contribute 20% as well or is it sufficient for solo 401k to bring in
40% of the purchase price for settlement?
ANSWER: It is imperative that the solo 401k put up
its applicable percentage of ownership total in the property towards the
earnest money deposit. Therefore, if the solo 401k will own 20% of the property
it must put down 20% of the earnest deposit money.
PE
in Arizona
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