QUESTION: This week an opportunity showed up
to bid in an auction but due to the time restrictions I would have, I would
need to part-time with a family member that is not my spouse or daughter. So to
bid in the auction I would use the 401K as ½ of the capital and my brother
in-law would have the other ½. Is it possible to use the 401K this way? If so,
how would the contract have to read as buyers?
ANSWER: The transaction you are describing is
known as a "Tenants-in Common Purchase" and the following rules apply
when using solo 401k retirement funds:
List both buyers on the deed as follows:
For example, if the split will be 50/50 between the solo 401k and a brother-in-law, then the deed would be recorded as follows:
XYZ Solo 401k, John Do, Trustee, an undivided 50% interest and (name of brother-in-law), and undivided 50% interest.
Further, the bid at auction would be split 50/50. To learn more about tenants-in-common click here.
List both buyers on the deed as follows:
For example, if the split will be 50/50 between the solo 401k and a brother-in-law, then the deed would be recorded as follows:
XYZ Solo 401k, John Do, Trustee, an undivided 50% interest and (name of brother-in-law), and undivided 50% interest.
Further, the bid at auction would be split 50/50. To learn more about tenants-in-common click here.
Thanks,
Mario in New York
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