Can I transfer over my SEP money to my solo 401k?

QUESTION: Can I transfer over my SEP money to my solo 401k and I have a self directed IRA that bought land, can that be transferred over.

Thank you,

PR

ANSWER: Yes the rules permit the transfer of SEP IRA and Traditional IRA to a Solo 401k plan. Further, you can transfer the self-directed IRA assets in-kind to your Solo 401k. Therefore, you won’t need to sell your IRA owned land first.

Most Solo 401k providers including our company will prepare the SEP and self-directed IRA transfer forms and list the real estate assets to be transferred in-kind to ensure the real estate is not first liquidated.  

Can I transfer former employer 401k to Solo 401k Roth?

QUESTION: We are confident that my former employer 401K money will be rolled over to my new Solo 401k account by December 31st. At this time, can I transfer funds from my former employer 401k plan to my solo 401K Roth account, or is there any formalities to be fulfilled before I initiate the transfer?

Any incite would be greatly appreciated, thanks Thomas  

ANSWER: The Solo 401k Roth rules require that you first transfer your former employer pre-tax 401k funds to the pretax portion of your new Solo 401k plan. Subsequently, you can process an “in-plan” Roth conversion, requiring the establishment of a designated Roth Solo 401k account (bank account) to hold the Roth funds.

Please read following blog from our website that explains the in-plan conversion process and then let me know when you are ready to proceed as conversion forms will need to be filled out and tax reporting performed. We can process the Roth Solo 401k conversion, a service not provided by all Solo 401k providers, at no additional cost.  

http://www.mysolo401k.net/Blog-for-MySolo401k.html?entry=in-plan-roth-rollovers-aka

http://mysolo401k.blogspot.com/2012/11/how-does-my-solo-401k-process-self.html

Is there anything unique about setting up a Solo 401K self directed checking account

QUESTION: I will be setting up a bank account next week.  Is there anything unique about setting up a Solo 401k self directed checking account?
 

Thanks for your prompt attention to this matter. LP
 

ANSWER: As long as your banker follows our bank account establishment guide that we e-mailed to you, the bank account process should go smoothly.  We can also walk your banker through the bank account setup process.  As detailed in our Solo 401k bank account blog and guide, 2 bank accounts are required, one fore each trustee/participant, if both Solo 401k trustees/participants will be participating in the Solo 401k plan. Further, the bank account will be setup in the name of the Solo 401k using the Solo 401k plan’s employer identification number instead of your social-security number or business tax-identification number. 

Solo 401k non-recourse loan question

QUESTION: Thanks for helping to open a solo 401k for my mother.  I had a few questions about who the solo 401k plan can borrow money from with respect to a Solo 401k non-recourse loan for investing in real estate.  Can the solo 401k borrow from:

Their own Self Directed IRA?

Their children's Self Directed IRA?

Thanks,

JK

ANSWER:  While other IRAs can loan funds to a Solo 401k (known as a non-recourse loan) which can then be used towards the purchase of real estate, you still need to be aware of the disqualified party and Solo 401k prohibited transaction rules. Disqualified parties make up the Solo 401k trustee and any of his or her IRAs because the trustee is a disqualified party and any of his or her assets are also considered disqualified. Further, the Trustee’s children (with the exception of stepchildren) and their IRAs are also considered disqualified parties and therefore cannot loan funds to their mother’s Solo 401k plan. However, other parties not considered disqualified, such as your mother’s brothers and sisters, her stepchildren, her aunts and uncles and cousins as well as friends, can either loan their personal funds or their self-directed IRAs to your mother’s Solo 401k through a non-recourse loan and used for the purchase of real estate in the name of your mother’s Solo 401k.

Can I transfer an Annuity to a Solo 401k?

QUESTION: I have an ING Express variable Annuity - which is not part of any IRA of any kind - just a regular annuity. How can this be transferred to my new self-directed Solo 401k?

ANSWER: The Solo 401k plan rules must be followed when transferring retirement funds to it.  Therefore, unless the annuity that you are seeking to transfer to your new Solo 401k is held inside a 401k, 403(b), 457, 401k, or SEP, SIMPLE or Traditional IRA, you will not be able to transfer your annuity to your new Solo 401k. Note that when an annuity is not held inside an IRA or qualified plan it is generally referred to  as non-qualified annuity, a type of annuity that is funded with after tax funds and cannot be transferred to a Solo 401k plan.

However, if the annuity is held inside an IRA or qualified plan, it may be transferred to your Solo 401k by either completing the annuity company’s transfer-out forms or using a Solo 401k providers transfer forms.

How to prevent your Solo 401k from promissory note fraud

While a Solo 401k may invest in promissory notes, whether secured or unsecured, as the Sol 401k trustee you, not the Solo 401k provider, are required to protect the assets of the Solo 401k plan which includes making investments that are intended to not only benefit the Solo 401k plan but also not put the plan in an unfavorable position. 

As such, take the following steps before investing your Solo 401k plan in promissory notes to help prevent fraud against your Solo 401k plan.

• If the promissory note is to an individual, have the individual provide a credit history report.

• If the loan is to a company, make sure it’s not a shell company by reviewing the company’s financials and verifying that the company is registered.

• If the promissory note investment is secured by real estate, have the borrower provide an appraisal for the property obtain a deed of trust that is recorded in the name of the Solo 401k, and obtain a title insurance policy to confirm correct title priority (i.e., that the Solo 401k is listed in first position).

• Make sure the promissory note documents have been reviewed and approved by your financial professional(s).  

Lastly, the promissory note borrower, not the Solo 401k,  must pay for the expenses incurred in drafting the note, obtaining the appraisal for the property securing the note investment, recording of the deed and title policy.