Self-Directed Solo 401k Setup Questions

I have questions regarding the setup and ongoing use of a Self-Directed Solo 401K to purchase and flip residential real estate.

If the Self-Directed Solo 401k plan is set up under a single member LLC that I already own ( e.g., ABC LLC),

1.)  can both my wife and I participate in the Self-Directed Solo 401k plan?

2.)  If we both can participate, do we need one checking account or two?

3.)  Does my wife need to become a member of the LLC?

4.)  If the main goal or idea is to make money for the plan through buying/rehabbing/selling of residential real estate, can I as trustee of the plan also participate in transactions and be compensated as a Real Estate Broker?

Thank you, T. Acuff 

Answer to Q 1: You can participate and make Solo 401k contributions on behalf of yourself only if you have net earnings (compensation) from self-employment in the trade or business for which the Solo 401k Plan was set up. Your net earnings must be from your personal services, not from your investments. If you have a net loss from self-employment, you cannot make contributions for yourself for the year. Same rules apply to your spouse.

Answer to Q 2: A checking account would be required for each Solo 401k participant for tracking each participants contributions, investment gains, etc. For example, if the name of the Solo 401k is ABC Solo 401k, the two checking accounts would be titled as follows:

Checking Account 1: ABC Solo 401k f/b/o Jane Doe

Checking Account 2: ABC Solo 401k f/b/o John Doe

You can read more about multiple checking accounts for Solo 401k at:

http://www.mysolo401k.blogspot.com/2012/03/solo-4o1k-or-individual-401k-is-for.html

Answer to Q 3: See answer to Q 1 above. Simply put, your wife will need to generate income from the business in order to participate and contribute to Solo 401k.

Anser to Q 4: You can invest in real estate alongside your Solo 401k through tenancy-in-common arrangement; however, you cannot receive compensation (e.g., commission) from the transaction as it would be deemed a prohibited transaction. what's more you nor your Solo 401k may incorporate debt financing when investing in real estate alongside your Solo 401k. Lastly, the real estate purchase would need to happen simultaneously. 

You can find out more about tenancy-in-common by reading following link:

http://www.mysolo401k.net/Blog-for-MySolo401k.html?entry=purchase-property-with-solo-401k

http://www.mysolo401k.net/Blog-for-MySolo401k.html?entry=purchasing-buying-real-estate-with