My Self-Directed 401k
is getting ready to be funded into my Wells Fargo Solo 401k Checkbook control bank’s account. I wanted to know what
the process was to use this money. I know I am able to use it to buy
investments; I can invest in a company; I can take a personal Solo 401k loan;
and I can lend it to someone.
QUESTION 1: Can I also use my Solo 401k to purchase
life insurance for myself, and what about health insurance?
ANSWER: The 401k rules do not permit Solo 401k to invest
in health insurance. However, the Solo 401k rules permit Solo 401k to
invest in Life Insurance but certain restrictions apply. Please click on Invest Solo 401k in Life Insurance to learn
about the restrictions and the process.
QUESTION 2: I know I would have to keep good records
and receipts on what I use My Self-Directed 401k for. What about a Solo 401k loan?
Do I get the Solo 401k Loan paperwork
from my Solo 401k provider or from the bank?
ANSWER: Wells Fargo only involvement with your
self-directed 401k is to offer a bank account since you opened Solo 401k with a
Solo 401k provider whose Solo 401k documents name you as trustee and allow for
investing in alternative investments; hence why it’s referred to as
Self-Directed 401k. All other matters (investment decisions, administration of
the loan, safekeeping of the alternative investments, etc) are handled by you
as Trustee of the Solo 401k.
To take a loan (Solo 401k participant loan) from your Solo 401k, the Solo 401k provider will need to prepare
the loan documents after you provide the Solo 401k provider the loan specifics
(amount, payment period, loan date).
Thank you for your help.
Sincerely,
Y M
Y M
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