QUESTION: I was wondering if I can take a loan INTO the Roth solo 401k or on the land that is non-recourse
to the ROTH solo 401k, or does it need to be non-recourse to me personally?
ANSWER: When you incorporate debt financing when investing your
solo 401k—whether pretax or Roth funds— in real estate such as land, the loan
must be to the solo 401k and be non-recourse. Therefore, the non-recourse loan is to the solo 401k not to the
participant as it would be prohibited.
QUESTION: And, can the loan be from a related party: parent or
entity controlled by parent.
ANSWER: The non-recourse loan to the solo 401k can be obtained
from a bank, company or an individual, for example; however, they must not fall
under the solo 401k disqualified party
category. For example, disqualified parties include the solo 401k owner, his
parents, his spouse, his natural grandparents, people providing services to his
solo 401k, his children, and most entities in which the solo 401k owner or any of
foregoing disqualified parties own and interest.
Visit Solo 401k non-recourse loan to learn more.
Thanks!
Jack L. in Florida
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