Restate Vanguard Solo 401k to Self-Directed Solo 401k

I am interested in purchasing a 10-acre piece of raw land in Montana but don't want to borrow or to tap my investment accounts because that would trigger tax bills.

QUESTION 1: I have a solo 401(k) at Vanguard with enough assets for this purchase. Can I transfer that to a solo 401(k) with you to buy this plot?

ANSWER: Yes you can transfer your current Vanguard Solo 401k to a self-directed solo 401k for investing in alternative investments such as raw land provided you are still self-employed and have no full-time employees.

QUESTION 2: How is that done? What are the fees?

ANSWER: To invest the existing Vanguard solo 401k plan in vacant land or other alternative investments such as precious metals, notes, tax liens, and private company shares, the existing Vanguard solo 401k plan will need to be restated to a self-directed solo 401k with a solo 401k plan document sponsor such as our company whose solo 401k plan document allows for alternative investments.  

Here is how the Vanguard Solo 401k restatement process works:

Because you already have solo 401k, we just need to restate the plan, so a final Form 5500-EZ will not apply. Instead, you are simply changing solo 401k plan providers. To restate the solo 401k, we need the original effective date of the Vanguard solo 401k plan, which is listed on the initial Vanguard solo 401k opening documents. We also need to know the name of the solo 401k plan. Lastly, you would need to complete the rest of the steps listed on our solo 401k sign-up page or give us a call and we can walk you through the process.  Lastly, visit solo 401k pricing to learn about the solo 401k fees.

QUESTION 3: Also, would there be restrictions on my use of the land? Could I build a home or cabin and use it myself?

ANSWER: While a self-directed solo 401k may invest in land that is subsequently developed, you could not use the land or the developed property for your personal use as it would be a violation of the prohibited transaction rules—specifically the following rule:

Furnishing of goods, services, or facilities between a Solo 401k plan and disqualified person. Click here for a full list of the solo 401k prohibited transaction rules.

Reason being, you are a disqualified party because you are the solo 401k owner and, therefore, may not personally benefit from any of your solo 401k assets including land that is developed.  

Thanks in advance, Larry in Montana