More inforation about Solo 401k Program

BACKGROUND: I called you last week about setting up a solo401k and just wanted to get some more details about this program.

I have a 401k from a previous employer and ING and wanted to setup a solo 401k in order to make a loan to myself and most likely some type of real estate investment. I have a full time job but also do some work as an independent contractor.

I make maybe $2000 a year with the independent contractor job and currently have been reporting this on the standard 1040.

QUESTION 1: I know I need an EIN number for the solo401k but should I also get an EIN number for the second job or can I continue to just receive this income under my social security number?

ANSWER:  I don’t recommend getting an EIN for your sole proprietorship as it is not required. Most sole proprietors use their social security number on their schedule C which is an attachment to the Form 1040.

 
I have roughly $60k to roll over, plan to take a $30k solo 401k loan and possible buy some real estate with the balance.

QUESTION 2: You had said the interest would be prime plus 1% ~ 4.25 currently for 5 years.
With an outstanding loan would it be permissible to finance a piece of real estate (if I were able to find a seller willing to finance)?

ANSWER:  The current prime rate is actually 3.25 so the solo 401k loan interest rate would be 4.25%.

Yes the remaining $30,000 in the solo 401k may be invested in real estate, and seller financing/debt financing may be used.

Thanks,

Jeff in North Carolina