Personally using Roth Solo 401k Real Estate Property

QUESTION: Before I make the decision on the Roth solo 401k in-plan conversion, I have a few more questions, so bear with me. Are the rules the same in regards to use of the property? Since I will be paying the taxes on the total amount of the property value, does that remove the restriction on usage of the property? The last question I have is related to the deed of the property, do I have to change the designation of ownership to record the Roth Solo 401K as the new owner.

ANSWER:  No you cannot use the property because it will still be owned by the solo 401k. Yes it is best that the deed is recorded to show that the Roth now owns the property, so title should reflect as follows if the Roth owns the entire property.

Solo 401k name (ROTH)

Additional Information

New Roth Solo 401k Conversion Rules 

Roth Solo 401k Distribution Rules

Can you have an IRA and a Solo 401k Plan?

QUESTION: Are the limitations between contributing to an IRA or a 401k confined only to contributions or are you only allowed to have one or the other. So, if we were to set up an IRA in the future and roll the assets of the 401k into it - are we then bound to only contribute to the IRA from that point forward or are we allowed to roll the assets into the IRA and then continue contributing only to the 401k?

ANSWER: An individual is allowed to participate in an IRA and a solo 401k at the same time; however, the tax deductible contributions to an IRA are affected if you are also contributing to a solo 401k plan. See following link for more on this. 

http://www.mysolo401k.net/contribute-ira-llc-self-directed-401k-magi-rules/

Common Solo 401k LLC Questions

1. Does the Solo 401 LLC operating agreement only permits real estate transactions or any other investments?

ANSWER:  The operating agreement will include language that lists all investments not disallowed by the IRS regulations and will also list disallowed investments. Disallowed investments include collectibles, works of art and alcoholic beverages, to name a few.

2. Do you need to file any tax returns for the LLC?

ANSWER:   A tax return is only required if the LLC has multiple members and it will be your responsibility in conjunction with your accountant to prepare and to file it.

3. For myself any wife will the LLC be single member or multiple with both of us funds coming from respective solo401k account?

ANSWER: The LLC will be deemed single member since both of you are participating in the same solo 401k plan since the solo 401k will be the member. 

4. Can I also become a member of this LLC (apart from Trustee of solo401k ) using my own funds? Will that be prohibited?

ANSWER: Yes you can as long as it is done at the start; however, the LLC will be deemed a multiple member LLC.  

  

5. What if LLC uses finance to buy real estate, will there be any UBIT tax? If finance is used by Solo401k trust there is no UBIT tax.

 

ANSWER: UBIT will not apply if debt financing is used to invest in real estate.