California Franchise Tax of $800 Waived for Solo 401k Member LLC for Real Estate

Unlike an IRA LLC in California where the IRA is the member of the LLC which is subject to the California annual franchise tax of $800, a solo 401k LLC where the solo 401k is the member of the LLC is not subject to the $800 annual franchise fee provided the solo 401k LLC solely invests in passive real estate (i.e., buy and hold rentals). If the Solo 401k LLC is used to invest in assets other than real estate, the exemption will be lost.

The exemption from the California Franchise Tax is found in R&TC Section 23701x.

Applying for the Waiver

  • Complete CAFT Form 3500: https://www.ftb.ca.gov/forms/misc/3500.pdf
  • The fee for processing the Application is $25

Again, this exemption only applies to solo 401k plans, profit sharing plans, defined benefit plans, stock bonus plans, and does not apply to IRAs including SEP IRAs.

 

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About Mark Nolan

Each day I speak with energetic entrepreneurs looking to take the plunge into a new venture and small business owners eager to take control of their retirement savings. I am passionate about helping others find their financial independence. Having worked for over 20 years with some of the top retirement account custodian and insurance companies I have a deep and extensive knowledge of the complexities of self-directed 401ks and IRAs as well as retirement plan regulations. Learn more about Mark Nolan and My Solo 401k Financial >>

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