Self-Directed Individual 401k FAQ – Can I invest my Solo 401k in both real estate and stocks?
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QUESTION:
I intend to set up a self-directed solo 401k and invest in real estate. While I wait for the right purchase, can I still invest in stocks in that account instead of letting my money be idle?
RESPONSE:
Absolutely!
Even though our solo 401k plan does allow for real estate and other alternative investments, the solo 401k plan also allows for investing in stocks, bonds, mutual funds, etc., and other typical investment options available through a brokerage account.
As part of the onboarding process, we will open accounts for the solo 401k at the bank or brokerage account (including Fidelity, Schwab, TD Ameritrade, etc.).
Of course, in order to invest in stocks, bonds, mutual funds, etc. one will need a brokerage account for their Solo 401k and in that case, we will prepare the paperwork to open an account at the brokerage of the client’s choice.
Based on client feedback, many clients who wish to invest in real estate prefer a bank account as they will now have access to certified bank checks, a debit card, and the ability to ACH funds in and out of the bank account which may be helpful when it comes to investing a Solo 401k in real estate including facilitating the income and expenses related to Solo 401k real estate investments.
Please note that it is possible to have both a bank and brokerage account for one’s Solo 401k and move money between such accounts (for example, move funds from a pre-tax Solo 401k bank account to a pre-tax Solo 401k brokerage account to invest Solo 401k funds in a mutual fund between real estate investments).
