Please check out this good question from our Daily Live Zoom call. Subscribe to our YouTube Channel to get notifications of our Daily FAQs.
Can I use both Pre-Tax and Roth Solo 401k funds to make a Self-Directed Solo 401k investment?
Q: I have money in both a pre-tax and Roth solo 401k account. Can I use funds from each account to purchase a Solo 401k rental property investment?
A: Yes, it is possible to use both pre-tax and Roth funds from a solo 401k plan to invest in the same real estate property. Here are some key points:
- You must be eligible to set up a solo 401k – meaning you are self-employed with no full-time W2 employees (other than a spouse).
- The solo 401k plan must allow for real estate investing and Roth contributions like our plan does.
- The property purchase cannot be a “prohibited transaction” – for example, you cannot buy property you or a related person already owns.
- The property title would transfer from the unrelated seller to the solo 401k account. You can use pre-tax and Roth funds for the same purchase. The purchase is still under one solo 401k entity, with transfers coming from each subaccount. For simplicity, rent payments can go to one account and be allocated between pre-tax and Roth based on investment ratios.
