Co Investing Solo 401k | Real Estate | Tenants In Common

QUESTION 1: I have read conflicting information on doing a real-estate transaction using the solo 401k partnered with myself. How is this not a prohibited transaction? con investing

ANSWER: Please click here to visit the DOL opinion letter 20001-10A, which cover the co-investment rules.

QUESTION 2: What steps need to be done to ensure it is OK?

ANSWER: Please visit link reference above and also visit tenants in common to learn more.

QUESTION 3: Once funds are rolled into the Trust’s bank account from the SEP, are there any restrictions or special accounting (with more than one bank account in the trust names), when moving funds between accounts?

ANSWER: If both spouses are contributing to the solo 401k, it is best to open separate bank accounts, one for each solo 401k participant. This will help ensure accurate and appropriate accounting of each solo 401k participant’s account. Further, the flow of the investment purchases, gains to expenses should be divided between both solo 401k participant’s respective accounts and based on the amount invested. What’s more, if Roth amounts come into play, each solo 401k participants Roth contributions and/or in plan conversions would need to be separately account for by opening additional bank accounts and designating them as Roth Designated Accounts.

QUESTION 4: How should fees, like notary, the establishment of the trust, and check orders be paid? Does it make a difference if these fees were incurred prior to the account being opened?

ANSWER: Please click here to learn about which fees must be paid with solo 401k funds and which can be paid with personal or business funds.

QUESTION 5: Do you have some general operating instructions with do’s and don’ts?

ANWER: Yes please visit self-directed 401k checkbook control do’s and don’ts. Further, please visit our website as we have published over 1,000 pages on the solo 401k subject and continue to add to it every day. Lastly, please feel free to call or e-mail us anytime to discuss solo 401k compliance questions.

TI C Summary

1)       One “cannot” combine Personal funds and 401K funds into a Real Estate investment if there is any loan involved in the transaction.

2)      One “can” combine Personal funds and 401K funds into a Real Estate investment if it is an all “cash” transaction, i.e. no loan involved.

3)      One can invest their solo-401K funds with “another” investor and get a loan from a bank, provided the other investor is not the solo 401k participant, his or her spouse, children, and grand parents to name a few. For a list of disqualified parties, CLICK HERE.

Solo 401k and Personal Funds QUESTION:

It is possible for real estate to be purchased using non-retirement funds (i.e. personal funds) as well as funds from your Solo 401k via a  “Tenancy in Common” transaction?



In such a transaction, the title would need to reflect the ownership interest of you and your Solo 401k (Ex. Chargers Solo 401k Trust, an undivided XX% interest, and Jane Do,an undivided XX% interest ).  Please note that the purchase would need to be all cash (i.e. no non-recourse debt financing is allowed).  Going forward, all of the expenses must be paid in accordance with the ownership percentages.  Please also note that rental income needs be paid to both owners (e.g. a rental property owned by tenants in common would require the tenants to write separate rent checks for each tenant in accordance with the ownership percentages).  See also in the 2nd link below the alternative option of investing in real estate via an LLC.
For more information on tenancy in common, please see the following link:

Two Separate Solo 401k Plans QUESTION:

If 2 separate solo 401k’s (husband and wife) enter into TIC to buy property, can they still get non-recourse financing?


No financing allowed because of TIC rules. However, if they both participate in the same solo 401k plan then the purchase is done under one solo 401k plan so TIC would me a mute point.

401k Loans and Co Investing QUESTION:

Can I combine money from Solo401k and a loan from a regular 401k account (I currently have a full time job) to fund a real estate purchase?


While the rules do allow for TIC transactions, you would need to be able to prove to the government if you are ever challenged that you could have accomplished the transaction without the use of your solo 401k to avoid a PT for enabling. See DOL Opinion Letter 2000-10A.
For example, if you have additional investment vehicles or funds that could be used (e.g., home equity loan, an IRA, personal brokerage account, etc), but you decided to use your solo 401k plan to co-invest with because it was convenient or because it was a good investment for the solo 401k plan, you would have a strong argument to make such investment.
It is also important to note that a TIC arrangement involving a disqualified person such as the solo 401k participant is executed simultaneously. Your solo 401k plan can’t purchase a property with you a week later buying part of it from the solo 401k plan, for example.

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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