Please check out this question from our daily live zoom:
Question: How can a real estate asset be transferred from a self-directed IRA to a solo 401(k)?
First of all, of course, one has to be eligible to set up solo 401(k) (i.e. self-employed with no full-time W-2 employees working for any business owned by such person or spouse if any).
Moreover, one must have a solo 401k plan offered by a provider such as My Solo 401k Financial that will allow one to hold real estate assets in their solo 401(k).
In that case, it is possible to transfer real estate from a self-directed IRA (SDIRA) to the solo 401(k), provided that the IRA is not a Roth IRA because of course one can’t transfer any type of asset from a Roth IRA to any type of 401k including a Solo 401k.
Please note such transfer would entail the following:
- Transfer Paperwork Submitted to Self-directed IRA Provider/Trust Company: As part of our service, we will help guide you through the process such as completing transfer paperwork to instruct the self-directed IRA provider/trust company to process an in-kind transfer of the real estate asset from the SDIRA to the Solo 401k 401(k) so that they can issue a 1099-R to report that transfer as a nontaxable direct rollover to your 401(k).
- Re-titling the real estate investment: The real estate asset will need to be re-titled under the name and EIN of the Solo 410k. For example, for an investment in a resl estate syndication one will need to inform the investment provider of the transfer so that the provider know that the asset is held in the solo 401k (e.g. for purposes of future dividend payments, tax reporting, etc.). For a real estate property investment, one would have to contact the county to ensure that the real estate records reflect that the ownership is held in the name of the Solo 401k.