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Self-Directed 401k FAQ: How to wire funds from my Fidelity Solo 401k account for private investment?
QUESTION:
I’m looking to make an investment into a private company with funds in my solo 401k. I need to wire money from Fidelity to the bank account of the Private Company for the capital call. I understand that the funds should not go to my personal account first, so Fidelity instructed me to use the attached form (option 3d) and I’m hoping that you can help me confirm that. Assuming this is the correct form, what else do I need to do to ensure that the investment is not classified as a distribution?
RESPONSE:
For information on how to request Fidelity Investments to wire the solo 401k funds to the private investment sponsor from the Fidelity brokerage account for the solo 401k that you opened with us, please see the following procedure which also references the applicable form Fidelity will need to wire the funds. https://www.mysolo401k.net/solo-401k/fidelity-investments-wire-directive-for-processing-solo-401k-private-equity-placement-investment-from-the-investment-only-non-prototype-brokerage-account/
Also, the self-directed solo 401k may be invested in private placements/ private company shares as long as you are not an employee of the entity and you combined with your solo 401k and other family members don’t own a 50% or more interest in the investment. Please see the following sample procedure for more information on these rules as well as how the investment is titled when investing a solo 401k in such an investment. https://www.mysolo401k.net/solo-401k/private-company-investment/
