QUESTIONS:
I’m running my consulting business through a single member LLC. I don’t envision having any additional employees for this LLC.
My goal is to roll an IRA into a Solo 401(K) to invest in some of my consulting clients, traditional mutual funds/stocks, possibly Bitcoin and perhaps take out a loan.
There are three companies that I’m consulting for where there is a chance that one of the two may occur:
- Be compensated with up to 5% of company stock
- Become an employee or be appointed to the board of directors
Could I use the Solo 401K funds to invest in these companies?
Also, if I invest in a rental property, can I personally rent it at market rates and no have a prohibited transaction?
ANSWERS:
Investing in the following is not allowed if the solo 401k invests directly; however, it is allowed if you borrow from the solo 401k funds and then use those funds for what you are trying to accomplish.
- Be compensated with up to 5% of company stock
- Become an employee or be appointed to the board of directors
If the solo 401k owns the property, then no you cannot use the property for personal use even if you compensate the plan. To learn more about the solo 401k rules, please CLICK HERE. For solo 401k FAQs, VISIT HERE.