I have some questions about your Solo 401K plan.
1) QUESTION: Can I invest in a Limited Liability company and under the operating agreement, only be allowed to receive interest, dividends and capital gains from that company, with the other investors allowed to receive the income from the operation of the company?
ANSWER: Assuming you qualify to open a Solo 401k, which means you are self-employed and have no full-time employees besides yourself a business partner or your spouse, then yes our self-directed Solo 401k plan permits investments in private companies including LLCs. However, the prohibited transactions would obviously still need to be followed. Therefore, based on your question, your Solo 401k may only own less than 50% of the LLC and the profits would have to flow from the LLC to the Solo 401k based on the Solo 401k plan’s less than 50% membership interest. Further, you cannot be an employee of the LLC nor receive any type of compensation as it would run afoul with the prohibited transaction rules. Simply put, you cannot benefit personally from your Solo 401k plan’s investment in the LLC.
2) QUESTION: Can I invest all my funds into the above company, or is there a 25% limit?
ANSWER: From the Solo 401k stand point, the purchase of membership units in an LLC is limited to less than 50% as described above. Visit Solo 401k prohibited transactions to learn more.
3) QUESTION: Cost of the Solo 401K plan?
4) QUESTION: I have a Roth IRA investment in the above Limited Liability Company and want to cancel the trust company that I have and roll the in-kind transfer to new Solo 401K plan. Can I do this?
ANSWER: No. The IRS regulations do not permit the transfer of Roth IRAs to Solo 401k plan.
5) QUESTION: Can I set-up the plan before the end of year (2012)?
ANSWER: If you qualify to open Solo 401k, yes you can open Solo 401k by 12/31 deadline and wait to make your 2012 Solo 401k contribution by your tax return due date plus extensions.