I would like to buy an exotic car in Honolulu in the solo 401k Trust Name

QUESTION: I would like to buy an exotic car in Honolulu in the solo 401k Trust name, and have the dealer consignment contract to rent it to the tourist, is this legal? It is very lucrative, as usual all proceeds would be put back into the solo 401k Trust.

ANSWER:  Unfortunately, the IRS regulations surrounding retirement accounts, whether a self-directed IRA LLC or a solo 401k, do not allow for the investment of retirement funds in cars, whether exotic or not. Other types of disallowed investments in retirement accounts include alcohol, works of art and jewelry such as diamonds and emeralds.

An alternative, however, would be to have the solo 401k act like the bank by loaning money to the dealer in a form of a promissory note. To learn more about the promissory note rules, click here.

Much appreciated,

Anthony in Arizona

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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