Margin Account and Solo 401k

1. There will be no problem with me and my wife both getting a solo 401k, right?  We can both be considered self employed. Yes provided that you are both working in the same self-employed business.

2. Would a margin stock account within a solo 401k be worth it?  It sounds like you get taxed heftily coming out of it (not sure at what rate, though), but at the same time, after about 10 years margin accounts catch up and surpass pretax accounts.  Whether it is “worth it” will depend on the facts and circumstances of course.  From a big picture perspective, this will depend on whether the additional returns achieved through leverage outweigh the additonal taxes incurred (note that the UBIT tax rate can be as high as 40%).

3.  I’d like to invest in real estate, but what are the limitations here?  Can I own a real estate business with a solo 401k or does it fall under UBIT?  I was going to try fundrise’s eREIT for starters. While you can invest your Solo 401k in real estate or REITs, this must be structured as a passive investment (i.e. it can be your real estate business, etc.).

4.  Is owning futures (either managed or directly) or options punished in any way?   If the investment is via a margin account in which case UBIT would apply.

5.  Lastly, any limitations on peer to peer investing? does do IRAs, but I wanna make sure. Peer-to-peer lending is certainly allowed provided that the loan is to un-related person, on market terms & documented in the name of the Solo 401k. With regards to a paricular provider, the question will be whether they will open an account in the name of the Solo 401k (as the account can’t be in your name if you are investing Solo 401k funds).

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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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