Move IRA LLC Assets to a Solo 401k Plan
I currently have a self directed IRA LLC and Trust Company America (TCA) is the SEP-IRA custodian. It has been in place since 2010 and currently the LLC is vested in four properties and has enough cash holdings to invest in a 5th property. My intent is to dissolve the SEP-IRA account I have with TCA and move the assets in the LLC to the solo 401k
plan. My questions are:
Are there any financial reasons why I would not want to do this? As I move closer to 59.5 (turn 54 in April), the solo401k appears to me to be a superior mechanism for making distributions without the hassle and fees associated with moving money from the LLC to the SEP-IRA and then filling out TCA forms for a distribution from the IRA to me. In fact, looking at my custodian agreement with TCA, it indicates they charge 1% of the asset value for full or partial transfers / distributions. I guess this means if I move $500K from the SEP-IRA to the solo401k then they are going to charge me $5K which seems very expensive to do a transfer. Do you know if this is standard practice?
It is not uncommon for IRA and SEP IRA investors who invested their IRAs in a checkbook IRA, to move forward with opening a self-directed solo 401k. If the goal is ultimately dissolve the IRA LLC, generally the IRA account holder will first transfer the IRA LLC in-kind to the solo 401k plan. Then, once the LLC is held inside the solo 401k plan, they will dissolve the LLC and deposit the real estate holdings into the solo 401k plan, resulting in the solo 401k owning the properties. As the solo 401k provider
, we can prepare the SEP IRA transfer form for your submission to the current IRA custodian to process the non-taxable in-kind transfer of the LLC.
Can I keep my current LLC in place and simply have TCA transfer all of the shares owned by my SEP-IRA to my solo401k? Or do the properties have to be retitled in the name of the solo401 and my LLC dissolved? Another option would be for me to sell the two properties in the course of the next year and then move the cash holdings from the LLC to the SEP-IRA and from there over to the solo401k before re-investing in new properties.
Yes you ca also transfer the SEP IRA owned LLC to the solo 401k by processing and in-kind transfer. This will result in the Solo 401k now being the sole member of the LLC instead of the SEP IRA.