Open 401k for LLC

QUESTION: I operate an LLC that is taxed as an S-Corporation for tax reporting purposes and I’m the only employee, so I issue a w-2 to myself each tax year. While I currently only do part-time work (10 to 15 hours per week) under this LLC, I want to know if qualify to open a 401k for my LLC and then invest in apartment rental units as well as tax liens down the road?

Any information you can provide would be appreciated.

Thanks, Jason in Colorado

ANSWER:  Yes based on your information above it appears that you meet the qualifications for participating in a Solo 401k, which are:

1)    The presence of self-employment (full-time or part-time)

2)    The non-presence of common-law employees who work full-time (note that if your business employed part-time employees, defined as those working 1,000 or less hours per year, you would still qualify to open a solo 401k for your LLC.)

The solo 401k that we offer can be self-managed, meaning that you serve as the trustee of the solo 401k, thus you are in control with respect to choosing the investment types and processing the investment purchases. Our Solo 401k plan permits any investment allowed under the regulations, including the following:

Real Estate, tax liens, precious metals, promissory notes, private equity investments, and more. For a full list, click here.

Disallowed solo 401k investments include work of art, rug or antique, certain metals and gems, stamps, alcoholic beverage, to name few. For a full list visit here.

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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