Open solo 401k for real estate investing while still employed

QUESTION: I am currently employed and have a 401k serviced by Fidelity. I want to invest in real estate using my 401k so it appears I will need a solo 401k. Is there any way for me to do this while still employed? Most of the time, I hear that you can’t do a roll over if you are still employed. Thanks for your time and help.

ANSWER: While the retirement account rules permit participation in multiple 401k plans (e.g., full-time employer 401k and self-employed 401k), you will need to check with your current employer as to whether or not you can transfer funds from the existing plan while still employed. However, if you are age 59 ½ or older you will be able to transfer your existing employer 401k funds (unless you are not fully vested) because age 59 ½ is a triggering event under the IRS 401k distribution rules.

Lastly, make sure you satisfy the self-employed requirements for opening a solo 401k before moving forward.  Lastly, yes the solo 401k may be invested in real estate provided the real estate is not purchased from a disqualified party (e.g., the solo 401k owner, his or her spouse, children, and parents, to name a few) and the real estate is not used by disqualified parties.

Linda in Topeka Kansas

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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