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