Rollover IRA rental real estate purchased with IRA distribution into a Solo 401k Plan

QUESTION: About a month back I processed a distribution from my self-directed IRA with Pensco Trust. The distribution included a rental property that I then sold about a week ago. I then deposited the proceeds from the property sale into my personal savings bank account. Since I’m self employed as a real estate agent, I would like to now set up a solo 401k and subsequently deposit the cash proceeds from the real estate property sale into the solo 401k. Can you please confirm that I can accomplish the foregoing without running afoul with the 60 day rollover rule?

ANSWER. Yes. You are basically looking to process an IRA distribution to a solo 401k before the expiration of the 60 day rollover window, which can be accomplished even though you will not be rolling over the rental property that was originally distributed from the IRA, but rather the cash proceeds from the sale of the property.

IMPORTANT: The same would not be true had the IRA distribution consisted of cash instead of the rental property and then the rental property purchased outside of the IRA, with the rental property then deposited into the solo 401k plan before the expiration of the 60-day rollover window. The transaction would not satisfy the IRA rollover requirement because only the cash distributed from the IRA may be rolled over to a 401k including a solo 401k plan.

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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