Solo 401k for Electrician Questions
I just resigned from Fedex and would like to rollover my 401k and PPA to a Solo 401k.
1) Can I use a Solo 401k for hard money lending?
ANSWER: Yes the solo 401k regulations allow for investing in promissory notes, whether secured or unsecured notes. Some of the rules that apply to investing a solo 401k in promissory notes include the following:
The borrower cannot be certain family members such as the solo 401k owner’s spouse, children and parents, to name a few.
The solo 401k will need to be listed as the beneficiary/lender on the note.
All note payments must flow back to the solo 401k bank account.
2) I do have a job at an electrical contractor but not making contributions to anything and I’m a part time real estate investor, can I still have a Solo 401k?
ANSWER: Yes an electrician can adopt a solo 401k plan since it is considered a trade or business provided he does not have any full-time W-2 employees. A trade or business is generally an activity carried on for a livelihood or in good faith to make a profit. The facts and circumstances of each case determine whether or not an activity is a trade or business. The regularity of activities and transactions and the production of income are important elements. You do not need to actually make a profit to be in a trade or business as long as you have a profit motive. You do need, however, to make ongoing efforts to further the interests of your business.
3) Which financial institution will this be set up at?
ANSWER: The self-directed solo 401k is provided by us, but you get to choose where to hold the solo 401k funds. You can use your local bank, credit union or a brokerage firm such as Fidelity, for example. To learn more about this CLICK HERE.
4) Do you just set it up or do you also monitor what transactions I make?
ANSWER: We setup the solo 401k plan and provide the ongoing compliance support. VISIT HERE to see a list of compliance services that are provided. However, as the trustee of the solo 401k plan, you will both place and monitor the investments. CLICK HERE to learn more about the role of the solo 401k plan trustee.