Investing a solo 401k in patents does not appear to be a disallowed investment as referenced below; however, it is prohibited to invest your solo 401k in a patent that you (the solo 401k account holder/participant) is developing because you are considered a disqualified party. See below for more on disqualified parties.
However, if the solo 401k invests in a patent that is being developed by a third party (non-disqualified party), the IRS rules do not reference such investment as being disallowed or prohibited. VISIT HERE to learn more about the prohibited transaction rules.
While the IRS rules do not provide a list of approved 401k investments. The code does provide a list of disallowed investment which include the following:
- collectibles, such as art, antiques, gems, coins, or
- alcoholic beverages, and they can invest in certain precious metals only if they meet specific requirements. (IRC Section 408(m))
However, certain transactions between a plan including a solo 401k plan and a “disqualified person” are specifically prohibited by law. CLICK HERE to learn more about the prohibited transaction rules.
