Solo 401k

Solo 401k Private Company Investment Questions

December 17, 2016 | By Mark Nolan
I have the following questions regarding investing my solo 401k in a private company.

  • Can I use my Solo 401k funds to invest in a private company LLC that I already personally own units of.
  • I’m the managing member of the private company LLC, but I don’t receive compensation and no fees are collected.

ANSWER:

Given this understanding, you can’t invest your Solo 401k in the LLC for the following reasons:
  • A transaction between a Solo 401k and a disqualified person is prohibited (see more regarding prohibited transactions HERE).  If 50% or more the LLC is owned by you and/or your family members the LLC will constitute a disqualified person (see more regarding disqualified persons HERE).
  • Even if you own less than 50% of the LLC such that it is not a disqualified person you can’t invest your Solo 401k funds in a manner that will personally benefit you such as an investment of your Solo 401k funds in an entity that in which you hold an minority ownership stake.

 

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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