Using Your Solo 401k and Roth IRA to Invest in the Same Investment Property (Real Estate)

Eventually you may find an investment property that you would like to purchase using your solo 401k plan but you may not have enough funds in the plan to make the investment. However, you may also have a self-directed Roth IRA that has enough funds when pooled with your solo 401k plan to make the real estate investment.

A possible solution may be through tenancy-in-common ownership. Under this arrangement, the individual’s self-directed Roth IRA and solo 401k plan can be pooled to purchase the property, with each retirement account investing its available funds. Each retirement account will own a percentage of the property.

Title to the property is taken in the name of both retirement account (the Roth IRA and the solo 401k) accounts based on the percentage of ownership  purchased by each retirement account.

For example, if the property purchase price is $100,000 and you invest $60,000 of solo 401k funds and $40,000 of self-directed Roth IRA funds, the ownership percentages would be 60/40.

Title would be taken as follows, for example:

Janet Do, Trustee of XYZ Trust, an undivided 60% interest and Equity Trust Company, Custodian  FBO Janet Do Roth IRA, and undivided 40% interest

After the Purchase 
  • Expenses and income are shared proportionately based on the ownership percentages.
  • Likewise, at time of sale profits will be based on the ownership percentages.

SOLO 401(K)