QUESTION 1: We have an IRA LLC, with real estate assets:
Can that be transferred into your i401k Roth program?
QUESTION 2: Can the IRA LLC also be transferred, to become either an i401k LLC, or an asset owned by the i401k [amending the Operating Agreement to reflect i401k ERISA & DOL laws]?
QUESTION 3: or do we have to shut down the IRA LLC and liquidate the real estate to which it holds title, and then transfer the IRA? We’d really like to keep the LLC, if IRS rules permit it.
ANSWERS: Here are your options.
Transfer the IRA LLC in-kind to the new self-directed solo 401k.
Unwind the IRA LLC by returning the LLC assets to the self-directed IRA. This may entail quite a bit of paperwork depending on the types and number of assets currently held in the LLC.
Subsequently, transfer the assets to the new self-directed solo 401k. Then register a new LLC with the secretary of state, as well as, obviously, drafting a new LLC operating agreement. Lastly, the assets would be deposited/invested from the Solo 401k into the newly drafted LLC.
Alternatively, you can leave the assets in the solo 401k and scratch the new LLC option.
Moreover, to comply with the IRS in-plan Roth conversion regulations, under all of the above options, the pre-tax asset/funds would need to be first deposited to the pretax solo 401k and then an in-plan Roth 401k conversion processed. Lastly, the LLC assets would need to be appraised to ensure the correct amount converted is reported on Form 1099-R using code “G” in box 7.
Thanks Robert in California