I got the Self-Directed Solo 401k checking account opened with Wells Fargo yesterday and deposited my Scottrade IRA direct rollover check today. The name on the Solo 401k bank account lists the name of my Solo 401k Trust and the IRS assigned Solo 401k EIN. Thanks again for your help with that. Now a couple of questions and a clarification.
1) Question: I do have 2 promissory notes still owned by my self-directed IRA LLC. How do I get those transferred into my Solo 401k trust?
Answer: The manager of the Self-Directed IRA LLC will need to prepare note assignments and assign the promissory notes to the Solo 401k by reregistering the notes in the name of the Solo 401k trust.
2) Question: My IRA LLC also owns two residential rental income properties free and clear in Memphis TN. How do I get those transferred into my Solo 401k trust?
Answer: The manager of the Self-Directed IRA LLC will need to prepare grant deeds and assign/grant ownership of the residential real estate properties from the Self-Directed IRA LLC to the Solo 401k by reregistering the properties in the name of the Solo 401k. Therefore, the Self-Directed IRA LLC will be listed as the Grantor and the Solo 401k will be listed as the Grantee.
3) Question: Related to the first two questions, do these assets technically have to go from Self-Directed IRA LLC back to my current IRA custodian and then to Solo 401k trust?
Answer: Good question. There are several steps involved when processing a direct rollover of alternative assets held inside a Self-Directed IRA LLC to a Solo 401k. As such, you will need to work in concert with the IRA custodian to ensure the IRA direct rollover rules are properly applied. Reason being, the IRA custodian is required to properly report the movement of funds and assets from the Self-Directed IRA to another IRA or qualified plan such as a Solo 401k by issuing Form 1099-R and using code G (this code alerts the IRS that the IRA assets have been transferred/direct rollover to another retirement plan such as a Solo 401k).
Further, you will need to provide the IRA custodian with final fair market valuation for the LLC. Next, the IRA LLC manager will need to dissolve the LLC by filing articles of dissolution with the secretary of state in which the LLC was registered. Upon receipt, you will need to be provide the IRA custodian with copy of Limited Liability Company Certificate of Dissolution. Next, provide the IRA custodian with copies of executed promissory notes and grant deeds as explained above. Finally, provide the IRA custodian with letter of instruction referencing aforementioned documents and that the fair market value of the LLC should be used to report the amount transferred from the IRA to the new Solo 401k. Make sure the IRA custodian understands that you are not transferring the LLC but rather the LLC assets to the Solo 401k. Lastly, your experienced Solo 401k provider may need to assist you in composing the letter of instruction to your current IRA custodian.