Transfer SEP IRA to Solo 401k and Non-Recourse Loan Questions

QUESTION 1:

I have both a rollover IRA from a previous employer and a SEP IRA. Can I combine these into a solo 401K?

ANSWER:

Presumably you are self-employed if you are already participating in a SEP IRA, but to clarify, here is how the IRS defines self-employment:

Yes the IRS rollover rules permit the transfer of SEP IRAs and Rollover IRAs to a self-employed 401k such as a solo 401k plan.

To see a full list of retirement account types that may be transferred to a solo 401k plan click here.

QUESTION 2:

Also, is it possible to purchase real estate using a non-recourse loan plus a down payment from the solo 401k?

ANSWER:

Yes a solo 401k may incorporate non-recourse loan financing when investing in real estate, whether for domestic or international real estate.

Some of the rules that apply when using debt financing in conjunction with a self-directed 401k to invest in real estate properties include the following:

  • The non-recourse loan is to the solo 401k, not the solo 401k owner/participant;
  • the lender, whether a bank or an individual, can only look to the property for repayment in the event of non-recourse loan default, not any other asset of the solo 401k; and
  • The non-recourse loan does not show up on the solo 401k trustee’s credit report.

Visit solo 401k non-recourse loan for a full breakdown of the rules, and visit solo 401k real-estate purchase methods to learn about others ways to invest a self-directed solo 401k into real estate.

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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