Solo 401K Investments

yota691 · October 12, 2012

A Solo 401(k) Plan offers one the ability to use his or her retirement funds to make almost any type of investment on their own without requiring the consent of any custodian or person. The IRS and Department of Labor only describe the types of investments that are prohibited, which are very few.

The following are some examples of types of investments that can be made with your Solo 401(k) Plan:

Residential or commercial real estate

Domestic of foreign real estate

Raw land

Foreclosure property

Mortgages

Mortgage pools

Deeds

Private loans

Tax liens

Private businesses

Limited Liability Companies

Limited Liability Partnerships

Private placements

Precious metals and certain coins

Stocks, bonds, mutual funds

Foreign currencies

Real Estate

The IRS permits using a Solo 401(k) to purchase real estate or raw land. Since you are the trustee of the 401(k) Plan, making a real estate investment is as simple as writing a check from your 401(k) Plan bank account. The advantage of purchasing real estate with your Solo 401(k) Plan is that all gains are tax-deferred until a distribution is taken (pre-tax 401(k) distributions are not required until the Plan Participant turns 70 1/2). In the case of a Roth Solo 401(k) Plan, all gains are tax-free.

For example, if you purchased a piece of property with your Solo 401(k) Plan for $100,000 and you later sold the property for $300,000, the $200,000 of gain appreciation would generally be tax-free. Whereas, if you purchased the property using personal funds (non-retirement funds), the gain would be subject to federal income tax and in most cases state income tax.

Tax Liens

The IRS permits the purchase of tax liens and tax deeds with a Solo 401(k) Plan. By using a Solo 401(k) Plan to purchase tax-liens or tax deeds, your profits are tax-deferred back into your retirement account until a distribution is taken (pre-tax 401(k) distributions are not required until the Plan Participant turns 70 1/2). In the case of a Roth Solo 401(k) Plan, all gains are tax-free.

More importantly, with a Solo 401(k) Plan, you, as trustee of the 401(k) Plan, will have "checkbook control" over your retirement funds allowing you to make purchases on the spot without custodian consent. In other words, purchasing a tax-lien or tax deed is as easy as writing a check!

Loans & Notes

The IRS permits using 401(k) funds to make loans or purchase notes from third parties. By using a Solo 401(k) Plan to make loans or purchase notes from third-parties, all interest payments received would be tax-deferred until a distribution is taken (pre-tax 401(k) distributions are not required until the Plan Participant turns 70 1/2). In the case of a Roth Solo 401(k) Plan, all gains are tax-free.

For example, if you used a Solo 401(k) to loan money to a friend, all interest received would flow back into your 401(k) Plan tax-free. Whereas, if you lent your friend money from personal funds (non-retirement funds), the interest received would be subject to federal and in most cases state income tax.

Private Businesses

With a Solo 401(k) you are permitted to purchase an interest in a privately held business. The business can be established as any entity other than an S Corporation (i.e. limited liability company, C Corporation, partnership, etc.). When investing in a private business using 401(k) funds, it is important to keep in mind the “Disqualified Person” and “Prohibited Transaction” rules under IRC 4975 and the Unrelated Business Taxable Income rules under IRC 512. The tax attorneys at the IRA Financial Group will work with you to develop the most tax-efficient structure for using your Solo 401(k) Plan to invest in a private business.

Precious Metals & Coins

Our Solo 401(k) Plan documents allow for investments into precious metals and certain coins. The advantage of using a Solo 401(k) Plan to purchase precious metals and/or coins is that their values generally keep up with, or exceed, inflation rates better than other investments. In addition, the metals and/or coins can be held in the name of the 401(k) Plan at a financial organization (any local bank) safety deposit box eliminating depository fees.

Foreign Currencies

The IRS does not prevent the use of 401(k) funds to purchase foreign currencies, including Iraqi Dinars. In fact, our Solo 401(k) Plan documents permit the purchase of foreign currencies. Many believe that foreign currency investments offer liquidity advantages to the stock market as well as significant investment opportunities.

By using a Solo 401(k) to purchase foreign currencies, such as the Iraqi Dinar, all foreign currency gains generated would be tax-deferred until a distribution is taken (pre-tax 401(k) distributions are not required until the Plan Participant turns 70 1/2). In the case of a Roth Solo 401(k) Plan, all gains are tax-free.

Stocks, Bonds, Mutual Funds, CDs

In addition to non-traditional investments such as real estate, a Solo 401(k) may purchase stock, bonds, mutual funds, and CDs. The advantage of using a Solo 401(k) Plan with “Checkbook Control” is that you are not limited to just making these types of investments. With a Solo 401(k) Plan with “checkbook control” you can open a stock trading account with any financial institution as well as purchase real estate, buy tax liens, or lend money to a third-party. Your investment opportunities are endless!

easyrider · October 12, 2012

Wow!!! this is just too weird, I mean does it make any sense for them to specifically mention the IQD as a 401k?? hmm........ great find Yota and this has got me thinking.

Butifldrm · October 12, 2012

Thanks yota, just like easy, you got my wheels turning. I looked for some other sites to see if they actually mention the IQD and here ya go. Great post thank You!

Solo 401K Investments

<br style="color: rgb(65, 65, 65); font-family: Arial, Helvetica, Verdana, Geneva, sans-serif; font-size: 14px; line-height: 24px; ">A Solo 401(k) Plan offers one the ability to use his or her retirement funds to make almost any type of investment on their own without requiring the consent of any custodian or person. The IRS and Department of Labor only describe the types of investments that are prohibited, which are very few.

The following are some examples of types of investments that can be made with your Solo 401(k) Plan:

Residential or commercial real estate
Domestic of foreign real estate
Raw land
Foreclosure property
Mortgages
Mortgage pools
Deeds
Private loans
Tax liens
Private businesses
Limited Liability Companies
Limited Liability Partnerships
Private placements
Precious metals and certain coins
Stocks, bonds, mutual funds
Foreign currencies

Real Estate

The IRS permits using a Solo 401(k) to purchase real estate or raw land. Since you are the trustee of the 401(k) Plan, making a real estate investment is as simple as writing a check from your 401(k) Plan bank account. The advantage of purchasing real estate with your Solo 401(k) Plan is that all gains are tax-deferred until a distribution is taken (pre-tax 401(k) distributions are not required until the Plan Participant turns 70 1/2). In the case of a Roth Solo 401(k) Plan, all gains are tax-free.

For example, if you purchased a piece of property with your Solo 401(k) Plan for $100,000 and you later sold the property for $300,000, the $200,000 of gain appreciation would generally be tax-free. Whereas, if you purchased the property using personal funds (non-retirement funds), the gain would be subject to federal income tax and in most cases state income tax.

Tax Liens

The IRS permits the purchase of tax liens and tax deeds with a Solo 401(k) Plan. By using a Solo 401(k) Plan to purchase tax-liens or tax deeds, your profits are tax-deferred back into your retirement accountuntil a distribution is taken (pre-tax 401(k) distributions are not required until the Plan Participant turns 70 1/2). In the case of a Roth Solo 401(k) Plan, all gains are tax-free.

More importantly, with a Solo 401(k) Plan, you, as trustee of the 401(k) Plan, will have "checkbook control" over your retirement funds allowing you to make purchases on the spot without custodian consent. In other words, purchasing a tax-lien or tax deed is as easy as writing a check!

Loans & Notes

The IRS permits using 401(k) funds to make loans or purchase notes from third parties. By using a Solo 401(k) Plan to make loans or purchase notes from third-parties, all interest payments received would be tax-deferred until a distribution is taken (pre-tax 401(k) distributions are not required until the Plan Participant turns 70 1/2). In the case of a Roth Solo 401(k) Plan, all gains are tax-free.

For example, if you used a Solo 401(k) to loan money to a friend, all interest received would flow back into your 401(k) Plan tax-free. Whereas, if you lent your friend money from personal funds (non-retirement funds), the interest received would be subject to federal and in most cases state income tax.

Private Businesses

With a Solo 401(k) you are permitted to purchase an interest in a privately held business. The business can be established as any entity other than an S Corporation (i.e. limited liability company, C Corporation, partnership, etc.). When investing in a private business using 401(k) funds, it is important to keep in mind the “Disqualified Person” and “Prohibited Transaction” rules under IRC 4975 and the Unrelated Business Taxable Income rules under IRC 512. The tax attorneys at the IRA Financial Group will work with you to develop the most tax-efficient structure for using your Solo 401(k) Plan to invest in a private business.

Precious Metals & Coins

Our Solo 401(k) Plan documents allow for investments into precious metals and certain coins. The advantage of using a Solo 401(k) Plan to purchase precious metals and/or coins is that their values generally keep up with, or exceed, inflation rates better than other investments. In addition, the metals and/or coins can be held in the name of the 401(k) Plan at a financial organization (any local bank) safety deposit box eliminating depository fees.

Foreign Currencies

The IRS does not prevent the use of 401(k) funds to purchase foreign currencies, including Iraqi Dinars. In fact, our Solo 401(k) Plan documents permit the purchase of foreign currencies. Many believe that foreign currency investments offer liquidity advantages to the stock market as well as significant investment opportunities.

By using a Solo 401(k) to purchase foreign currencies, such as the Iraqi Dinar, all foreign currency gains generated would be tax-deferred until a distribution is taken (pre-tax 401(k) distributions are not required until the Plan Participant turns 70 1/2). In the case of a Roth Solo 401(k) Plan, all gains are tax-free.

Stocks, Bonds, Mutual Funds, CDs

In addition to non-traditional investments such as real estate, a Solo 401(k) may purchase stock, bonds, mutual funds, and CDs. The advantage of using a Solo 401(k) Plan with “Checkbook Control” is that you are not limited to just making these types of investments. With a Solo 401(k) Plan with “checkbook control” you can open a stock trading account with any financial institution as well as purchase real estate, buy tax liens, or lend money to a third-party. Your investment opportunities are endless!

http://www.irafinancialgroup.com/solo401kinvestments.php

yota691 · October 12, 2012

Wow!!! this is just too weird, I mean does it make any sense for them to specifically mention the IQD as a 401k?? hmm........ great find Yota and this has got me thinking.

I got this info from a call on the Phone Yesterday, kinda interesting for something that worthless as they say!!

Thanks yota, just like easy, you got my wheels turning. I looked for some other sites to see if they actually mention the IQD and here ya go. Great post thank You!

Thanks Butifldrm I didn't have to much trouble finding this, after what i was told.. Same article I just didn't post the Link Thanks again

EagleEye · October 12, 2012

Yota ...if I am reading this correctly this is HUGE...no need to go off shore...for those of us.. for whom this is a one-time type investment....

THANK YOU !! GREAT FIND !!!

rockfl9 · October 12, 2012

Settle down everyone...FIRST.. Funding for an IRA or 401k must come from EARNED INCOME and is accounted for at the end of each fiscal year.Capital gains and dividends are not earned income. ..You cannot just decide to write a check for the total amount..For a 401K I believe the limit is 35% of gross income for the year..Second It is a CUSTODIAL PLAN the .assets are held by the custodian, NOT YOU personally ..Usually you give the custodian USD and tell him how to invest it.. For which you will be charged a fee. I dont know how they would handle a transfer of dinar But I think you would first have to fund the account with USD from earnings and when the account balance is greater than value of the dinar get the custodian to accept it and return to you the value in USD. Then remember you cant remove any until 62 without a penalty.

yota691 · October 13, 2012

Iraqi Dinar in your IRA

It is possible to purchase Iraqi Dinar in your IRA (even Roth IRA). With such a unique investment, you will need to open a self-directed IRA. New Direction IRA specializes in making it possible for you to purchase non-traditional investments such as foreign currencies.

New Direction IRA is equipped to handle all the requirements involved with Dinar in your IRA, such as valuations for IRS reporting and account administration.

Q. Does New Direction IRA choose the Dinar dealer?

No, the dealer is up to you. The account holder is responsible for choosing the Dinar dealer and the amount they would like to purchase. New Direction IRA does not sell any product nor promote any products or vendors.

Q. How do I purchase Dinar with my IRA?

There are 4 main steps when purchasing Dinar in your IRA

1. Establish a new account with New Direction IRA, Inc. To open your account New Direction will need the following:

a. 3 page application

b. 1 page fee schedule

c. copy of your driver’s license

d. $50 account opening fee by check

(payable to: New Direction IRA) or Visa/MasterCard

All of these are needed to open an account.

2. Fund the new account with a transfer, rollover or a contribution.

3. Determine how much Dinar you would like to purchase in your IRA and instruct New Direction to purchase the Dinar on behalf of your IRA with a Buy Direction Letter.

4. After the Dinar is purchased, it will be stored at a depository of your choice.

Q. Can I move funds from another IRA to New Direction IRA?

Yes, any IRA can be transferred or rolled over from your current IRA to a new self-directed IRA with New Direction IRA. If you do not have an IRA you can open one with New Direction and fund it with a contribution. For more information, please visit our plans page.

Q. Where can I store the Dinar?

The IRS states that the investment needs to be at arms length. You cannot store the Dinar personally.You will need to store the Dinar at a depository. If you do not know which depository to use, you can ask your dealer. Many times your Dinar dealer has an established relationship with a depository and will assist you with the process.

Q. Can I purchase Dinar with a Roth IRA?

Absolutely, you’re permitted to purchase Dinar with any type of IRA account. New Direction IRA provides a variety of options including: Tradiational IRAs, Roth IRAs, SIMPLE IRAs, SEP IRAs, and more.

Q. Can I contribute Dinar to my IRA instead of US Dollars?

The IRS requires that you contribute dollars to your retirement account. Your Self Directed IRA may then purchase directly from a Dinar Dealer using our Buy Direction Letter.

Q. How do I get Dinar I already hold into my IRA?

The IRS restricts you from doing business across the table from yourself, your spouse, and all your direct lineal family members (and their spouses). Your IRA must make a new purchase of Dinar since you aren’t allowed to purchase anything from yourself or direct lineal family members. https://newdirectionira.com/dinar-in-your-ira/

jeepguy · October 13, 2012

think i`ll try my best too keep the goverment outta my money division ,, as much as possible ,,, ,,, cuts down on paper work :huh:

ExecConsult · October 14, 2012

You can actually invest up to 100% of your first $16,500 of income and then up to 20% of additional income after that. What is even more cool is that your solo 401(k) can be a "Roth" solo 401(k). With a Roth Solo 401(k), you contribute after tax dollars, but ALL INCOME IS TAX FREE (not only tax deferred). If you think there will be a lot of income, This is the way to go.

Best of Blessings,

Mark

P.S. Good article from WSJ online can be found titled 401(k)s for Solo Business. It is written by Jane Hodges

Edited October 14, 2012 by ExecConsult

MAYDAY · October 14, 2012

MARK,

THANK YOU for your comments...You are certainly one of the most respected members of this family......

Can you address the minimum/maximum requirements of this type of IRA ie: Age at opening ......? Length of time account must be held before profits can be withdrawn.......??? Whether or not there are certain requirements that might make

this type of account not suitable for some members?........too junior??.....too senior?...etc ( How is that for PC Compliance? )..lol .......any additional information would be greatly appreciated...

Thank you in advance for your response...........You have always contributed a great wealth of knowledge and character to this family....along with untold multitudes of others......

MAY GOD BLESS YOU AND HOLD YOU IN THE PALM OF HIS HAND !

MAYDAY

rockfl9 · October 14, 2012

ExecConsult::::: I think you forgot to say it must be from EARNED INCOME! Based on your annual tax report.. Also cant touch money in a for 5 years?

yota691 · October 15, 2012

ExecConsult::::: I think you forgot to say it must be from EARNED INCOME! Based on your annual tax report.. Also cant touch money in a for 5 years?

You can touch it anytime you want, but it will cost you!!

20Mil · October 27, 2012

Settle down everyone...FIRST.. Funding for an IRA or 401k must come from EARNED INCOME and is accounted for at the end of each fiscal year.Capital gains and dividends are not earned income. ..You cannot just decide to write a check for the total amount..For a 401K I believe the limit is 35% of gross income for the year..Second It is a CUSTODIAL PLAN the .assets are held by the custodian, NOT YOU personally ..Usually you give the custodian USD and tell him how to invest it.. For which you will be charged a fee. I dont know how they would handle a transfer of dinar But I think you would first have to fund the account with USD from earnings and when the account balance is greater than value of the dinar get the custodian to accept it and return to you the value in USD. Then remember you cant remove any until 62 without a penalty.

Settle down everyone...FIRST.. Funding for an IRA or 401k must come from EARNED INCOME and is accounted for at the end of each fiscal year.Capital gains and dividends are not earned income. ..You cannot just decide to write a check for the total amount..For a 401K I believe the limit is 35% of gross income for the year..Second It is a CUSTODIAL PLAN the .assets are held by the custodian, NOT YOU personally ..Usually you give the custodian USD and tell him how to invest it.. For which you will be charged a fee. I dont know how they would handle a transfer of dinar But I think you would first have to fund the account with USD from earnings and when the account balance is greater than value of the dinar get the custodian to accept it and return to you the value in USD. Then remember you cant remove any until 62 without a penalty.

This is not entirely correct...

What does it mean if a retirement account is "Self-Directed" and why would I want to convert an existing IRA into a Check Book IRA LLC instead?

Many custodial companies are using the term "Self-Directed" to describe IRA and 401(k) products that they market. "Self-Directed" IRAs are an expanded version of a Traditional IRA, and allow investment options from stock and mutual funds to also include real estate, tax liens and a variety of other potentially higher-yielding investments. The only thing they can't invest in is life insurance and collectables (i.e. coins, stamps, etc.).

You "Self-Direct" your account only in the sense that you choose your investments from a very limited list of stocks and mutual funds offered through your account custodian. If you have an Ameritrade account (or something similar), you have this kind of "Self-Directed" account.

Unfortunately, what these companies aren't telling you is that the custodian will only allow you to invest in things they make money with. If there's no money in it for them, you're not going to hear about it.

Even though a self-directed IRA is a step in the right direction, owners of this type of IRA quickly learn that there are some significant drawbacks to this type of plan.

Here are a few 'deal breakers' worth mentioning:

Who's in charge? — Custodial "approval" is required before you're allowed to make an investment. (Why should you have to get someone else's approval to invest YOUR funds?)

Wasted time — So you're ready to invest. GREAT! Before you do that you've gotta fill out all the paperwork and then WAIT up to a week... or longer! (Kiss all those time-sensitive investment opportunities goodbye!)

Interest charges on uninvested funds — Uninvested funds are held in an account with the custodian that pays you little or no interest. (Why shouldn't you be the one making the interest on YOUR uninvested money?)

Transaction fees — Typical fees include a yearly "Maintenance" fee (usually based on a percentage of the market value of the assets in the plan), fees for buying AND selling assets, and fees for every little service from document safe-keeping to cashier's checks and faxes.

These are some of the reasons why many are converting their existing Traditional or Self-Directed IRAs over to a Check Book IRA LLC or "Solo 401k" instead.

You can find companies that will help your existing IRA form and own a special customized LLC. YOU are named as the manager and have the sole signature authority. The LLC is a legal entity that has powers and protections that an individual or any regular IRA don't possess.

What we're talking about here is a hybrid; it's a combination of a self-directed IRA custodian and a special LLC. This kind of LLC is designed specifically for an IRA and respects IRS and Department of Labor codes governing IRAs.

By the way, an IRA owned LLC is a totally different kind of entity compared to a regular LLC. When the paperwork is drafted, it has to contain very specific language that meets all IRA codes and requirements; otherwise, the entire LLC IRA may be disqualified and liable for taxes.

Needless to say, you don't want that to happen! And you don't have to worry about that because Steve's firm will create an LLC for you from start to finish with their legal staff, and with 35 years of experience, they'll make sure everything's done according to all the rules and guidelines.

Once your LLC is created, it's 100% owned by your IRA, which you then become the manager of. That means you can open up a checking account at any local bank branch that you choose.

Then the funds are deposited in that account and you buy and sell out of that LLC. If you purchase investment property, for instance, it's all held in the name of the LLC, and all profits go into the LLC. You don't own the LLC, the IRA owns it... and you own the IRA. Simple, right?

This specific strategy results in no taxes being owed on the profits generated in the LLC, unless you elect a distribution from the plan.

With a Check Book IRA LLC, you can have a checking account for all types of investments. Invest in real estate, foreclosures, tax liens, notes and mortgages; make loans, joint ventures, partnerships, start-up businesses, or managed accounts; trade online, and trade puts, calls and OTC companies. In other words, whatever an LLC can invest in, so can you.

Check Book IRA LLC Asset Protection benefits:

Question: What's worse than not making any return on your IRA?

Answer: Losing it through a lawsuit.

Let's be honest, it doesn't matter whether you're a doctor in a high-risk profession or an auto-mechanic, we live in a litigious society, and no one is completely safe or immune from lawsuits.

Is your current IRA safe from lawsuits?

The US Supreme court ruled that a court could decide how much of your IRA you get to keep in the event you lose a lawsuit and your creditor is allowed access to your IRA assets — Ouch!

Experts say that the average successful person is sued between four and seven times during his or her life. There are nearly one million lawyers in America, and many of them earn a living by suing people, or defending people who are sued.

Setting up a Check Book IRA LLC may not give charging order protection in all cases, but it can help. The assets in the LLC are protected by all of the IRA laws, and as an added benefit, are also protected by LLC laws and statutes. This is because under the law, you, your IRA, and the LLC are all viewed as separate legal entities.

The bottom line is you can make investments anytime you want to by simply writing a check and signing it. You'll also sleep well at night knowing you've got powerful LLC asset protection backing you up.

okane · November 1, 2012

Now for the "stupid question" , can you set this up yourself or do you have to have an outside custodian to do the set up and yearly filing? The tax form looks to be about as easy as it can be.

20Mil · November 1, 2012

Now for the "stupid question" , can you set this up yourself or do you have to have an outside custodian to do the set up and yearly filing? The tax form looks to be about as easy as it can be.

You would definitely want to contact a company that specializes in establishing this type of LLC. They will definitely have all of the answers!

But yes, you will need an outside custodian firm but the company which specializes in forming the LLC will refer you to a firm with no investments to sell you. They will help you form an LLC and name you manager and have the sole signature authority.

Edited November 1, 2012 by 20Mil

okane · November 1, 2012

20Mil , thanks for the response. You are quite the night owl or in a much different time zone. I just ran across this info yesterday and haven't studied it out enough to have better questions. Thank you for your time. Have you done this? The fees seem to vary greatly, both start up and yearly. I did read an IRS memo RE: Individuals going over their contribution limits by not including the bookkeeping, supplies and such involved with the account. As if they, the individual was personally doing all of the management of the fund.

20Mil · November 1, 2012

20Mil , thanks for the response. You are quite the night owl or in a much different time zone. I just ran across this info yesterday and haven't studied it out enough to have better questions. Thank you for your time. Have you done this? The fees seem to vary greatly, both start up and yearly. I did read an IRS memo RE: Individuals going over their contribution limits by not including the bookkeeping, supplies and such involved with the account. As if they, the individual was personally doing all of the management of the fund.

I am a night owl due to me living in Hawaii and trading the financial markets full time. I personally do not have an IRA or a 401k but I am helping my parents to properly establish and protect themselves using this type of structure. If you have any other questions just post them here and I'll do my best to answer them. Overall, the individual has full authority of the investments that the IRA LLC chooses to pursue.

CRYPTO REWARDS!

Solo 401K Investments

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