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Message
Looking for info on Self-Directed 401(k)
Posted on 2/26/25 at 9:02 pm
Posted on 2/26/25 at 9:02 pm
Anyone ever used one of these before?
I read about them recently, and recently started my own business, so I'm really interested in setting one up. The potential to invest in real estate through one is the main intrigue, as I already have an employer-sponsored 401(k) with my full-time job, and contribute 15% into that one.
My business is consulting, and while there are some fixed rate services I provide, most of my income will be commission-driven. Anyone with specific experience with any type of solo 401(k) and this type of "irregular" income?
I read about them recently, and recently started my own business, so I'm really interested in setting one up. The potential to invest in real estate through one is the main intrigue, as I already have an employer-sponsored 401(k) with my full-time job, and contribute 15% into that one.
My business is consulting, and while there are some fixed rate services I provide, most of my income will be commission-driven. Anyone with specific experience with any type of solo 401(k) and this type of "irregular" income?
4
Posted on 2/26/25 at 9:10 pm to Cowboyfan89
I do. Do you have a substantial IRA to roll into it? If not, it’s going to take you some time to build up to where you could use it for RE. You likely would want to back off your contributions to the match so you could fund more into the SD401k. Depending on income, matching potential on your W2 job, and income from the 1099 gig, that would determine a lot about how much you could intelligently get into it.
Once you tell us all of that, then we can discuss limitations and potential uses of the SD401k.
Once you tell us all of that, then we can discuss limitations and potential uses of the SD401k.
Posted on 2/26/25 at 9:32 pm to Cowboyfan89
yes i have one for my corporation
make sure you get one from a provider with checkbook control. go open a bank account in the name of the 401k trust then you can invest it in whatever you want basically outsider a few things. much better control this way since you will be the trustee and plan administrator.
No need to open one with a brokerage company where you will not have control and be forced into investing only in their products.
This company will get you an EIN and draw up a QRP for you.
LINK
make sure you get one from a provider with checkbook control. go open a bank account in the name of the 401k trust then you can invest it in whatever you want basically outsider a few things. much better control this way since you will be the trustee and plan administrator.
No need to open one with a brokerage company where you will not have control and be forced into investing only in their products.
This company will get you an EIN and draw up a QRP for you.
LINK
Posted on 2/26/25 at 9:44 pm to UpstairsComputer
What’s considered substantial?
Posted on 2/26/25 at 10:24 pm to Teddy1388
Enough in your account to pay cash. I have checkbook control. Bought two properties 14 years ago, sold one two years ago and bought another
Rules are stringent..but I got sick of having all of my assets in the stock market casino.
My properties were purchase in different times, coming off the real estate dump in Florida
Rules are stringent..but I got sick of having all of my assets in the stock market casino.
My properties were purchase in different times, coming off the real estate dump in Florida
Posted on 2/26/25 at 10:25 pm to Fat Bastard
I use irafinancial, too
Posted on 2/27/25 at 5:07 am to Cowboyfan89
The limits apply to the total of all 401k contributions.
I use a SEP for side business.
I used a solo 401k when I did not have a regular job. It allowed me to make big contributions to retirement.
It was through Fidelity.
I use a SEP for side business.
I used a solo 401k when I did not have a regular job. It allowed me to make big contributions to retirement.
It was through Fidelity.
Posted on 2/27/25 at 11:51 am to Cowboyfan89
quote:
and contribute 15% into that one.
That's great but unless you are over 50 you are limited to $23500 a year.
Posted on 2/27/25 at 3:14 pm to VABuckeye
I looked into this once.. for real estate.. as I recall lots of snags.. mostly was you could not depreciate the real estate against income generated in this method..
I may be wrong but I do recall it was not what I wanted to do .. fwiw I have rental and plenty of 401 I was considering investing in something other than stocks..
I may be wrong but I do recall it was not what I wanted to do .. fwiw I have rental and plenty of 401 I was considering investing in something other than stocks..
This post was edited on 2/27/25 at 3:17 pm
Posted on 2/27/25 at 9:46 pm to VABuckeye
You can hit the total limit at 70k in a SD401k assuming you're under 50.
Just to keep the math simple:
W-2 Income 100k
Match 6%
That's 12k of 70k. So 58k remaining.
Then in 1099 business if he makes 100K:
Up to $23,500 deferral limit minus the 6k from above - $17,500
25% profit share - $25,000
After Tax - $15,500
Total: $70,000.
But now you only got 58k to do anything with. Going to take a minute to get good properties like this unless you already have money to fund this with.
Just to keep the math simple:
W-2 Income 100k
Match 6%
That's 12k of 70k. So 58k remaining.
Then in 1099 business if he makes 100K:
Up to $23,500 deferral limit minus the 6k from above - $17,500
25% profit share - $25,000
After Tax - $15,500
Total: $70,000.
But now you only got 58k to do anything with. Going to take a minute to get good properties like this unless you already have money to fund this with.
Posted on 2/27/25 at 10:24 pm to VABuckeye
quote:
That's great but unless you are over 50 you are limited to $23500 a year
Not so my friend; for 2025 max is $70k for under 50 and $77.5k over 50.
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