Self-Employed 401k Eligibility FAQ – Can I set up a Solo 401k for my rental real estate LLC?

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The solo 401k plan, commonly referred to as self-directed Solo 41k is the retirement plan of choice for self-employed individuals or owner-only businesses including for the features highlighted below:

-The highest contribution limits for any defined contribution plan including up to $57,000 (or even $63,500 if you are 50 or older) for 2020 (for 2021: $58k or $64.5 if you are 50 or older).

-The ability to make pre-tax, Roth, and even Mega Backdoor Roth contributions.

-401k participant loans of up to $50,000

-Invest with checkbook control in real estate, cryptocurrencies, notes, private placements, and other types of alternative investments.

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For over 10 years, My Solo 401k Financial is the leading self-directed solo 401k provider having helped over 8,000 clients take control over their retirement funds by focusing on superior knowledge, expertise, and customer service with over 100+ 5-star verified customer reviews on the Better Business Bureau (BBB)….(read more)

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Self-Employed 401k Eligibility FAQ – Can I set up a Solo 401k for my rental real estate LLC?

If you are a self-employed individual with a rental real estate LLC, you may be wondering if you are eligible to set up a Solo 401k plan for your business. The good news is that as a self-employed individual, you are eligible to establish a Solo 401k plan for your rental real estate LLC.

A Solo 401k, also known as an individual 401k or one-participant 401k, is a retirement savings plan specifically designed for business owners with no employees, other than a spouse. This type of retirement account allows you to make contributions as both the employer and the employee, allowing for potentially larger contributions and tax benefits.

Here are some frequently asked questions regarding Solo 401k eligibility for rental real estate LLC owners:

1. Can I contribute to a Solo 401k for my rental real estate LLC?
Yes, as the owner of a rental real estate LLC, you can contribute to a Solo 401k plan for your business. This allows you to save for retirement while taking advantage of potential tax deductions.

2. Are there any eligibility requirements for setting up a Solo 401k for my rental real estate LLC?
To be eligible to establish a Solo 401k plan, you must be self-employed with no full-time employees other than yourself and your spouse. Additionally, your rental real estate LLC must generate income in order to contribute to the Solo 401k.

3. What are the contribution limits for a Solo 401k for my rental real estate LLC?
As both the employer and employee, you can make contributions to your Solo 401k plan. For 2021, the total contribution limit is $58,000, or $64,500 if you are 50 years or older. This includes both elective deferrals (employee contributions) and employer non-elective contributions.

4. Can I make non-elective employer contributions to the Solo 401k for my rental real estate LLC?
Yes, as the employer of your rental real estate LLC, you have the option to make non-elective contributions, which are typically tax-deductible for your business.

5. Can I take out a loan from my Solo 401k for my rental real estate LLC?
Yes, a Solo 401k plan allows you to take out a loan from your account, up to 50% of the account balance or $50,000, whichever is less. This can provide you with additional flexibility and access to funds for your rental real estate business.

Setting up a Solo 401k for your rental real estate LLC can be a smart retirement savings strategy for self-employed individuals. It allows you to take advantage of potential tax benefits and larger contribution limits, ultimately helping you save for retirement while investing in your rental real estate business. If you have any further questions about Solo 401k eligibility for your rental real estate LLC, it is advisable to consult with a financial advisor or tax professional to ensure compliance with IRS regulations and to maximize the benefits of this retirement savings vehicle.