Pooling Solo 401k with Other Investors in Commercial Real Estate Investment

[Larry B.]

It it permissible to purchase a commercial real estate investment where the solo 401k trust pools funds with other investors who are using their own personal funds. The property will be owned by an LLC. Any input on how to structure this arrangement?

Larry B.

Contact

[Mark Nolan]

Yes, and here are the items to consider:

The solo 401k participant cannot be an employee or a partner/manager in the LLC.

The solo 401k participant’s personal investment as well as certain family members (e.g., his spouse, parents, children, etc.) and his solo 401k investment in the LLC cannot be 50% or more. In other words, all the aforementioned investors–if applicable–investment in the LLC have to be aggregated and cannot be 50% or more.

Lastly, see the following page under “Considerations Regarding Private Equity Investments” for more on the above as well as how to title such investment from a solo 401k side. https://www.mysolo401k.net/solo-401k/private-company-investment/

Mark Nolan

Compliance Officer

Contact

1-800-489-7571 www.mysolo401k.net