I am 69 years old. I am a sole participant in 401(k) solo. The 401(k) solo only investment was rental property which I recently sold. I am contemplating rolling over to IRA and terming 401(k) solo. I pay $200 to 3rd party to keep 401(k) solo updated. The sponsor of plan (2012) is my LLC rental property.
What are the benefits of maintaining a 401(k) solo if I am no longer invested in self directed real estate?
I do the same thing with an SD401K. I haven’t sold the properties yet. Nonetheless, your company which owned the real estate is/was owned by your 401(k), not by you. Yes, you own the 401(k), so it’s a bit of legal fiction, but that’s how it works.
If you did it like I did, your 401(k) bought all or most of your company in return for cash which you then used to buy houses. The only way to unwind that is to figure out how much profit you made, and realize that really it was the 401(k) which profited.
If the house cost say, $100K and you sold it for $150K, then you unwind the 401(k) by giving it back 50% more than it gave you/the company. It gives back the stock it owns in the company as part of the deal and you’re done.
Typically, the IRS will not accept your guess. You probably need to spend a thousand bucks on an independent appraiser who says what it’s worth. The only given is that it did grow or shrink based on what happened to the house(s) it once owned.
Disclaimer: I’m not an attorney or a CPA, and you might need one. What I do is help people with their eventual non-working future.
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