The Special Purpose Solo 401K LLC

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March 24th, 2011

There are a number of advantages of using a special purpose LLC to make an investment using your Solo 401k Plan.

Limited Liability Protection: The LLC offers its members, in the case of a Solo 401k Plan, limited liability. Owners and members of the LLC are not liable for the debts, obligations, and liabilities of the LLC. Since, in most cases, your retirement account may be your most valuable asset, protecting them from attack from creditors is essential. By using an LLC, you would be able to shield all your 401k assets held outside the LLC from creditor attack.

Privacy: Along with limited liability protection, the LLC offers its owner(s) privacy, confidentiality, and discretion when making investments. Because most states do not require the name of the member(s) of the LLC to be made publically available when forming an LLC, by using an LLC, the 401k Plan participant can shield its identity when making an investment. Whereas, if the Solo 401k Plan made the investment directly (without using an LLV), the Solo 401k Pan’s name would be included on all the real estate and title related documents and would be publically available. In other words, the name of the Solo 401(k) Plan, which typically involves the name of the business or sole proprietorship adopting the Plan would be included on all public documents, whereas, in the case of an LLC, only the name of the LLC would be included. What this means is that anyone looking to identify the owner(s) of the property will have a very difficult time finding it.

By using an LLC to make a Solo 401k plan investment, you will benefit from limited liability protection and privacy protection when making Solo 401k plan investments.

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