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Real Estate Investing, Solo 401(k) Document Changes and more | Client Q&A

AdMail Podcast
3 Minute Read

In this week’s episode, IRA Financial’s Adam Bergman Esq. answers questions about setting up a Self-Directed IRA for real estate, investing in stocks and Solo 401(k) plan document changes.




Question 1 from Kevin V. in Youngstown, OH: I am 43 years old and have funds in an employer 401(k) plan. I want to buy real estate, which my 401(k) plan won’t let me do. How can I set up a Self-Directed IRA?

It’s pretty standard that you cannot invest in real estate, or other nontraditional assets, in an employer 401(k). Generally, you can only invest in stocks, bonds, mutual funds or some combination with a target date fund. Therefore, you need a Self-Directed IRA if you want to make real estate investments with retirement funds.

Unlike an IRA, you need a triggering event to move funds out of your 401(k) plan. Typically, a triggering event occurs when you reach age 59 1/2, separate from your job, or the plan is terminated. Since Kevin is under 43 and still works for the same job where his 401(k) funds are, he cannot roll those funds over into an IRA.

However, he may still directly contribute to a Self-Directed IRA, roll over 401(k) funds from a previous job, or transfer other IRA funds into the Self-Directed IRA. His current 401(k) funds are locked in where they are until he has that triggering event.

Question 2 from Wendy T in Rockville, MD: I have a Checkbook Control Self-Directed IRA and I want to buy stocks – what is my best option?

Before we answer Wendy’s questions, IRA Financial is excited to announce that in early 2021, you will be able to use the IRA Financial app to start investing in ETFs, with the ability to buy individual stocks by mid-late next year. We will be the first company to not only allow buying and selling stocks on our app, but also invest in alternative assets, such as real estate.

Until the new robo-app is ready, TD Ameritrade has a really good account using Self-Directed IRAs to invest in stocks and traditional assets. You can use other providers, like Charles Schwab, however there may be reporting issues when it comes to taxes. TD Ameritrade has proven to be the best provider when it comes to knowing that the IRA (or the LLC if one is used) is the vehicle used to invest and not the person who owns the IRA.

Question 3 from Sam E in Olympia, WA: I have a Solo 401(k) plan with IRA Financial. When will my plan documents be updated for change in law?

About every six years or so, 401(k) plan prototype documents must generally be restated. 2021 is that year, so all new changes in the law, including CARES Act amendments. All IRA Financial clients who take advantage of our compliance service will have their documents amended for the most up-to-date laws.

These documents must stay up to date. If the IRS audits you and your plan documents are not up to date, it could get you into trouble. or they may disallow any contributions you have made. It’s important that you are in touch with your plan provider, if it not IRA Financial, to ensure your documents are good to go!

AdMail – Keep it Coming

We hope you enjoyed the latest episode of AdMail. Mr. Bergman will continue to respond to questions each week so long there is a demand for them! If you have any questions for him, email him at abergman@irafinancial.com.

As with his other podcasts, you can check out AdMail on SoundCloud. Be sure to subscribe to know when the next one pops up! Thanks for listening and have a great day, Self-Directed Nation!

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