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California Real Estate Investments – Solo 401(k)

california self-directed ira
2 Minute Read

You can make many investments with the Solo 401(k) retirement plan, including California real estate investments. You’re not restricted to traditional investments when you establish your plan at a self-directed facilitator, such as IRA Financial. As a result, you can make investments like real estate, tax liens, private placements and much more. If you have confidence making traditional investments, you can further diversify your retirement portfolio by investing in stocks, bonds, mutual funds, etc.

The Solo 401(k) for California Real Estate Investments

The Solo 401(k) is an IRS approved qualified retirement plan that was designed specifically for the self-employed and small business owner with no full-time employees. The Solo 401(k) retirement Plan offers such individuals a significant number of retirement and investment opportunities. Like a self-directed IRA with checkbook control, as trustee of the Solo 401(k) Plan, you have the freedom to make all investment decisions for your Solo 401(k) without the consent of a custodian. This gives you checkbook control over your 401(k).

Therefore, the Solo 401(k) plan allows you to eliminate the expense and delays with an IRA custodian. Ultimately, this enables you to act quickly when the right investment presents itself.

Trustee of the Solo 401(k) Plan

Like a Self-Directed IRA LLC where the IRA holder will serve as the IRA LLC manager, in the case of a Solo 401(k) Plan, the business owner can serve as trustee of the Solo 401(k) Plan. Accordingly, as the Solo 401(k) Plan trustee, making an investment is as simple as writing a check straight from the Solo 401(k) Plan bank account, which you can open at any local bank or credit union.

Unlike a Self-Directed IRA with checkbook control, which requires the formation of an LLC, any type of business, including a sole proprietorship can adopt the Solo 401(k) plan. The advantage of this, especially in a State like California, is the business owner does not have to establish another LLC, which comes with filing fees and a minimum California franchise fee.

Benefit of a Solo 401(k) in California

Establishing a Solo 401(k) without the need of an LLC is advantageous in a state like California, which imposes a minimum annual franchise fee on all entities doing business in California. If you were an investor who used a Self-Directed IRA with checkbook control to make an investment, you must establish a special purpose LLC. In most states the LLC filing fee is quite minimal (typically around $150) with very small annual filing fees. However, for a State like California, the filing fee is much steeper. Not having to form an LLC offers a significant tax-saving.

Open a Bank Account Anywhere

A Self-Directed IRA LLC requires a special IRA custodian, often called a passive custodian. Even though IRA funds are transferred tax-free into the newly established LLC, an IRA custodian must be a part of the process. However, in the case of a Solo 401(k) plan, investors can open the 401(k) account at any local bank or credit union. In most cases, this involves no fees. This, along with not having to establish an LLC makes the Solo 401(k) a great solution for a California retirement investor who is self-employed and has interest in making real estate investments within California.

Get in Touch

To learn more about the advantages of using a Solo 401(k) to make California Real estate investments, get in touch with a certified 401(k) specialist at IRA Financial. Call us directly at 800-472-0646. Or fill out the contact form and a specialist will be in touch with you.

We look forward to assisting you.

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