In general, an individual with a self-directed IRA that owns real estate is permitted to transfer in-kind the real estate to the a new Solo 401(k) Plan without tax or penalty. The IRS allows IRA holders to rollover IRA funds and assets in a 401(k) qualified retirement plan. Note – Roth IRA funds cannot be rolled into a Solo 401(k) Plan. There are a few important items the IRA holder must consider when deciding how to complete the Solo 401K rollover process.
First, the new Solo 401(k) Plan must be a plan that can accept a rollover of in-kind assets, including real estate. The new Solo 401(k) Plan and custodian would need to accept the in-kind transfer of real estate. Not all Solo 401(k) Plans accept the rollover of real estate into the Plan. Note – IRA Financial Group’s Solo 401(k) Plan accept the rollover of in-kind assets, such as real estate.
Secondly, the in-kind rollover should be handles by a tax professional, since the real estate would likely need to be re-titled into the name of the new 401(k) Plan.
In sum, the in-kind rollover of real estate form an existing IRA to a Solo 401(k) Plan is not restricted by the IRA and the rollover is tax-free and penalty-free. It is important to make sure the 401(k) Plan custodian (bank or financial institution where the 401(k) plan will be opened) and new Solo 401(k) Plan provider allows for the rollover of the real estate from the existing IRA.