top of page

Self-Directed 401K

A self-directed 401K, referred to hereafter as the "Indi.K", is a 401K plan setup for your company. As the Manager of the company, you can act as the Trustee for the Plan's monies. Like a self-directed IRA, the self-directed 401K enables you to self-direct your investments, but in this case it is on behalf of your 401K. The investments can be in real estate, other companies, or your own C-Corp. The use of this type of structure enables you to have investment and checkbook control over the 401K. This eliminates custodian involvement and hassles, regardless of the investments. Most importantly, you are able to pay the C-Corp a management fee for managing your assets inside your 401K!

Benefits of the Self-Directed 401K
(Indi.K):

 

1. Traditional 401K Plans do not permit direct ownership of real estate or other non-traditional investments in a 401K, so indirect investment via the Indi.K is the only choice. When an Indi.K sells real estate or other investments, the capital gains are deferred through the 401K, like any other 401K investments. The headaches of 1031 exchanges are never necessary.

 

2. Ownership of the property in an Indi.K allows you, as manager, to have direct, hands-on control of and investment decisions over Indi.K assets, including control of the checkbook. Custodian involvement and hassles are eliminated, regardless of whether the investments are in securities, real estate or other assets.

 

 

 

 

4. Since you control and handle all Indi.K transactions, and act as the "custodian", there are no expensive annual fees. Litigation threats, which accompany investments such as real estate, are substantially reduced. This is done by isolating the investment inside a title holding company or Trust holding company, and away from the rest of your 401K funds and estate.

 

5. The Indi.K continues to provide deferral of income and gains inside the 401K. If the company sponsoring the plan generates income, then you can make contributions of up to $49,000 annually to the 401K plan ($16,500 for employee and $32,500 for employer for the year 2011)

 

 

How Does a Self-Directed 401K (Indi.K) Work?
 

1. We create the entity (LLC or C-Corp). 

2. We create the plan and file with the IRS (Trust with Plan documents). 

3. We rollover monies from current IRA(s) and/or 401K(s) to your Indi.K plan.

4. We setup checking accounts for the company.

5. You direct investments by purchasing membership or stock in a company (your C-Corp or another entity).

 

 

Self-Directed 401K (Indi.K) Strategies:
 

1. Purchase cash flowing real estate

2. Loan to yourself or others

3. Buying or starting a business

4. Use purchase options on real estate

5. Flip properties

 

What Your Plan Comes With:
 

Setup of C-Corp

Filing of State Articles

Filing for Corp EIN with IRS

C-Corp Bylaws

Setup and Operating Guide

Stock Certificates

Meeting Records (Initial and Annual)

Banking Authorizations for Checking Account

Creation of 401K Plan Documents

Filing of 401K EIN

Favorable Determination Letter from IRS

Complete set of Plan Documents with all Necessary Forms and Guides

Assistance and Guidance in the Rollover of Current Plan to New Self-Directed Plan

Assistance and Guidance in Setup of Checking Account

Unlimited Pre and Post Setup Consulting for Plan Setup and Operation

 

3. A Indi.K can use its 401K funding as a down payment for a real estate investment purchase, with the Indi.K financing or borrowing the balance. The use of debt financing for real estate investment is not subject to UBIT tax.

bottom of page