Solo 401K for rental property (but employed fulltime)

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biggs198
Posts: 5
Joined: Wed Feb 04, 2015 1:09 pm

Solo 401K for rental property (but employed fulltime)

Post by biggs198 » Fri Jan 12, 2018 5:10 pm

I am wondering if I can own solo 401k for profit i earn from rental property. I am fulltime employed with 401k tax free maxed out. I want to contribute additional money to after tax IRA and would like to use solo 401k for it. I already contribute to individual IRA > backdoor roth as well. Is it possible to send my rental profit to solo 401k as after tax?

mattsm
Posts: 161
Joined: Mon Jan 11, 2010 10:27 am

Re: Solo 401K for rental property (but employed fulltime)

Post by mattsm » Fri Jan 12, 2018 5:11 pm

After tax? Why not just invest in a normal brokerage account?

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Duckie
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Re: Solo 401K for rental property (but employed fulltime)

Post by Duckie » Fri Jan 12, 2018 6:17 pm

biggs198 wrote:I am wondering if I can own solo 401k for profit i earn from rental property.
Most of the time income from rental property is considered "passive" and is reported on Schedule E. In that case it is not considered "compensation" and does not qualify for a solo 401k.
Is it possible to send my rental profit to solo 401k as after tax?
If you are a self-employed real estate professional and file Schedule C for your property income then you could open a solo 401k. But if you're planning on the "after-tax" contributions you won't be able to have a standard solo 401k. You'll have to either be your own administrator or out-source it. See Mega Backdoor Roth In Solo 401k: Control Your Own Destiny.

biggs198
Posts: 5
Joined: Wed Feb 04, 2015 1:09 pm

Re: Solo 401K for rental property (but employed fulltime)

Post by biggs198 » Sun Jan 14, 2018 12:13 am

@duckle, thanks for the info. That's what i suspected. I used to previously work for a company that allowed additional 20K after tax contribution to 401k, on top of 18k before tax. But new company doesn't allow it. It seems that the law is unequal wondering if anyone has looked into filing a complaint.

@mattsm, reason is you could convert it to roth and have it grow tax free.

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