Individual 401 k Rules: Buying a Retirement Home with Your Solo 401k
With a Solo 401k, plan owners can invest in real estate properties, as long as they don’t live in these properties or benefit from the purchase in any other way. But what if you plan to purchase a retirement home with a Solo 401k? Is it permitted by Individual 401 k rules?
According to the IRS, retirement homes are allowed investments for retirement plans, including the Solo 401k plan. Plan owners can invest in retirement homes, as long as they follow all the rule and requirements. Learn more in this Solo 401k Quick Tip video.
Individual 401 k Rules: Buying a Retirement Home
A retirement home is one of the investment options available to a Solo 401k. You can certainly choose to use funds from your Solo 401k to purchase a retirement home. Keep in mind, however, that you cannot live in the retirement home while it still belongs to the plan. Just like other investment properties, all expenses and income will be accounted to your Solo 401k instead of your personal account. At retirement age, you can have the home distributed to you and start living there. You will have to pay taxes for that distribution, but there will be no penalty.