With a Solo 401k for real estate investors, you can invest in real estate properties and other alternative assets. At the time of distribution, you can either liquidate the assets and distribute cash to yourself or you can choose an in-kind distribution. This option allows the plan owners to own and take control of the assets held in a Solo 401k plan, without having to convert them into cash. In the latest Solo 401k Quick Tip video, Sense Financial shared more information about the in-kind distribution from a Solo 401k for real estate investors.
In-kind Distribution from a Solo 401k for Real Estate Investors
You can distribute real estate property from the plan. This is known as an in-kind distribution. It is still subject to income taxes and early distribution penalties if you are under normal retirement age at the time of the distribution. The end-result is you now own the real estate outside of the Plan and can thus use it personally because it is no longer held in the Solo 401k for real estate investors.
Before processing an in-kind distribution, the property must be appraised in order to ensure income tax and early distribution penalty is paid on the correct value.