When investing with a Real Estate 401 k plan, plan owners may need to obtain insurance for their properties. According to Solo 401k rules, plan owners need to keep all transactions at arm’s length. As a disqualified person, the plan owner is not allowed to pay for the Solo 401k investment expenses using personal funds. He or she also cannot extend any credit to the plan.
When it comes to insurance policy for a real estate 401 k property, plan owners cannot pay for the insurance expenses. The policy also should be under the name of the Solo 401k plan.
In this Solo 401k Quick Tip video, we will discuss what plan owners need to know about insuring a Real Estate 401 k rental property:
Insuring Rental Property Held by a Real Estate 401 k Plan
The property insurance for a rental owned by your 401k should be in the name of the Solo 401k trust, which is the owner of the property. Sometimes the insurance company may insist for the insurance to be in your name as individual. As the trustee of the plan, you can obtain insurance in your name, but be sure to ask the insurance company to add the trust as other interest. Remember that insurance premiums as well as any other expenses related to the property must be paid from the Solo 401k account.