Top 5 Investment Opportunities with Solo 401k Retirement Plans

One of the most promising features of Solo 401k retirement plan is the ability to choose your investments. If you are a small business owner planning to build a retirement fund, Solo 401k retirement plan offers an excellent opportunity for diversification.

Individual 401k Contribution Limits
Individual 401k Contribution Limits

Real Estate Investing

For full-time realtors, the Solo 401k could be the best retirement plan as it allows investment in real estate. With checkbook control, investing in a property is as simple as writing a check and any gains on your investment is tax-free until distribution. In fact, Roth solo 401k plans can give you access to tax-free distributions so that you can pocket all the investment gains.

A few important factors that you need to consider including:

  • Making all financial transactions through Solo 401k
  • Avoid using any personal funds for covering transaction costs
  • Fund the transaction with non-recourse loan only
  • Do not involve any disqualified individuals in the transaction

Investing in Tax Liens

You can purchase tax liens and tax deeds with your Solo 401k plan. You have to use a check or wire transfer from your Solo 401k account for the purchase of tax liens. In addition to it, any capital gains received from the purchase or sale of tax liens should go into the Solo 401k account only.

Loan Money from Solo 401k Account

It can also be profitable to use your Solo 401k account for issuing personal loans to qualified individuals. You can purchase notes with retirement funds and gain interest over a longer period. Make sure that the interest payments find their way back to your Solo 401k account, where they can grow tax-free.

Invest in Private Businesses

For small business owners and entrepreneurs, the ability to invest in private businesses can serve exceptionally well. You can invest in potential private businesses and even enter into a partnership with qualified individuals. While investing in a private business, make sure that none of the disqualified individuals is participating in the business at any level whatsoever.

Choose Precious Metals and Coins for Investments

Are you interested in investing money in precious metals and coins? The IRS allows investing in precious metals and coins through Solo 401k retirement plans. You can buy IRS-approved coins or metal bullions and store them in a financial institution. Precious metals offer protection against any market declines and they are lower risk investments.

The most important thing to remember in Solo 401k investments is to avoid disqualified transactions and stay invested for longer periods.