Retirement Accounts

Fund Your Account

2m55s

How to use your existing retirement funds

Which accounts are limited to SDIRAs

Which accounts can rollover to a Solo 401k

BONUS! A quick trick to save you thousands

By now, you might be thinking about opening a Self-Directed IRA, or maybe even a Solo 401k or eQRP. But let’s get started by looking at your existing retirement accounts.

If your retirement funds are held in a Roth or Inherited IRA account, unfortunately, you’re locked into these account types, and you can only transition them to a Self-Directed IRA. Personally, this is the situation I’m in, so I feel your pain if you’re in this boat.

On the other hand, if you have a Traditional IRA, or maybe a 401k of either Roth or traditional formats, or even a 403b or any other type of retirement vehicle, well those funds are totally free to move. And as long as you’re eligible, you can send them wherever you like, whether it’s a 401k or eQRP, or even to a SDIRA if you’re not self-employed.

Now, let’s touch on that last one. Maybe you’re not earning self-employment income, and you can’t qualify for a Solo 401k to fully avoid taxes. How can you get around this?

Well luckily there’s a way! If you don’t currently have self-employment income, you can still go ahead and invest passively with a Self-Directed IRA. As you’ll find in our case studies video, a Self-Directed IRA is unlikely to incur any taxes in the first 3-4 years when passively investing.

Now remember, unless your account is a Roth or Inherited IRA, you’re never locked into a Self-Directed IRA. In-kind rollovers, even while you’re passively invested, are generally not overly complicated. So in the meantime, you can go out and earn self-employment income and become eligible to open a Solo 401k. At that point, you can move the asset from your old Self-Directed IRA, over to your new tax-free Solo 401k.

And remember, the eligibility for a Solo 401k is extremely low. You just need to be able to report self-employment income for any year the account is open. It can be something as simple as selling arts & crafts on Etsy, or doing some consulting work.

And by doing so, this means you were able to invest first, and achieve eligibility down the line. If you’re able to do this before a sale, you’ll avoid 100% of the impending taxes that will come with the associated capital gains. And when you join us for our case study video, you’ll see that on a $100,000 investment, this could mean a tax savings of more than $30,000 on total returns. All because you drove an Uber around town, or you went into your attic and sold some of your old stuff. Come up with any way you can to generate self-employment income every year, and you’ll save yourself a large tax burden when passively investing as a Main Street Investor.

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