All investment activity done by the Solo 401k must be passive.

One of the really special benefits of your Solo 401k is that the funds are tax-deferred.

That means that if you sell an investment owned by the Solo 401k, the profits are passive and no capital gains taxes are due since you used retirement funds.

Keep things simple and clean:

  • Use Solo 401k funds to pay any expenses related to the investment (earnest money, maintenance, management fees, etc)

  • Have any profits deposited directly into the bank account for the Solo 401k (you never get the money personally)

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