Self Directed (Solo) 401(k) Plans


A Self Directed 401K, referred to after this as "one.K", is a 401K plan which is set up for your company. As the Manager of the company, you can act as the Trustee for the plan's monies. This enables you to self direct investments on behalf of your 401K hence the term self directed 401K. The investments can be in real estate, other companies, or your own C-Corp. The use of this type structure enables you to have investment and checkbook control over the 401K.

Click Here for an overview presentation on the Self Directed 401k (one.KSM)
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Click Here for a brochure on the Self Directed 401k (one.KSM)

Benefits of the Self Directed 401K (one.KSM)

  1. 401K Plans do not permit direct ownership of real estate or other non-traditional investments in an 401K, so indirect investment via the self directed 401K (one.KSM) is the only choice.
  2. When a (one.KSM) (Self Directed 401K) sells real estate or other investments, the capital gains are deferred through the 401K, like any other 401K investment. The headaches of 1031 exchanges are never necessary.
  3. Ownership of the property in a one.K allows you, as manager, to have direct, hands-on control of and investment decisions over one.K assets, including control of the checkbook. Custodian involvement and hassles are eliminated, regardless of whether the investments are in securities, real estate or other assets.
  4. A one.K can use its 401K funding as a down payment for a real estate purchase, with the one.K financing or borrowing the balance. The use of debt financing for real estate is not subject to UBIT tax.
  5. Since you control and handle all one.K transactions, and act as the "custodian", then there are no expensive annual fees.
  6. Litigation threats which accompany investments such as real estate are substantially reduced. This is done by isolating the investment inside a title holding company or Trust holding company, and away from the rest of your 401K funds and estate.
  7. Continues to provide deferral of income and gains inside the 401K.
  8. If the company sponsoring the plan generates income, then you can make contributions of up to $44,000 annually to the 401K plan ($15K for employee and $29K for employer for the year 2006)

How does the Self Directed 401(k) work?

  1. Create Entity (LLC or C-Corp). NAFEP will create the entity with the appropriate state.
  2. Create the Plan (Trust with Plan documents). NAFEP will create the Plan and file with the IRS.
  3. Rollover monies from IRA or 401K to your one.K.
  4. Setup Checking Accounts for the Company and the Plan.
  5. Direct Investments by purchasing membership or stock in a company (your C-Corp or another entity).

Strategies for using the one.KSM

  • Purchase real estate
  • Loan to yourself or others
  • Buying or starting a business
  • Use purchase options on real estate
  • Flip properties
  • License intellectual properties

Click Here for an overview presentation on the Self Directed 401k (one.KSM)
(you may need to temporarily turn off your pop-up blocker or allow pop-ups for this site)

Click Here for a brochure on the one.KSM

Click Here for an application form to order the one.k, which will include both the 401K plan and the special LLC.

For more information or questions, Click Here to send an e-mail. Someone from AE&T will contact you, free of charge.

SM one.k and mySOP are service marks of National Association of Financial and Estate Planning. (www.nafep.com) All rights reserved by NAFEP.

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