What Can a Solo 401k Invest In?

A solo 401k can make traditional investments, such as stocks, bonds, certificates of deposit and mutual funds. However, it also offers self-employed business owners the ability to invest in alternative assets like real estate. In addition, a solo plan allows for investment in almost any type of asset class without requiring the consent or approval of a custodian. The IRS only designates a few investment types that are prohibited.

The following are some examples of investments that a solo 401k is allowed to make:

  • Real estate (including residential and commercial)
  • Loan origination, including hard money loans
  • Foreclosures, short sales, etc
  • Real estate crowdfunding
  • Most foreign currencies
  • Secondary mortgage or mortgage pools
  • Raw land
  • Trust deeds
  • Private operating businesses (be careful with UBTI)
  • Tax liens
  • LLC or other partnership interests
  • Gold, silver or other precious metals (some restrictions apply)
  • Private company C-Corp stock
  • Stocks, mutual funds, bonds and other debt instruments

Unrelated Business Taxable Income (“UBTI”) should always be considered before making any investment.

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Emparion, LLC does not provide legal, investment or tax advice. The information herein is general and educational in nature and should not be considered legal or tax advice. Tax laws and regulations are complex and subject to change, which can materially impact financial results. Emparion cannot guarantee that the information herein is accurate, complete, or timely. Emparion makes no warranties with regard to such information or results obtained by its use, and disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information. Please consult an attorney or tax professional regarding your specific situation.