Longboat Retirement Solutions LLC

Questions about the Solo 401k May 16, 2015

This is the first in a series of posts, giving responses to questions that I have been asked….and a little commentary.

One of my favorites:

“Could I set up a Solo 401k with Longboat, transfer the money I have in my current IRA to the new Solo 401k, write a check for the full amount, cash it out and flee the country?”

My answer “I wouldn’t be able to stop you, nor would I or anyone else know that you cashed out.  It would be illegal.  The bank may fill out a suspicious transaction form when you cash a large check.  You would be taking a contribution, and it would be a taxable event.  I don’t recommend this.”

I’m sure people have done this and gotten away with it, but I don’t recommend it.  Any time you take money out of your traditional IRA or 401k it is a taxable event – the IRS wants their piece of the pie.

I am not sure what this guy wanted to do with the cash, but if he was thinking of investing it in another country, he could do that legally with a Solo 401k.  It would be harder, but possible with a Self Directed IRA (you would have to ok it with your custodian).

I am not in the business of giving tax or investment advise.  There is no shortage of “gurus” out there who will sell you snake oil and “fail safe” investments.  caveat emptor

 

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