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Don't Confuse Solo 401k with 401k Small Business Financing

4/30/2012

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Investor has option to invest Solo 401k in alternative investments such as real estate, private placements, notes, trust deeds, tax liens, etc., in addition to equities (stocks and mutual funds). Whereas a 401k for small business financing is used for what the name implies: to finance one's business or franchise, for example.

Moreover, when you open solo 401k, you are restricted by IRS regulations from investing 100% of the plan's funds in your business, which is not the case with 401k small business financing. Further,  solo 401k is for maximum of two participants--both spouses or two business partners, whereas 401k small business financing allows for unlimited number of participants.
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    Author


    George Blower is a principal of My Solo 401k Financial LLC and also serves as the General Counsel with responsibility for providing all legal services to the organization.  

    Prior to joining My Solo 401k Financial, he served as general counsel for a subsidiary of a Fortune 500 financial services company.  

    He received his bachelor’s degree in economics at the University of Michigan in 1998 with honors. He received his juris doctorate from Harvard Law School in 2001. He is a member of the Michigan and Ohio bar associations.

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