QUESTION:
I am considering a transfer of 230,000 from my SEP to a solo 401k. I would like to use it to purchase vending machines.
These vending machines could possibly generate an annual income of $200,000.
Would I be allowed to use the $200 k as income to pay bills, mortgage,
vacation, etc? Thanks. Jason
ANSWER: The 401k business financing retirement plan not the
solo 401k allows for the purchase of a business. While the solo 401k is used
for investing passively in a business, the 401k business financing retirement plan
is used for investing in one’s own business.
Yes the business owner can take a salary based on revenue generated
from the 401k funded business. Because the W-2 income is the business owner’s taxable income, he or she may use the W-2
funds for any purpose including paying bills, vacations, etc.
Thanks,
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