I am looking at a Checkbook Solo401k so i can invest in a friends business for a good monthly return. Do I need to be self employed to do this? I was self employed for years and my money is in 401k account with a big bank.
Thanks for your question. From the situation you’ve described it sounds like you could definitely find a way to invest in your friend’s business. There are a couple of ways to go about investing, which will basically boil down to whether you plan to actively work in the business.
If you plan to work directly in the business then you may want to consider using a ROBS to help fund your new company. A ROBS is a great tool that allows you to roll over retirement assets to your new company and use those funds directly in your business (you just can’t use retirement funds for certain things – like to pay yourself a salary).
If you don’t plan to work in the new business, then you’d probably be better off rolling your old 401k into a self-directed IRA, which can then invest in your friend’s new business (so long as it isn’t a general partnership or an S-corp and meets certain other criteria. We actually have a great article coming out soon on self-directed IRAs, so be sure to check back!
In the meantime, you can learn more about how to use retirement assets to fund a new business by checking out our article on 401k business funding.
Hope this helps! Thanks again for reading!