In order for a 401(k) to invest alongside a disqualified person (such as their daughter):
- The transaction must take place simultaneously
- It cannot not be purchased from a disqualified party
- Each party’s percentage of ownership must be listed
- Third party debt financing cannot be involved (i.e. a bank)
You want to justify to the IRS/DOL that you could have completed the transaction with your other resources (i.e. cash in your bank account), but you chose to use your Solo 401(k) because it was a great investment for the account.
Because this is a grey area of the tax code, we highly recommend seeking a professional opinion before engaging in such a transaction.