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February 23, 2024

Can a Solo 401(k) Invest in TICs?

Can a Solo 401(k) Invest in TICs?

Solo 401(k)s can invest in Tenancy in Common (TIC)s. However, special rules apply when the other owner in the TIC is a disqualified person.

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.

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