401K Financial Planning

One Response to “on disablity can I invest my 401k in a business?”

1. MVD34 Says:
   January 23rd, 2012 at 1:20 am

   Nope.. not allowed.

   (a) A 401k is qualified plan.

   (b) For an IRA your daughter is a disqualified person.

2. Woof Says:
   January 25th, 2012 at 12:20 am

   No. Your investment choices are limited to those offered by the specific 401(k) plan.

3. TheSchwaz Says:
   January 25th, 2012 at 10:42 am

   There is a slight chance that this may be possible. First you will need to have a self directing plan. A 401k is a qualified plan and most likely was not set up as self directed. You could roll over into a traditional ira that is self directed and invest in alternative investments, such as business entities. Even if you roll over into this type of plan, you may still run into issues with your daughters business. She is considered a disqualified individual and the irs prohibits investing directly with a disqualified person. The exception in business entities is that a disqualified individual is allowed, but cannot have a combined interest in the business exceeding 50 percent. This means that she needs to have other partners involved with the business that are not considered disqualified individuals to yourself (any person of your lineal decent I.e. Children, grandchildren, your parents or grandparents would be considered disqualified). So in short, if your daughter has three other business partners and they each own 25 percent of the business, you would be able to buy into a percent of the business yourself, not to exceed 50 percent including your daughters interest (this would take buying out one of the partners or percentages of their shares). So while the chances may seem slim, it may be possible but it depends on the particulars of your specific situation. This info is simply my opinion and interpretation and not to be taken as professional investment advice.