Solo 401(k) Made Simple: Bigger Limits, Fewer Gotchas

PassivePockets: The Passive Real Estate Investing Show

Host Chris Lopez sits down with John Bowens, CISP of Equity Trust to demystify Solo 401(k)s for real estate investors. John explains who actually qualifies, how to stack contributions up to $70k/$77.5k/$81,250 (2025 limits) and use the “mega backdoor” to Roth, and why Solo 401(k)s can avoid UBIT on debt-financed syndications when IRAs often can’t. They get tactical on plan design- one bank account with clean source tracking, blending traditional + Roth into a single subscription (and later in-plan conversions), and exactly how to roll over or restate a plan without triggering a termination. John also breaks down spouse/child participation, controlled-group and W-2 pitfalls, and a real UBIT case study that shows how the right plan choice can save five figures in tax.

Key Takeaways:

Solo 401(k) eligibility: true self-employment income and no rank-and-file W-2s; spouse/partners OK, under-21 and part-time hour rules matter

Higher limits + mega backdoor Roth: employee non-deductible → in-plan Roth conversion for bigger tax-free growth

UBIT advantage: Solo 401(k)s are generally exempt from UDFI/UBIT on debt-financed real estate (IRAs are not)

Simpler operations: one bank account, source tracking in software, and the ability to blend trad + Roth in one deal and convert later

Do rollovers right: restate/transfer the plan (don’t “terminate”), mind Form 5500, and watch controlled-group attribution

Disclaimer

The content of this podcast is for informational purposes only. All host and participant opinions are their own. Investment in any asset, real estate included, involves risk, so use your best judgment and consult with qualified advisors before investing. You should only risk capital you can afford to lose. Remember that past performance is not indicative of future results. This podcast may contain paid advertisements or other promotional materials for real estate investment advisers, investment funds, and investment opportunities, which should not be interpreted as a recommendation, endorsement, or testimonial by PassivePockets, LLC or any of its affiliates. Viewers must conduct their own due diligence and consider their own financial situations before engaging with any of the advertised offerings, products, or services. PassivePockets, LLC disclaims all liability for direct, indirect, consequential, or other damages arising out of reliance on information and advertisements presented in this podcast.