In brief: I don't know the answer to your question.
I have a solo 401K with Fidelity and they have been very weasy to work with, but all I own in the account is mutual funds. You could certainly buy a REIT fund in an account with them, but I very much doubt that they have any mechanism to allow you to invest in individual properties using your solo 401(K) account.
claims to offer an account that is exactly what you are looking for.
This is a qualified plan for those who own or run a business which has no employees. A Solo 401k offers the same abilities as an IRA LLC, but without having to hire a custodian or create an LLC.
The Solo 401k offers several unique benefits above and beyond the IRA LLC:
- Invest into private companies, precious metals, real estate, and virtually anything else
- Transfer existing retirement funds into this new plan (anything that could be transferred into an IRA)
- Make new contributions
- No need to hire a custodian. .. . For a self directed plan, naming yourself as trustee offers simplicity, reduced cost, and the comfort of not needing to place trust in another person or financial institution.
- No need to establish an LLC. You have checkbook control built in without having to form an LLC. . . .
- Maximum contribution limits nearly 10X higher than the IRA. r.
- Borrow money from your retirement funds. Take a loan up to $50,000 (or 50% of account value) for any reason. The loan must repaid over a term of up to 5 years.
- Roth subaccount with no income restrictions. . . .
- UBIT/UBTI/UDFI Exempt. Generally retirement accounts do not pay income or gains taxes, but when an IRA owns real estate that carries mortgage debt, a special trust tax is triggered. This is called UDFI tax (Unrelated Debt Financed Income) and is a type of UBTI tax (Unrelated Business Taxable Income). Solo 401k plans are exempt from UDFI. Nabers Group was the first self directed plan provider to announce this discovery.
My guess is that they charge much more than large, low-cost brokers for the solo 401(K) accounts they manage. If you want to go this route, you should probably shop around.
Can I self-direct investments within a mainstream-managed Solo 401K (Fidelity, etc) or do they require it all to be in mutual funds and "investments" that they can control?
I'm not sure why "investments" is in quotes--they really are investments, after all. And concerning the "control" that Fidelity/Vanguard/etc exert over the investments--I don't quite follow you. I own them, and I say what the money is invested in, and I can take it out whenever I choose. If I wanted to "control" real estate I probably wouldn't choose to get a loan to buy it (as the bank then owns it) and I'd be in fear of the city, county, and other entities and the "control" they exert over real estate.
If you don't get many helpful replies here, I recommend you start a new thread titled "Real Estate in a Solo 401(K)?" as that will catch the eye of folks who may know the answer to your question.