How to Combine an IRA LLC and a Solo 401(k) for Maximum Flexibility

If you’re serious about putting your retirement accounts to work in alternative assets like real estate, private lending or startup equity, you may find both the IRA LLC (or IRA Trust) and the Solo 401(k) attractive. But what if you didn’t have to choose one or the other? Many investors are combining both to get the best of each.

Here’s how that strategy works and when it makes sense.

Why use both structures?

Each structure brings its own advantages. An IRA LLC gives you “checkbook control” of funds inside a self-directed IRA vehicle; a Solo 401(k) lets you contribute much more annually and, in some cases, borrow from the account. If you qualify for a Solo 401(k) (self-employed or business owner with no full-time employees beyond spouse) you can roll or transfer existing IRA funds into it, and then keep an IRA LLC or IRA Trust in place to hold older funds or certain investments. This layering gives you flexibility.

For a deeper comparison of these structures, read IRA LLC vs. IRA Trust vs. Solo 401(k): Which One Fits Your Investing Style?

 How it typically works

Here’s how you might set this up in practice:

• Start by setting up a self-directed IRA with an LLC or Trust that gives you checkbook control over alternative assets.
• Meanwhile, establish a Solo 401(k) for your self-employment income. If you have an existing IRA, you may roll it into the Solo 401(k) (subject to rules) to capture higher contribution limits.
• Use the IRA LLC for certain investment types where you want streamlined deal flow or more direct control.
• Use the Solo 401(k) for high-contribution years, or for assets that benefit from the Solo structure (higher limits, loans, etc.).
• Maintain separate bank accounts, track which funds belong where, follow required plan documentation and compliance for each structure.

 What makes this combo powerful

• By using the Solo 401(k), you can often invest more each year and take advantage of loan provisions if needed.
• The IRA LLC adds flexibility and speed for alternative assets, especially when dealing with real-time decisions, or assets with highly specific terms.
• By keeping both structures, you’re not limited by one set of rules or contribution caps; you can optimize for each asset and strategy.
• If your business income fluctuates, the Solo 401(k) provides a future “high-capacity” bucket while the IRA LLC continues to hold alternative assets with less annual contribution necessity.

Key issues to watch

• Make sure no one asset is improperly counted or mixed across the accounts. Clarity and segregation of assets are crucial.
• Confirm that you meet Solo 401(k) eligibility rules (no full-time employees beyond spouse, business activity income present) and maintain proper documentation.
• Be rigorous about compliance for each structure (IRS rules, documentation, entity filings, valuations).
• Have clear bookkeeping and tracking so you know what funds are in the IRA LLC vs the Solo 401(k) and how each is invested.
• Consult professionals when rolling funds or using complex structures—mistakes in eligibility or plan setup can cost dearly.

At Check Book IRA, we specialize in setting up both IRA LLCs and Solo 401(k)s, including hybrid structures for investors who want maximum flexibility. If you’re ready to explore this setup, we can help you design a structure that fits your investment goals and your business.