401k compared to IRA, when it comes to LLCs. Ever wondered about the right way to contribute? Here’s the straight scoop.
Transcript: Hi, this is John Park, PGI Self-Directed and contributor to BawldGuy Talking. Today, we’re going to do a simple quick example. I’m going to keep it really at a 50,000 foot view level is you have a self-directed plan whether it’s an IRA or a 401K. You’ve heard about IRA LLC’s. You’ve heard about self-directed or self-administered 401K plans with the LLC. Your initial question is, “When I want to make a contribution into the plan, if I have an LLC from my plan, can I just make the contribution into the LLC?” Absolutely not. Any contribution to any retirement plan, even if it’s associated with an LLC and has membership interest in that LLC, the contributions always need to go into the actual plan whether it’s an IRA or a 401K first before assets can be assigned to the LLC where the IRA or the 401K has a membership position. Always just remember one thing. With your self-administered plan, whether it’s IRA or 401K, contributions always go into the plan first before you can then move them to the LLC to use for investment purposes. This is John Park, PGI Self-Directed. Hope you’re having a great day. Look forward to seeing you next time.