retirement plan and rental property llc

Technical topics regarding tax preparation.
#1
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19-Oct-2020 7:38am
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USA
Can a rental property llc open retirement plans for its owners/employees such as sep, solo401k etc? I read that passive rental property llc can not do that and want to confirm.
 

#2
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22-Apr-2014 3:06pm
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WA State
You have to have earned income as a base for retirement plan contributions.
Rental income isn't earned income. It's not that the entity can't establish a plan; it's that there won't be any base to allow for a contribution, unless you pay wages or GPs.
~Captcook
 

#3
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4-Mar-2018 9:03pm
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The Office
To add to what CaptCook mentioned, rarely does it make sense to convert rental income to earned income just for a retirement plan contribution. It's a tradeoff that many affected clients just deal with, unless their real estate portfolio is huge and they'd like to diversify their investments and accounts, often at a higher cost than just maintaining the status quo.
 


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