Reader Questions: REITs and Retirement Accounts for Your Employees

I've received two more reader questions since the last question about credit card payment protection plans. And that's great. Anyway, I've decided to answer them together. And I think I'll start collecting reader questions and answering them (if I have any) once a week.

Real Estate Investment Trusts

This question was prompted by a post I wrote about REITs:

I'd like to know how these REITs are processed by a custodian?

For the most part, REITs are processed like any other investment. There are fees associated with it, and your custodian may end up getting paid commission on the product. You can add REITs to retirement accounts, just as you would add any other investment to your portfolio. One of the things that has made REITs attractive (well, sort of, since there isn't much to do with real estate that is attractive right now) is the ability to trade them on the stock market -- just like any other individual equity.

Offering a retirement account to employees

The next reader question has to do with offering a retirement plan to employees:

I own 2 separate LLC's.  One is a company that I alone work for, administering anesthesia.  This files as an S Corp and I have a self employed 401k.  I have another single member LLC that owns and manages rental property.  That LLC has hired an employee.  Do I have to make the 401k or some other retirement plan available to my employee?

There is nothing (right now) that says you have to offer a retirement account to your employees. You are not required to offer that to your employee -- especially since s/he is an employee for a company that you're not getting a plan through.

Your accountant may be referring to the thought that it is a good idea to offer a retirement account. It is worth noting that there are tax benefits in it for you if you offer a retirement plan to your employee(s). But you don't have to.