Do I use my Roth IRA Contributions? What are the rules?

Question

What is your advice on using Roth IRA contributions to invest in your first real estate investment property?

Are there any rules or specific information on doing this?

Brandon Rush · Answer

Hey Alex,

I think you need to write it out and see what the future outcomes would be if you went either route. Generally I would say it is a good idea as there are many more benefits in real estate investing than there are in your Roth IRA. Some of those benefits include appreciation, tax benefits, cash flow, ability to pull HELOCs and many more. With the Roth IIRA, you area simply putting money in and waiting until you get old to pull it back out. My suggestion, pick up some property, then slowly start using some of those profits and putting them into your Roth IRA as an alternative way of investing.

I myself am planning to roll my Roth IRA into a whole life insurance policy instead. I won't go into the full detail here but its basically way to have cash that is building over time (similar to a Roth IRA), that you can borrow from as well to purchase real estate or significant expenses instead of draining your savings account and rebuilding.

Good luck and let me know if you have any questions,

Brandon

Brandon Rush · Answer

I forgot to mention the rules. You can pull out whatever you put in tax free since it is post tax money. Any profits that you have made will be taxed if you pull them out. Just look at your statements to determine the exact amount you have contributed.

Basit Siddiqi · Answer

@Alex BallesterosHow much money do you have in your Roth IRA account?1) It may be hard to get leverage through a retirement account2) You can't comingle your retirement account assets with your personal account.3) If you are not well capitalized in your retirement account to fund repairs / renovations, you may be forced to liquidate your real estate.4) You won't be getting the same tax benefits if you own real estate in your personal account.5) Eventhough it is a retirement account, there still may be tax considerations that you have to deal with.

Do I use my Roth IRA Contributions? What are the rules?

Do I use my Roth IRA Contributions? What are the rules?

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