Taking from 401k to buy an investment property

5 Replies

Hello, Can anyone tell me how to take money out of my 401k to buy a property without being penalized with all the taxes? Or even if there is a way to do it. Thank you

@James Harris , welcome to BiggerPockets and congratulations on your first forum post!

There is no way for you to take money out of your 401k and not pay taxes. There is a way however to roll those funds into self-directed IRA, which will enable you to invest in alternative assets such as real estate. Keep in mind that it would not be "your" investment, an IRA would own the property, the income would belong to the IRA and you personally would not be allowed to benefit from the IRA or any investments it owns.

@James Harris

It depends on the terms of the plan and your relationship to the plan sponsor. Are you still employed by the 401k plan sponsor? How old are you? What's the source of funds within the 401k?

If the funds are accessible, you should consider rolling them over to a Checkbook Control IRA/401k that allows you to invest in real estate within the plan, rather than withdrawing and getting hit with taxes and penalties.

I am also thinking about doing the same thing. Is there a calculator or something like that, that could help figure the numbers and determine what rate of cash flow I would need to get. The idea makes sense to me but I like numbers.

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