Using 403B and Roth IRA Money

4 Replies

Is it possible to move money from a Roth IRA and a 403B account into an investment property without early withdraw or tax penalties? I have around 15K in several different funds that I believe would serve us much better if they were used to help us purchase more properties. I have a small rental that I could pay off with this money. I've had two bankers tell me that I could use a free and clear property for leverage for additional loans. Banks financing our deals at this point seems to be the most cost effective route to go. Maybe we'll find a private lender or hard money lender at some point but right now, we don't have any kind of relationship with any other lender.

@Brian Campbell  

What you need is a self directed IRA. You would have to rollover/transfer funds from your current retirement account into self-directed. That is the only way you can have access to those funds. Your current custodian will not allow you to use those funds for real estate investing.

You can't combine Roth IRA (after tax) with 403B (pre-tax) funds. If you wish to use both accounts you would need to create two self-directed accounts: Roth IRA and Traditional IRA. Another alternative would be converting your 403B into Roth, which is a taxable event, and then you could combine it with your Roth IRA.

While your self-directed IRA can acquire investment property, you can't just "move money from your Roth IRA or 403B account into an investment property". As I mentioned earlier you need to set up self directed account first and then purchase the property inside of your account.

You will not be allowed to use your retirement funds to pay off mortgage on rental that you already own. That would be "prohibited transaction".

This topic has been discussed on BP forum extensively, so search for other discussions and educate yourself. 

Hey @Brian Campbell  

Dmitriy is right, you'll need a provider that can help with you alternative assets.

The complication for you would be partnering both accounts (if necessary) to make an acquisition. Your contract would be written as tenants-in-common with the undivided interest (example: 50% - 50%). Where this arrangement gets complicated is in dealing with cash flow. Because each account is responsible/entitled to its proportion of income and expenses, cash flow must always be divided up accordingly. Some IRA providers have sufficient technology to make this accounting easier. Online bill pay and online rent pay are just two examples.

Feel free to ask additional questions or like Dmitriy said, search the forums for additional reads. Good luck!

I suspect you are still participating in the 403B, so you might find some restrictions on converting those funds into a self directed arrangement. 

BTW - the "A" in IRA does not stand for the word account; it represents the word arrangement. Unless you are in Ireland :)

Great information all -- Thanks!

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