Need some advice

3 Replies

My wife and I own a four plex and are in a deal now to have another one built for us. When that building is completed this spring, we will move into it. I then plan on cashing out my 401k and using my Retirement to purchase a couple of larger buildings, 6+ apartments each. My issue is, if I put the funds in a self directed IRA then all the profits have to return to the IRA, as far as I can tell. This is not a good option because we will need the profits to live on. I could also just pull the cash and leave what I have to for the feds, It will be a substantial amount, but I would have total control of what ever is left over. My question is, does anyone have any ideas that would help me retain a larger portion of my money, so that I can invest it in something worth while. Thanks

@Shannon Allex  

If you are over age 59 1/2, then you can keep the principal of a self directed IRA invested and draw off the income. If you are under age 59 1/2, then you really do not want to tap into your IRA if you do not have to, because you will pay both income tax on the amount withdrawn as well as a 10% penalty for early distribution.

The above is true whether the IRA is invested in stocks or in real estate. A self directed IRA only changes how you can invest with an IRA, but the underlying fundamentals of the IRA being a tax-sheltered RETIREMENT savings plan are not changed in any way.

There are methodologies such as a Substantially Equal Periodic Payment (SEPP) whereby you can begin taking distributions from an IRA prior to age 59 1/2 without the 10% penalty, but this is complex.

Your question is best addressed to a CPA or CFP who can discuss your current income needs, earnings, age, and retirement income needs.  They will need a more detailed picture of your situation than you can typically address via a forum such as this.  It sounds to me as if charting when/how you need to access your retirement savings is the real question.  Once you answer that, you can determine how to invest your retirement savings to maximize the returns.  Maybe those apartments will make sense, maybe not.

Can you fund without touching your retirement? Are you able to refinance your first personal and pull money out of it?

Thank you Brian and Elizabeth, this is going to be a little more difficult then I first thought. I have never been one to stop at the first road block,so I'll figure something out.  I appreciate the time both of you spent on answering my question.  I hope you had a wonderful Thanksgiving, and Merry Christmas to you Both. 

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