Self-Directed IRA / Solo 401(k) with Investment Guidance

8 Replies

I see several different SD 401(k) and SD IRA companies (with checkbook control) being recommended in the forums which is great but also makes it hard to choose.

Are there any companies that can set up self directed vehicles but also assist you with various types of investments? I would like to use my 401(k) or IRA to invest in real estate notes, tax liens, and perhaps peer-to-peer lending. I'm not yet comfortable with jumping into these types of investments on my own.

@Mark S.

Generally speaking, a quality self directed IRA/401k provider will provide some guidance - with quality varying depending on the expertise of the firm. But, the guidance you can expect will be with respect to how your investment strategy intersects with the tax code, not a how-to of investing in real estate and related assets.

You should seek a good mentor with a background in the types of real estate investments you are seeking to make, preferably in your local market.

The self directed IRA is a funding mechanism that gives you control over the funds and a much broader set of investment choices as to how to invest your retirement savings. When it comes to identifying, evaluating and executing investments, you will be the one responsible and should build a team to help you in these areas.

@Mark S. , what @Brian Eastman said is very true.  Most of the main players do a good job at providing guidance & assistance in purchases.  I have Equity Trust, but there are several others that are very good.  Make sure you know differences between Solo 401k & SDIRA....if u can do the Solo 401k that is the better route to go.

Originally posted by @Bryan C. :

@Mark S. , what @Brian Eastman said is very true.  Most of the main players do a good job at providing guidance & assistance in purchases.  I have Equity Trust, but there are several others that are very good.  Make sure you know differences between Solo 401k & SDIRA....if u can do the Solo 401k that is the better route to go.

 Why is the Solo 401k better?

@Bryan C. @Brian Eastman

 Thank you both for the advice. I did see several posts listing the reasons why the Solo 401k is better. I'm not certain I qualify for the Solo 401k but will investigate.

@Dana Duong

The Solo 401k is a more robust retirement plan designed for owner-only businesses. As an employer sponsored retirement plan vs an IRA, the contributions are higher, there are some nice Roth IRA features, and the availability of a participant loan allowing you to borrow from the plan personally. A Solo 401k is also not subject to tax on debt-financed income (ie mortgaged property) as an IRA is.

That said, the best plan for any individual will vary based on their situation, goals, age, income level and type and several other factors.

Originally posted by @Dana Duong :
Originally posted by @Bryan C.:

@Mark S. , what @Brian Eastman said is very true.  Most of the main players do a good job at providing guidance & assistance in purchases.  I have Equity Trust, but there are several others that are very good.  Make sure you know differences between Solo 401k & SDIRA....if u can do the Solo 401k that is the better route to go.

 Why is the Solo 401k better?

Dana, I wrote an article here on BP blog few years ago about the advantages of Solo 401k, check it out, it will answer your question:

http://www.biggerpockets.com/blogs/2810/blog_posts...

Hi, Mark S.

There are some rule of using 401k / Solo 401k in investment area:

1. 401ks cannot be used to buy real estate If it is with their current employer

2. If they cash out of the 401k they get hit with a 10% penalty and they pay taxes on the money when they take it out.

I have found an IRA 401K company that does this well that I refer people to. It is Shaun McKay at Ameircan IRA. You can reach out to them at www.americanira.com. These guys can educate you on what your flipping options are.

Ok go in and click this link

http://www.irs.gov/pub/irs-tege/robs_guidelines.pdf