Self-Directed IRA

9 Replies


I'm new to buying investment properties. My wife and I currently own our home and have two bids recently accepted for properties we plan to use as rentals. My question though is about Self-Directed IRA. Can we roll our current 401K's into one and then use it for purchasing rental properties?

Please excuse my ignorance on this topic, just trying to understand a bit more about how they work?


As far as I know @Mike White , the only way you can do this is if the 401k funds/accounts are from a previous employer and not your current one. 

In most cases, you cannot roll over current employer 401k plans into a self directed IRA. If you have left that employer, then yes, you should be able to do that. Get with a good IRA manager/custodian and they can give you the specifics.

RealTrust IRA is who we use (Chelan, WA), they are very good and work with investors.

When you leave your employer, also consider a Solo 401k if you qualify. It has some great benefits over self-directed IRA's.

Current 401(k)s are eligible for rollovers if you have (a) left your employer or (b) reached the retirement age specified in the plan (generally 59.5). 

You can contact your current employer's HR department or the plan administrator to see if any special situations apply. Your goal is to complete what some call an 'in-service distribution'. 

You should also know that retirement plans are attached to each individual and their social security number. If you and your wife currently have separate 401(k)s, you'd each have to open a self-directed IRA. Combining plans would not be an option. However, the two IRAs could partner with one another.


So then we we rolled into one of these IRA's we could use that money to buy investment properties?

Yes you can buy properties with a SDIRA.  There are particular rules that you should follow though.  I am not an expert on it but there are guys on here who have a lot more knowledge.

Most likely you will not be able to rollover current employer 401k into an IRA, but it's worth to check with your plan administrator if there are any exceptions in your plan.

@Chris S. is correct.

Since it is already in a 401k there is no reason to turn it into an IRA. Set up a solo401k with you and your wife. Whenever you leave your jobs you just transfer the old 401k into the new 401k. There are more reasons to have the 401k than there are the IRA.

@Mike White

Each of you would need to setup and IRA and then transfer your respective funds into them. The IRA regulations allow for real estate investments. See following link.

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