401k investing

10 Replies

My husband and I are new. We dont even have a house yet, but crazy enough we have some one who wants to invest with us using their 401K. She doesnt know too much about it and neither do we.

I am looking for a good resource to educate us on the topic.

Welcome Michelle, will they be taking out a 401K Loan? You can't withdraw from a 401K before the age of 59&1/2 without a penalty, which is 10%.  If they are over the age limit, the 401k counts as income. 

My wife and I took out a 401K loan last year to buy our 2nd rental.  But we are paying it back so we don't incur a penalty.  Many other questions, but I would talk with a tax person that really understands your situation.  

Good luck, take care. 

I think she is talking about using her 401K retirement plan, not doing a 401K loan. If so, most 401K plans cannot be self directed. 

I have a SOLO 401K plan. I do HML using it with good results. In some instances, cash can be borrowed from the plan as well. Have your friend talk to a good tax advisor to find out the pros and cons and what she is allowed or not allowed to do.

@Michelle Reynolds

If your partner is under age 59 1/2 and the 401k is with their current employer, they likely cannot move the funds to a self directed IRA that would be able to invest in real estate.

If the funds are from a prior employer, or they are over age 59 1/2, they can move the funds to a vehicle that would allow for real estate and private lending investments.

There is a ton of good information here on BP, and with a little reading in the forums, you'll find several providers of self directed plans and get a feel for the services they offer.

If your friend has the ability to move funds, they can contact one or more plan providers to learn about their options.  And yes, as @John Thedford noted, confirming their plan with their tax advisor is always the right move.

Thank you. I have been looking at all the forums on BP. Its alot to sift through

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