Self Directed IRA investing to maximize use of my funds

2 Replies

My company has been purchased and the division that I am in will be sold through the divestiture. 

This will allow me to move my 401K into an SD-IRA, of which all the funds will be used to purchase SFR's, all-cash (no leverage).

About half of my 401K is Roth and the other half is pretax money. 

Looking for Pros/Cons of converting all the money to Roth prior to rolling to SD_IRA and then investing in SFRs. 

Secondly, and more importantly, I am seeking input on the best way to set up the SD_IRA to minimize overall costs. 

The best structure to maximize the use of my funds and minimize all the setup, annual, per transaction, ... fees.

All the SFRs will require rehab, so there will be several outgoing payments from the SD-IRA initially per property, and (if all goes as planned) monthly income from each property going into the SD-IRA.

I am confident that someone has already navigated these waters and hope that many of you have had a good experience doing so. 

Would appreciate your guidance and direction. 


@Todd E.

If you are in some fashion self-employed with no full time employees, then a Solo 401(k) plan would be optimal.  It could accept both the Roth and tax-deferred funds out of the existing 401(k).  If you choose to do a conversion of tax-deferred to Roth status, you could do so over time.

In the IRA realm, having two different sets of funds will be potentially problematic, as they will need to be held in separate IRA accounts.

A checkbook IRA would be optimal, but creating a partnership entity between tax-deferred and Roth IRA's is limiting as you can no longer add funds in the future, will be required to file a partnership return for the entity, and would not be able to do future conversions from tax-deferred to Roth inside the single vehicle. As such, two separate structures would work better.

@Todd E.

I would not convert to a Roth until I see and understand the new tax reform being worked on in congress. Secondly I would not convert until I read the book "keep it" by Joe Luby. 

I'm not sure how much money you are talking about or what each SFR goes for but I will tell you how many of our mclients set up their accounts as well as myself. A seperate Ira is established for each SFR to isolate the liability and most use the flat fee approach approx $275/year/account. This approach has many benefits but you need to layout your plan and also be able to adjust as laws and technology change and equity grows.

I don't think there is a significant price difference when all is said and done between most SDIRA custodians. PM me if you want to discuss actual $$ and cents. Several administrators have a couple of fee structures that may work differently for the circumstances of different geographic areas and real estate values. I don't think there is a one size fits all. 

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