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Tax, SDIRAs & Cost Segregation

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Elliott Hall
  • Atlanta, GA
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SD Roth IRA vs Typical LLC

Elliott Hall
  • Atlanta, GA
Posted Feb 23 2018, 06:57

Hi my name is Elliott. This is my first post here. I've been saving and educating myself over the past couple years and am about ready to make my first investment in a rental property to help on my way to financial freedom. My question is about what to do with an old 401k contribution? 

I have spoken with my attorney and CPA and received their advice but I wanted to hear from actual investors who have been down this road. If I put my 401k earnings into a self-directed Roth IRA then I can use that money to invest in an LLC I manage to make investments in rental properties. Of course, the goal is to eventually pull money from these investments monthly to I can semi-retire hopefully in 10-15+ years. If I wait out the 5 years with the Roth IRA (so I can avoid any and all future taxes) then I can pull distributions from it with only a 10% penalty (until I'm 59.5). Correct me if I'm wrong but that 10% penalty will probably be less than taxes I would pay on giving myself a monthly salary from a Typical LLC (if I just cashed out my 401k and put the funds into a Typical LLC to purchase properties)?

Having said all this, even if I go the Roth IRA route with the 401k money, I will still be creating a Typical LLC and fund it with other capital I have saved.

Hopefully, this makes sense, I'd really appreciate some advice and suggestions. Thanks

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