Looking to Move (401k) retirement money for self direct loaning

4 Replies

Looking for info on companies to move a 401k to a self directed 401 or IRA to be able to use for loaning and investing for real estate. I know someone has done this here so any advice on steps, what to be cautious about. Any info would be appreciated.

Thanks,

Mike 

@Mike Loy , congrats on the first post!

The topic of self-directed 401k has been discussed on the forum many times, here is a link to one of such discussions that you may find helpful:

https://www.biggerpockets.com/forums/51/topics/527...

There are several providers offering the service who are active on BP, do some research/reading and you will find out who the key players are. Reach out to two or three of them to interview them personally, check their references and then make your decision. 

Thanks for the reply. I think I need to go towards the IRA checkbook since we do not have a business . I am a realtor and could you that route but think the SD IRA would work better.

Mike

@Mike Loy

As a realtor you qualify for a Solo 401k, which has many advantages over self-directed IRA, here are few:

  • Contribute 10X more than into an IRA (up to $61,000 per year per participant)
  • Access up to $50,000 from your retirement account tax-free and penalties-free at any time prior to retirement via participant loan feature
  • Exempt from UDFI tax on leveraged real estate
  • Invest tax-free using Roth 401k sub-account
  • Checkbook control without use of an LLC
  • Custodian is not required = no custodian, transaction or asset based fees

You can read it in more details here:

https://www.biggerpockets.com/blogs/2810/21298-sol...

The bottom line is that if you qualify for Solo 401k - it would be way better than an IRA.

@Mike Loy I second what @Dmitriy Fomichenko said about you being qualified for solo 401k. Also keep in mind, if you plan to use leverage in your investing strategy, checkbook IRA may get hit with paying taxes on UDFI. Solo 401k is excluded from this tax.

Best!