Getting started investing using my retirement funds
Hello - I've been looking to get started in the real estate investment business for a while now. My goal is to create a cash-flow generating portfolio for my family and break free of the "corporate slavery" we deal with daily. I have an idea on how to make this work initially but would like some insight.
We have a sizeable amount saved in my 401k from my previous employer, plus we each have a small pension from a couple closed out plans. I would like to convert this into either a SDI or possibly 401(a) pension plan and use that plan to mortgage the investment - basically be my own bank. The investment would be repaid using a standard mortgage promissory note at whatever interest rate is acceptable to generate income for the SDI/401(a), but the income from the property would be my cash flow. This prevents me from losing a sizable portion of my 401k due to taxes if I cashed out now, and allows me to leverage money that is currently sitting in stocks/bonds/mutual funds. I don't think I would throw all of this into real estate but instead stay diversified across the board.
This seems like a smart plan on paper - but would this type of double-dipping be allowed by the IRS? Can we bring other family members into the fold later if they wanted to get involved?