Real Estate Agent · Nassau County, NY (Port Washington) · Member since 2017 · 24 posts · 8 votes
Want to tap into my 401k to become an active investor. Goal is cash-our refi (brrrr)...
Understand pulling cash out of old 401k will mean paying taxes on it and potential early withdrawal fee - which I will fight tooth and nail for.
Alternative is an SDIRA - but I heard this limits what an investor can do with their real estate investments? Any ways around it - don’t want to sit passively investing.
We are ready to offer - all that is set I would just rather use my retirement money VS my own cash reserves in my bank accounts.
Rental Property Investor · RVA · Member since 2016 · 5k+ posts · 4k+ votes
5y
Yes there are limits to what you can do with your SDIRA. Look up disqualified persons and prohibited transactions. You can still invest in real estate with an SDIRA, but there are compliance rules you have to abide by.
Your understanding is correct, you personally can not be actively involved in any investments owned by your self-directed IRA. All investments must be passive, remember this is not your money (now anyways). Any way around that will lead you into trouble so don't go there!