How to take control of your 401K: self directed 401k

Question

I’m interested in taking control of my 401K and using the funds to finance my real estate investments. I see this as a good idea for two reasons. 1.) it will help me on my path to financial freedom through real estate. 2.). It will help insulate my retirement account from a volatile stock market.
Does any one have thoughts on this matter? Has anyone already done this? Can anyone point me in the right direction?

William Joel Idleman · Answer

Hey Clinton - I definitely recommend a solo 401k to clients over an IRA.  There is much more flexibility with the solo 401k.  I'm not a fan of putting real estate inside either of these products because you will not get to utilize depreciation inside a 401k or IRA.

Clinton Leighton · Answer

THANKS FOR THE REPLY!  I WILL REACH OUT TO MR. EASTMAN FOR MORE INFORMATION.

Clinton Leighton · Answer

GREAT INSIGHT.  THANK YOU SO MUCH FOR REACHING OUT.

Dmitriy Fomichenko · Answer

@Clinton Leighton

Is the 401k with the current or past employer? If current - you most likely will not be able to access it until you leave that employer. If this is from old employer - you are free to move it to self-directed IRA or Solo 401k. Keep in mind that the income from rentals will belong to the retirement account, you personally would not be able to benefit from it until later (just like with any other retirement account)

Chris Seveney · Answer

Clinton. Yes I have done this and used @Brian Eastman here on BP to get my solo 401k setup. To have a solo 401k you need to have an operating business (I believe you could sell toothpicks or lemonade if you want but must have a business with income). If you do not qualify for a solo 401k you could always go the self directed IRA route, but a solo 401k is in my opinion a lot better option because you do not have to worry about UDFI/UBIT and can contribute a lot more to it on a yearly basis.

How to take control of your 401K: self directed 401k

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