I may leave a current employer and therefore I believe I will be eligible to turn my 401k into a real estate investment product. Pros and cons? ability to use the whole amount and how so ?

@Rochelle Gerber yes about ten years ago and never looked back. It's been wonderful. Reach out to @Dmitriy Fomichenko who has the best options out there. Good Investing...

@Rochelle Gerber Here are some of the downsides of putting real estate into an IRA or 401k. No tax deductions: You can’t claim deductions for property taxes, mortgage interest, depreciation, repairs, improvements and other property-related expenses. Property expenses: All expenses, repairs, and maintenance costs must be paid with IRA or 401k funds, and you must pay others to do repairs and manage the property. You can't even change a lightbulb. You or your family can't use or live in the property. You can't sell a portion of a property like you can sell portions of stocks, bonds, mutual funds, etc. You may have to sell the whole property to access the funds in the IRA or 401k when you retire. If you violate any of these rules you could blow up your IRA or 401k and the IRS could force you to distribute all of the assets in the IRA or 401k. This could lead to a huge tax bill and penalties at the end of the year. Think carefully before you do this. Good luck.

In the spirit of order of operations, might be helpful to break down in this fashion: 1) With your 401(k), do you have pre-tax money and post-tax Roth funds? If so, you will need to rollover those funds into respective money sources of pre-tax and Roth. 2) Analyzing whether to use IRA or Solo 401(k), is fairly straight forward, when the intent is for you to have your own business and want to use the funds for real estate investing. Most likely you will establish a Solo 401(k), due to the additional benefits, some of which were already mentioned. If you have pre-tax and post tax Roth funds in the existing 401k, you will initiate a rollover into a newly formed Solo 401(k), with some funds dropping into the pre-tax bucket and Roth funds dropping into Roth bucket. 3) 3 benefits that I find many real estate investors are attracted to with the Solo 401(k): 1) Higher Contribution Limits (providing you have enough earned income) 2) Ability to contribute to Roth, without MAGI limits where you have to do a backdoor contribution, like you do a Roth IRA. 3) Exemption from UBIT/UDFI on debt financed real estate deals, this could be directly, or through a syndication type deal. 4) Now, we can proceed with, what about the caveats and qualifications to open and maintain a Solo 401(k): 1) You need to have earned income from the business/sole prop. that is sponsoring the Solo 401(k). Your contributions have to be recurring and substantial. I will say, being the industry for nearly 20 years, this is a huge problem. I see folks who have Solo 401(k)'s, but only have passive income. If all you do is own rentals for example, likely not qualified with a Solo 401(k). You might consider getting with your CPA and discussing a strategy to have a micro-business and show some earned income. 2) You can't have any W-2 employees, with the exception of yourself, a spouse, and any partners that own at least 5% of the business. (Keep in mind controlled group rules, meaning if you own a business with W-2 employees, you often can't just setup a side business and open a Solo without giving benefit to your W-2 employees with your main business - another area not often discussed in this industry until it is too late). 5) Lot's of pros with Solo 401(k)'s as you can tell from above with the UDFI exemption on debt financed real estate and ability to make larger contributions. There can be more compliance work and potentially higher costs compared to just a Self-Directed IRA. 6) If you decide to rollover to a Self-Directed IRA first (your pre-tax money) you can always rollover that money into a Solo 401k when you eventually qualify. Just keep in mind, if you move money into a Roth IRA, you can't move from Roth IRA into the Solo 401(k). You can however move from 401(k) Roth funds into the Roth bucket of the Solo 401(k). Hopefully this gives you some ideas to run with. This should not be construed as tax, legal or financial advice. This is merely education. Please work this material through your professionals and seek the proper advice.

Well I would be running my own company

Interesting tidbit here. I didn't know that difference between IRA and solo 401k. If your max contribution for SDIRA is $7K a year, do most people just opt to keep mostly with stocks/bonds until they reach a certain point where they can invest? Seems like it would take a really long time before you can buy real estate if you're only allowed to contribution $7k a year.

@Rochelle Gerber A self-directed IRA allows 401(k) funds to invest in real estate with these key points:Pros1. Investment Flexibility: Real estate, private lending, and more.2. Tax Benefits: Gains grow tax-deferred or tax-free.3. Potentially Higher Returns: Real estate often yields higher returns.Cons1. Strict IRS Rules: No personal use; prohibited transactions lead to penalties.2. Tax on Debt-Financed Income: Subject to UBIT.3. Illiquidity: Real estate is harder to liquidate quickly.You can invest the full amount but must use IRA funds exclusively for property expenses, keeping personal finances separate. Don't forget that you can take out a 50k loan from 401k and buy in your personal name. Real Estate in personal name saves taxes at your personal level if planned correctly.This post does not create a CPA-Client relationship. The information contained in this post is not to be relied upon. Readers should seek professional advice.

thank you very much. a lot to digest. it sounds like if my Solo business takes my existing 401k (only 401k funds I do not have roth funds) and my business pays me to flip homes and consult, then i can put my funds directly into the 401 solo plan. i will definitely reach out to my accountant as well.

ok thank you . i will study this

It's a bit cumbersome, you have to maintain strict financial separation, and because the loans have to be non-recourse, your LTV is lower. You also have to file UBIT taxes and most CPAs don't even know what that is. So maybe better to just invest unleveraged. But on the other hand, you can also convert into a Roth and enjoy tax-free rental income for the rest of your life.Great book: Leverage your IRA by Mathew Allen.

Has anyone moved their 401K to a self directed real estate one? Has anyone moved their 401K to a self directed real estate one?

Back

Resources & Media

Resource Hub Bookstore Blog Guides Pro-Exclusives PRO Podcasts Pro Partnerships

Events & Training

BPCON2026 Webinars Free Courses

Strategies

How to Manage Your Rental Property How to Operate a Short-Term Rental How to Passively Invest in Real Estate How to House Hack How Does the BRRRR Method Work How to Flip a House How to Invest in Commercial Real Estate How to Invest in Real Estate How to Invest in Multifamily Real Estate How to Build Wealth

Invest More Confidently

Join the real estate investing community that’s helped thousands of people achieve financial freedom.

Start Free Trial

The Podcast Investors Trust

No fluff. Just deals, strategies, and lessons from the front lines of today's market.

Listen Now

Back

Pick Markets

Market Finder PRO Picking a Market Workshop PRO Picking a Market Worksheet Top 100 Cash Flow Markets Market Insights - Sunbelt Region

Market finder

Pinpoint the best real estate market for your specific goals with expert recommendations and real-time data on appreciation, affordability, rent-to-price ratio, and more.

Pick Markets

Pro membership

Get unlimited access to tools and resources that make it easier to find, analyze, and manage deals with confidence!

Upgrade to Pro

Back

Find Deals

BiggerDeals Off-Market Deal finding PRO Real Estate Syndications Investor-Friendly Agents Find Foreclosures Community Listings (FSBO) Business Directory

NEW! Find Cash-Flowing Deals Fast

Search nationwide listings with built-in cash flow analysis.

Find Deals

Invelo - off market deals

Scale your portfolio with off-market deals.

Explore Now

Back

Calculators

Rental Property Calculator PRO Rehab Estimator PRO Rent Estimator PRO BRRRR PRO Fix & Flip PRO Short-Term Rental PRO Sell vs. Keep PRO Landlord Insurance Calculator by Steadily All Calculators

Rental property calculator

Is it a good deal? Run your numbers like a pro with this simple yet powerful calculator.

Run the Numbers

Rent estimator

Understand how much rental income you can expect based on recent reports and data for your specific property.

Run Report

Back

Manage Properties

Managing Properties 101 Find a Property Manager RentRedi Property Management Software PRO Baselane Automated Bookkeeping & Banking PRO Property Management Tools Ask a Management Question Finding Tenants Screening Tenants PRO Leases + Landlord Forms PRO Property Insurance Property Maintenance / Rehab PRO

Property management software

Manage tenants, tasks, and your entire portfolio with one simple tool.

Activate Now

Property manager finder

Find reliable property management partnerships that last.

Find a Property Manager

Back

Plans & Pricing

Pro Membership Business Membership

Try PRO for 7 days completly free

Avoid mistakes and make informed decisions with Pro.

Start Free Trial

Grow your business

Promote your business on BiggerPockets and make quality connections with the right investors.

Sign Up Now

Back

For You

Newest Unanswered My Discussions Followed Discussions Followed Categories Followed Locations Followed People

General Real Estate

General Real Estate Investing Starting Out Deal Analysis Buying & Selling Business & Marketing Landlording Property Management Reviews & Feedback

Real Estate Strategies

House Hacking BRRRR Short-Term Rentals Mid-Term Rentals Multi-Family Fix & Flip Other Strategies

Finance & Financing

Lending Creative Finance Personal Finance Taxes & Legal Issues

News & Announcements

Official Site Announcements Market Trends & Data Real Estate News & Current Events Pro Exclusive Area PRO

Events & Networking

Events & Meetups Classifieds

Back

All Books

Best Sellers Browse All New Books & Pre-Orders Bundle & Save Books for Beginners

Unlock hidden potential in every property and maximize returns

This is your creative breakthrough guide to escaping investment paralysis and unlocking hidden profit in any market.

Get Your Copy

Build a Cash-Flowing Glamping Business with High Equity Upside

Whether you're starting from scratch or expanding existing hospitality operations, learn the practical frameworks needed to capitalize on the growing demand for upscale outdoor experiences.

Learn More

Has anyone moved their 401K to a self directed real estate one?

Most Popular Reply