Self Direct Roth IRA or SD 401K?

Question

Wanting to roll over my traditional 401K to a SD Roth IRA or SD 401K. Which one is the best for real estate investing? Pros and cons?

Dmitriy Fomichenko · Answer

@Harold Groetsema

welcome to BP, it's good to have you here!

First of all, you can't rollover 401k into Roth IRA, you have to roll it over to Traditional IRA first and then convert it into Roth. Remember that this is a taxable event so be sure to consult with your CPA about tax consequences.

Self-directed Solo 401k is great vehicle and more powerful than self-directed IRA for several reasons. You can learn more on one of my recent blog posts here:

http://www.biggerpockets.com/blogs/2810/blog_posts...

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Wishing you the best!

Elizabeth Colegrove · Answer

Welcome to Biggerpockets!

This is an amazing place because the only thing everyone agree with is real estate. Other than that everyone has their own niche. So look around the blogs, forums and listen to the podcasts. If you see a post you enjoy check out the persons signature. Also do the search button. If someone wrote about this subject. Check out their signature. I believe a few people have made this their calling. Many of us including myself talk about our strategies, styles, niches and business model on our website. So definitely check that out as it is an amazing additional resource. For example, my blog is about while working full time, buy and hold investing, 0% Down Rentals, Personal Properties turned rentals, Long distancing investing, self-managing 3,000+ miles away. Definitely list your blog or website in your signature, if you have one. Its a great additional networking source.

Look forward to seeing you around! Let me know if I can help!

Brian Eastman · Answer

@Harold Groetsema,

Welcome to BP.  It is a great resource.

There is no single answer to your question regarding the comparative benefits of a self directed IRA vs a Solo 401(k).  Which plan is best for you will depend on many variables such as your current age, investment goals, tax profile, etc.

The best way to get started on answering that question is to contact one of the reputable firms offering self directed IRA & 401(k) plans.  A good advisory company will take the time to learn about your situation and help you ask yourself the questions necessary to chart the best course.

Even then, keep in mind that most plan facilitators, while knowledgeable about their specialty products, are not acting as your CPA and capable of providing the type of comprehensive analysis of your personal situation that a licensed tax advisor can, so you may likely want to learn about your plan options then confer with your tax professional to confirm your approach.

Best of luck to you as you get familiar with BP!

Self Direct Roth IRA or SD 401K?

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