401k to self directed IRA for rental investment

5 Replies

I want to move 401k to self directed IRA for rental property investment down payments. My 401k administrator doesnt allow that. Are there any banks/financial institutions which will allow that? Looking for advise here

@Sid Shankar

I don't recommend doing this if it's your first deal.  I say this because it's a big step to take and it could get hairy.  There are other avenues you can take in terms of leveraging. 
Otherwise you can talk to an institution that specializes in self-directed IRAs.  

Agreed with @Steve Kontos , it's very difficult to maintain the retirement account as needed on your first deal.

If you do move forward, search for self directed IRA custodians and Checkbook IRAs. There are a lot of rules around what you can and can't do with these, make sure you take time to learn the rules!

@Sid Shankar

If your 401(k) administrator does not allow an in-service rollover, then you can not move the funds unless you end your employment with them. Finding another administrator or custodian will not effect your 401(k)'s ability to rollover to the administrator. See if you can speak with someone in management, HR or even your company's owner to potentially amend the 401(k) plan defaults. 

Specifically for rental down payments, your SDIRA will need to purchase the entire property or partner with another entity. The SDIRA is responsible to pay its percentage of the down payment, as well as any expenses. The IRA gets its percentage of profits sent back to it.

For the IRA to pay just the down payment is considered a prohibited transaction by the IRS. I recommend you learn a little about what and who is prohibited before doing any transactions to ensure you do not get your IRA disqualified.

Thanks Carl, the amount I am talking about is moved from another administrator from old employer to the current administrator with new employer. I can move that part again. 

This is fairly complicated, but Advanta will do this. It's a self directed IRA. Crowdfunding is another way to get into real estate a bit more safely then going on a single property. Crowdstreet etc.

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