Buy Now Thru Your 401K (Buy Your Retirement Home Now)

Buy now thru your 401K-People looking for a way to invest now for their retirement home or land should consider a Self Directed IRA or 401(k) s. This allows for a wide variety of investment options ranging from metals to real estate. People no longer have to worry about making risky investments, such as the stock market. The problem with the stock market and other types of risky investments is that someone else is in complete control of the money and it can disappear quickly. When people take use all of the legal forms of investing with a Self Directed IRA or a Self Directed Roth IRA they will see a nice return, will not have to pay taxes and they are in complete control of what they do with their investments.


Imagine being able to invest in things that are almost guaranteed to increase by several folds in the coming years.. People can buy now thru your 401K vacation or retirement home of their dreams, whether it is in the United States or an exotic island across the world and be eligible to move in tax free at the age of 59 1/2. This would be an awesome adventure, considering how many people have to pay a substantial amount of tax when they close on a house that does not even feature everything they want.

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These are one of the few types of investments that allow people to not have to pay taxes.

People can also use Self Directed IRA real estate to invest in some rental properties. Imagine being able to turn a profit on a yearly basis by renting out to local people. Then if they decide to cash out at the eligible age they will not be taxed on the money invested in the property.   The beauty of “buy now thru your 401K” is that your IRA/401 k will pay the home owners association fees, the taxes and other fees associated with maintaining the property.

Part of the reason that this type of investment in the tax-deferred retirement plans is not better known is the fact that most banks, brokerage firms or fund companies do not permit clients to invest in real estate. It’s only been over the past fifteen to twenty years that we have seen the emergence of custodians specializing in alternative investments.

Many investors mistakenly believe that these types of investments in real estate are not permitted by law or IRS Code. The truth is that there are only three types of investments explicitly prohibited in IRAs by statute-life insurance, collectibles, and Sub-Chapter S Corporations. Solo 401 (k)s have no explicit prohibitions on specific investments at all. So buy now thru your 401K!

Invest in a Wide Variety of Property Types

Buy Now Thru Your 401K -There is a wide range of types of real estate that can potentially be held in an IRA/Solo 401(k). The range may vary from custodian to custodian some research will be required to find a custodian who has the knowledge, experience and expertise to provide services required to hold the following types of properties in Self-directed IRAs/Solo 401 (k)s:

  • Raw land (now is the time to buy foreclosed lots)
  • Pre-construction
  • Residential Property
  • Condominiums
  • Condo-tels
  • Multi-family units
  • Commerical Property
  • Apartment Buildings

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Regardless of the type of property purchased, IRA owners should be aware that there needs to be enough funds in the IRA or income coming into the IRA to take care of the annual expenses such as taxes, insurance, repairs, maintenance, etc. It addition, these expenses cannot be paid by the IRA owner outside the IRA without risking the potential for a taxable distribution of the real estate with corresponding penalties.

Owning Real Estate in an IRA has its Limitations

Using IRA funds in real estate is not for everybody. There are certain restrictions and prohibitions which you need to understand before considering this type of purchase. The fundamental thing is that the IRA account owner must understand that the property is held by the IRA/401 (k) and that the account owner cannot receive any benefit from the investment. Buy now thru your 401K is a super way to purchase a retirement home and use it as a rental until you are ready to retire, but I encourage you to consult your tax and legal advisors to insure that the transaction does not violate any of the prohibited transaction rules.

I am not an expert on this subject and if they are thinking of doing it, they had better make sure they contact a custodial 401K company to handle the transaction for them-but gheez seems like a no brainer to me.

Disclosure: Contact your accountant or financial advisor for further advice


 Renee Baxter

 Cell: 864.710.4645