$1,000,000 401k to Real Estate at age 60 for retirement

[Austin French]

I am a new member on BP and this is my very first post.  It amazes me all the people on BP that are so willing to help.  In advance, I appreciate any and all information/help.  My father is 59 years old and has $1,000,000 in his 401k.  His ambition is at a all time high concerning his finances as he is concerned about funding retirement.  Not the best time to be so concerned I know.  He has met with multiple financial advisors who have presented plans to invest and start withdrawing from his nest egg.  I am new to my own real estate ventures and I presented the option of cashing out his 401k and investing in real estate.  I have been researching how to best go about this, but still haven't been able to formulate a plan.  I greatly appreciate any advice or direction.  I am trying to gather 3-4 different strategies/Plans of 401k to RE.  Once we have the possible strategies we will be able to find what works best for him and move forward.  Thanks everyone!

Austin

[Brian Eastman]

@Austin French

To take money out of a 401k will create a tax liability and reduce the amount of cash available to invest significantly.

The better option would be to rollover a portion of that 401k to either a self-directed IRA or 401(k) as most appropriate for your father's situation. There would be no tax consequences in such a move, and such a plan would then allow your father to diversify that portion of his portfolio into assets such as property, private mortgages or crowdfunds.

It would be the tax-sheltered retirement plan investing in real estate (not your father directly) and there are rules associated with avoiding any kind of self-dealing, but this can be an effective way to take some of your father's savings and invest them in real assets that produce consistent income.

As someone over age 59 1/2, your father has the ability to take distributions from a retirement plan, so if he can put that money to work generating income, then drawing off the income will leave the principal intact and therefore extend the life of the funds.

This is just a tip of the iceberg post towards a set of near and long term, small and big picture issues your father will want to evaluate, but the key takeaway is not to withdrawal a big chunk of 401k money, just reconfigure how it is invested.