Can someone check my math?

[Shawn Root]

I was trying to run some numbers through a spreadsheet to see what the effects were

of cashing out a 401k to invest in vs. leaving it in a self-directed IRA/401k.

Assumptions:

1. Starting value of 300k in 401k

2. Lose a third of that by cashing out

3. Lose about 20% by converting to Roth

4. All cash (reserves required + net rents) is deposited in an account and just held there.

5. Rents are 1.3 percent of total purchase price of property

6. Expenses are 50% of rents.

7. Cashout option allowed to invest with 20% down and 5% reserves

8. Retirement accounts required to invest with 40% down and 10% reserves.

9. All had 30 year mortgages at the same rate.

10. Cash option paid 25% tax on net rents (may not have done this quite right)

11. Very simple monthly appreciation and increase in rents based on 3% for inflation

and for appreciation (I know this isn't realistic, but it made the calc easier)

So, for example, the SD Regular IRA would be able to purchase $600,000.00 property

because it has the full 300k to work with, but must use 240k for a down payment and keep

the other 60k in reserve. The Cash Option was able to purchase $800k of property

even though it only had 200k to start with.

This is what I found after 30 years (end of loan):

SD Normal IRA:

Gross Rents - $ 19,100.00

Property Value - $1,470,000.00

Cash Account - $1,629,000.00

SD Roth IRA:

Gross Rents - $ 14,600.00

Property Value - $1,127,000.00

Cash Account - $ 948,000.00

Cashout Option:

Gross Rents - $ 25,400.00

Property Value - $1,960,000.00

Cash Account - $1,378,000.00

What strikes me is that the cash account in the cash option is after-tax money. No

more tax gets paid on that. Also, the gross rents are much higher because a larger

amount of property was purchased.

Now....did I go horribly wrong somewhere? Because by these numbers, I should

dissolve that retirement account tomorrow.

Thanks in advance for any help in figuring this stuff out. I'm sure that I

must have missed several pertinent pieces of info.