Using a SDIRA versus 401k

[Daria B.]

Here's a thought in SDIRA versus loaning to oneself from the 401k. 

SDIRA as we know comes with all sorts of fees.

401k can be used to loan money out to the holder of the account. 

I always thought that to be a bad idea but anyway....When the money is paid back, it's with interest (I'm told) to the account holder.

So, the 401k has no fees when using it as allowed to withdraw from. The money would be used to either fund a flip, thereby, paying the 401k back after selling. Or, down payment or rehab and again paying back afterward.

Can the 401k be used to avoid the fees that come with SDIRA accounts?

I'm sure there are strong reasons for withdrawal from the 401k.

[David Dachtera]

@Daria B.,

It depends ...

If your whole thrust is to avoid fees, you may want to rethink being in REI. Consumers avoid fees. Business people view fees as the cost of doing business and look for ways to deduct them from their taxable income.

That said, of course, remember that with a self directed account the entire value can be used, while 401(k) loans are limited to 50% of your vested balance up to $50K. 

401(k) withdrawals would be subject to the usual rules about the age of the account holder regarding penalties and 20% tax withholding.