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Updated over 5 years ago,

User Stats

24
Posts
18
Votes
Brian Babbage
  • Rental Property Investor
  • Kentucky
18
Votes |
24
Posts

Cash Out Roth 401k to buy more units

Brian Babbage
  • Rental Property Investor
  • Kentucky
Posted

Wondering what folks think about cashing out a Roth 401k to put that money to work in RE. 

I currently have a fully vested Roth 401k through my employer that has a sizable chunk of cash (definitely 2 down payments in my market). I stopped contributing a few months ago to start funneling more cash toward purchasing properties. I am now thinking about leaving my Job to take another higher paying W2 opportunity. I am considering taking the 10% penalty for early withdrawal from a Roth 401k so that I can unlock that money and put it to work in RE. My reasoning here is two-fold 

  1. I am more bullish on RE long term than the Market (and even more bullish on RE vs Market short term). 
  2. The consistency of the cash flows coming from rentals could expedite my being able to leave my 9-5 faster, therefore focusing more time on RE, therefore building a portfolio that provides something closer to financial freedom faster. 

For additional context I have an SDIRA already that I invest through, and I know I could potentially roll the 401k into that and possibly avoid the penalty, but I am hoping to have this cash in my personal accounts so that once the money is invested I can be closer to quitting my 9-5 and focusing on RE full time. 

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