401K to buy rentals for the purpose of retirement.

[Joshua Cochran]

I know you can purchase a home using your IRA. I currently have a 401K through my employer. Anyway I can use it to purchase rentals for retirement riches?

NOTE:  I am aware of the rollover aspect of the 401K into an IRA once I leave my job.  Anything I can do with it while I am with this employer?

[George Blower]

@Joshua Cochran

1) I gather that your 401k is with your current employer. In that case, the plan won't allow you to invest in real estate (or even rollover contributions to another retirement plan that would until you quit your job).

2) If the plan allows you to take a 401k loan, that might be one option to access funds to invest in real estate (i.e. you would borrow the funds and then purchase in your own name or an entity that you own personally).

Here are the general considerations regarding 401k loans.

401k Participant Loans

• If your 401k plan allows for 401k participant loans, the maximum loan amount is equal to 50% of the balance up to $50k. The repayment terms for a 401k participant loan are equal monthly/quarterly payments of principal and interest (typically prime plus 1%) over a 5 year term (longer if used to acquire your principal residence).
• Please note that if you take a full $50,000 and then pay back the loan, you can't take another $50,000 until 12 months after the first loan was fully paid back.
• Per the loan offset rules that went into effect with the 2018 Tax and Job Act: if you leave your job and the loan is current at the time you leave your job but then the loan goes into default because you left your job, you will have until your tax return deadline (including any timely filed extension) to make the loan current by depositing the outstanding balance into an IRA (and thereby avoid the taxes and penalties that would otherwise apply).

Please keep in mind the multiple loan rules:

Under those rules, the sum of the balances of a participant's outstanding 401k loans under a single 401k plan (using the highest outstanding balance of each loan over the last 12 months) can't exceed 50% or $50,000 whichever is less. Thus, if you took a $50,000 loan and paid it back within 6 months, you would need to wait another 6 months before you could take another $50,000 loan.