Please help a newbie! Using IRA to invest?

[Casey Young]

Hi I am new here let me start off by saying I am in the middle of my first flip and i do all the construction work myself so money is a little tight but i believe it will pay off..... I hope. Let me get to my question I will say its been a good day I just found out i have 11k in a 401k that I didn't know I had! This is definitely a surprise, a very pleasant surprise anyways I am going to lose 4k of this if I cash it out I would rather keep all of it but how do I do it? I have heard i can switch it to an IRA and use it to invest but what are the stipulations and how do I go about doing this? Can i use this money to invest in my current flip? Can I use it for a down payment on the next property? Can i buy notes with this? Any help or advice it greatly appreciated this is my first post and would like to thank everyone in advance.

Casey 

[Dmitriy Fomichenko]

Hello @Casey Young and welcome to BP!

You need self-directed IRA or self-directed Solo 401k to invest your retirement funds in non-traditional assets such as real estate.

There are some limitations that you need to be aware of, one of them is that all transactions must be 'arms-length' and they can not involve 'Disqualified Person', which is you and your immediate family members. Therefore you are not allowed to invest into your current flip.

You could use funds in your IRA as down-payment only if you are buying the property inside of an IRA, not personally. In this case you must use non-recourse loan.

Investing in notes probably would be most suitable in your case because of the smaller amount you have to invest. It is unlikely you can get a property with just $11K.

The subject of self-directed retirement accounts have been discussed on this forum extensively, I suggest you take the time to search and read other threads.