Using my 401k to purchase real estate? Who to contact?

[Christopher Reynolds]

Hello everyone! I have a 401k with a company I work for. Although my career used to be with this company, I have started a contracting business in the last few years. However, I am still employed by this company on a part time basis.

I have learned of a tactic where you can take a loan out (not closing the account) against the 401k funds. You can use the funds for whatever you wish, but why would you want to purchase a non-performing asset?! :) You even pay yourself interest, as you act as your own bank. I contacted my loan servicing company, and they said my employer does not allow loan distributions from their plans.

If I left my employer, would I be able to start a new 401k account with another servicing company that allows loan distributions? I don’t want to close the account, as I don’t want to pay taxes on the money right now, and I also want to pay back the loan and use this tactic repeatedly. I contacted Fidelity to see if they could help me, but I don’t think they understood my question correctly. Or, they didn’t want me to use their financial products in that way. The meeting ended with the probably 24 year old Fidelity representative telling me he “knows a lot about real estate” and that it “can be way too risky” and that I should think about other options. Purchasing real estate is the best thing I have ever done for my financial stability. Wrong answer pal.

I know I probably need to talk to a professional regarding these matters, but what type of professional do I need to seek? Financial planner? I would leave my current employer very soon if it meant I could access these funds with a loan. I have a decent chunk of money “sitting there”, but I want to use it to generate income for me now, not in 30 years from now. Thanks BP!