Weighing 401k vs IRA Rollover for Self Financing

[Jesse Weiland]

I believe this is my first post. This question has been on my mind for a while so I thought I would pose it here and see what others think about it. My goal is to buy my first property in 2018. I just started a new job and have my 401k from my last job that I need to eventually move. I can roll it over to an existing IRA or to my new 401k. Some of this is in a Roth 401k but most is in a traditional 401k. If I weren't looking to possibly use this money to buy a property, I would just move it to my IRA. My question is, what options do I have to access this money without paying early withdrawal fees or tying everything up until I'm 58-1/2? I know I can borrow from it if it's in a 401k. I don't believe I can take a loan or otherwise access it if it's in a traditional IRA. I can't write myself a loan from a self directed IRA and I don't want to lose access to profits until I'm 58-1/2. Please share your thoughts.

[Brian Eastman]

@Jesse Weiland

If you leave the funds in a retirement plan, you have two choices: roll to the new employer 401k and for the most part the funds will be trapped there. You could borrow from a 401k up to $50K or 50% of your plan value, whichever is less. The alternative is to roll the old 401k to a self-directed IRA. Such a plan would give you greater flexibility for investing the funds, such as into real estate or private lending, but everything would be 100% for the benefit of the plan and you would not be able to personally access funds until you reach retirement age of 59.5. A self-directed IRA is simply a means of having broader investment options and more control, but is still a tax-sheltered retirement plan with the same age restrictions.