Investor · Summerville, SC · Member since 2013 · 32 posts · 3 votes
I plan to retire some time next year and need some advice. I have a 401k invested in stock funds, and would like to avoid the ups and downs of the market. My goal is stable passive income, so leaving the money in a stock fund would worry me. Same with an annuity.
My thought was to buy rental property, paying cash from the 401k. The 401k money would be considered income in the year it is withdrawn, so there will be a large tax bill. We have one sfr now, so I know that what I'm considering amounts to a part time job, that's OK. I do realize we could finance and buy a bunch of property, but that would be full time work, not really in keeping with the goal, retirement..... Are there any big points I'm missing, or is this a reasonable plan?
you may want to consider using self directed IRA or 401k to but that investment property. If you do that you will have to pay any taxes on one large distribution.
Investor · Summerville, SC · Member since 2013 · 32 posts · 3 votes
12y
Thanks for the reply Dmitriy. What you say is true, but if I read the rules correctly, you can't self manage the property under a self directed ira. Am I reading that right? It does seem that management fees would be less of a hit than the tax.
If we did go this route, what entity would the property be titled to, Richards IRA? And would that leave the ira exposed to liability from owning the property?