Need 401K transfer to SDIRA Tips

[John Casmon]

My previous employer was forced to close shop and I was just told that they are going to send me my 401K funds. I've decided I want to use these funds to invest in real estate (I have a separate IRA from previous 401ks), but after realizing the tax implications from a straight distribution, I'm now looking to roll them into a self-directed IRA. A portion of the funds are Roth 401k and the other portion is traditional 401k.

I've been researching Midland IRA, but looking for any feedback or recommendations on who to use and how to set it up as this seems to be more complex than I initially thought. I just read that I can partner funds from my SDIRA account with my personal money to purchase RE which I did not realize was possible due to the personal use restrictions.

Any best practices, watch-outs or intel would be appreciated. Tagging a few folks who are knowledgeable on the subject from other threads - @Brian Eastman @Dmitriy Fomichenko @Timothy Riley

[Brian Eastman]

@John Casmon

Firstly, you will want to determine which format of self directed IRA will best suit your needs.

Trust Companies like Midland serve as a 3rd party processor for your IRA transactions. They hold the funds, sign every document, cut every check and receive every deposit. This works well for static investments, but most real estate is not so static.

Alternately, you can look into a checkbook IRA LLC or - if you qualify as self-employed - a Solo 401k. These plans will put you in control of the funds and you will operate investments out of a bank account of your choosing.

I suggest you contact a few providers of each platform type (no one firm does both) and see which will suit the specifics of your situation and goals.