Rolling over my 401K

[Jason Moran]

I'm a big believer that there is a significant stock market correction coming in the next year or two, as well as a local California real estate market correction. I currently have a 401k from my 9-5 job with 50K in it that I think is going to get hit hard in the market correction. Does anyone have a recommendation on Self Directed 401k's or IRA's for the purpose of real estate investing? My goal is to flip homes in the very short term, build cash, then purchase 4-plexes during the real estate market correction as long term holds. I've read in the forums about using the SDIRA's for notes, but that is way out of my wheelhouse. I've been a General Contractor for years, and my wife is a Realtor so we know our market and what it takes to do the work.

[Dmitriy Fomichenko]

Hi Jason, totally agree with you that you can have much greater control over real estate than the stock market... Couple things regarding the above:

1. If you have a 401k with your current employer - you will not be able to roll this over into self-directed IRA (or 401k) until you leave the company or reach a retirement age.

2. Retirement accounts are designed to be used for passive investments. Flipping is considered an active business and income from such may result in UBIT taxes. Be sure to consult with the knowledgeable CPA regarding the tax impact.

3. If you set up a self-directed account, your wife would be considered a "Disqualified Person" and therefore would not be allowed to act as an agent in the transaction involving your IRA or 401k.