Use of self-directed 401k after 59-1/2 to build primary residence

[Owkaye Go]

I'm 61 years old and I've had a Fidelity 401k for the past 7 years or so. I also have a Traditional IRA. I do not have anything "Roth".

I'm self-employed on a part-time basis with no other income. I've been tax-deferring nearly all of my small income each year since 2010, and I'm planning to build a new home and move into it next year.  At the moment I've accumulated about $150k in retirement funds.

I've read that with a truly self-directed solo 401k I can use some (or all?) of my retirement funds to invest in my primary residence.  So does it make sense to replace my Fidelity 401k with a truly self-directed checkbook-control solo 401k, and then use those funds to finance the construction of my new primary residence?

My thought is to use these existing retirement funds instead of getting a construction loan. Then my primary home will be paid off -- free and clear -- so my only housing costs going into retirement will be maintenance, taxes, and insurance.

Bottom line:

Is there a better approach for me to accomplish my goal of building and moving into a new home by the end of next year? Or does this plan make as much sense as any other options I might have?

[Dmitriy Fomichenko]

Owkaye,

One of my clients did something similar but you will have to distribute the property  (or cash) before you can use it for personal benefits, which would be taxable event so it is important to plan for the tax liability. Here is how they did it:

https://www.nerdwallet.com/blog/investing/self-dir...

[Carl Fischer]

@Owkaye Go

Money is so cheap now I would opt for a low interest loan. I would look at investing your $150k in something that gives you monthly payments in excess of your loan payment and use that money to pay off your home loan. @Dave Van Horn has a great class on how to do that and he uses discounted notes. 

As @Dmitriy Fomichenko said you will take that distribution and pay taxes one way or another and no money money coming in but no loan payment either.