Thinking about dumping my IRA to start real estate investing

[David Carroll]

Looking for your thoughts- I have both a Roth and Traditional IRA. I'm considering rolling them into a self directed IRA or solo 401k but hate the thought of a custodian. I'm also considering just pulling it all out and taking the penalty, paying the taxes and then investing. Yes I will be losing some money but will have full control of my assets. Why would or wouldn't you do this?

[Dmitriy Fomichenko]

Originally posted by @David Carroll:

@Dmitriy Fomichenko Thanks for the reply. I do have an S Corp and am eligible for a solo 401k. So how can I avoid a custodian?

David, in order to avoid the custodian you need to establish truly self-directed Solo 401k. Here is how it works:

1. Your S Corp will act as plan sponsor

2. Your S Corp will adopt Qualified Retirement Plan (Solo 401k)

3. Plan is created, instead of using a custodian, 401k Trust will be used as a vehicle to hold plan assets. As trustee you control it.

4. As plan trustee you will open business checking account for your Solo 401k Trust, fund it with rollover or contributions and start investing. Investing will be as simple as writing a check. All income will flow back to the 401k trust business bank account and all investment related expenses will be paid from this account.