IRA liquidation tax strategy

[Soheil Naimi]

I am looking for ideas to have an IRA account funds be extracted to be used and the tax be deferred

[Dmitriy Fomichenko]

@Soheil Naimi

Not sure what you mean by "extracted", but if you do take a distribution from your IRA it will be a taxable event (there is no way to avoid the taxation), plus you will be penalized if the distribution is premature.

As Eamonn suggested you can transfer your IRA into self-directed IRA. Transfer is not a taxable event so the taxes will be deferred. The funds can be used to make alternative investments, but can't be used by you personally for your own benefits now.

Even better option will be to move the funds into truly self-directed Solo 401k plan (this plan is not for everyone but being real estate agent you are considered self-employed and will qualify for it). This move will give you several advantages:

1. You will have unlimited investment options (including real estate and other alternative investments)

2. This plan has high contribution limits and will allow you to shelter over $50K of your income from taxes

3. If you wish to access your retirement funds for personal use you could do so by utilizing "participant loan" feature of the plan (not available with an IRA). The loan is limited to $50K or 50% of the balance, whichever is less, but it allows you to have instant access to your 401k monies for any reason.

You can learn a lot more from this related discussion:

https://www.biggerpockets.com/...

Hope this helps!