401k for real estate investing

[Fernando Romero]

I have a 401k I have never taken money out of and am considering using it to invest in real estate rentals. Does anyone have advice on how to best do this while minimizing any taxes I would have to pay? If anyone has experience doing this I would appreciate any input. I am 37 years old and just switched jobs so the 401k is open to some options as I was fully vested at the company I left. Thanks.

[Dmitriy Fomichenko]

@Fernando Romero, you have two options:

1. Take distribution, pay taxes and penalties (you will probably end up losing 40-50% of the amount you pull out) and then personally invest.

2. Set up a self-directed IRA or truly self-directed Solo 401k plan (if you are eligible), perform tax-free rollover and invest in real estate inside of a qualified retirement plan. You personally would not receive any benefits at this time, but you control the asset and it would grow tax-deferred for your future use. 

Hope this helps!