401k to fund property

[Cariza Abinguna]

Hi guys! I have a good amount of money from my 401k from my previous employer. I didn't do anything to it once I left my job back in 2020 so its just sitting in my account. I would like to cash it out and use the funds for purchasing properties. I am aware of the penalties and taxes which I'm okay with. I just think I'll have a better ROI using the cash now to buy more properties than just letting it sit there. I was just wondering if anyone have a better idea or have suggestions and recommendations how I can utilize my 401k money to use for real estate. I heard of SDIRA? but I dont fully understand it. Can I roll over my 401k to SDIRA?

[Dmitriy Fomichenko]

@Cariza Abinguna,

Yes, you can establish a self-directed IRA and then rollover your old 401k into it. Once the new account is funded you can invest your IRA funds any almost anything, including real estate. This way you accomplish several things:

1. Remove your 401k from exposure to the stock market (which you can't control)

2. Will have the ability to invest in real estate (which you can control)

3. Avoid paying taxes and penalties on early distribution, which could wipe out 30-50% of your 401k balance (would be poor financial move)