Invest and loan from 401K or just save?

[Tara Kinney]

Strategy Questions:

I work as an 1099 for my "real job". I have an LLC and it is taxed as an S-Corp. I have recently stopped contributing to my 401K to use the money to save for real estate. But....I've been thinking....what will give me more "spending" money to invest in real estate?

As my own employer....I can set up a $2 to $1 matching contribution to my 401K.... so I could put in the max $18K and my LLC would contribute another $36K. Now...I know I do NOT want to hold real estate in my retirement account as I lose much of the tax advantages. However, I can "borrow" from my 401K to invest in real estate and then pay myself back with interest.

My question is: does it make more sense just to pull the money straight out of my LLC to invest in real estate, or should I invest in my 401K with matching and then loan from my 401K? Keep in mind that all the money is "mine" anyway, so by "matching" it's not like I'm "making" more money, it is just reclassified so to speak.

What are your thoughts and suggestions?