Skip to content
×
Try PRO Free Today!
BiggerPockets Pro offers you a comprehensive suite of tools and resources
Market and Deal Finder Tools
Deal Analysis Calculators
Property Management Software
Exclusive discounts to Home Depot, RentRedi, and more
$0
7 days free
$828/yr or $69/mo when billed monthly.
$390/yr or $32.5/mo when billed annually.
7 days free. Cancel anytime.
Already a Pro Member? Sign in here

Join Over 3 Million Real Estate Investors

Create a free BiggerPockets account to comment, participate, and connect with over 3 million real estate investors.
Use your real name
By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.
The community here is like my own little personal real estate army that I can depend upon to help me through ANY problems I come across.
Innovative Strategies
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

Updated almost 2 years ago on . Most recent reply

User Stats

50
Posts
27
Votes
Daniel C.
  • Rental Property Investor
  • NH
27
Votes |
50
Posts

Better way then cashing out 401k?

Daniel C.
  • Rental Property Investor
  • NH
Posted
At first read, I’m sure the amount of reasons not to cash out my 401k will be many, but I want to give context and see what you guys think. I have about 250k in a past employers 401k. My options with it are to cash out, roll over to an ira, or some combination of the two. I’m new to REI, but I’ve done my research over the last 6 months, listened to all the pod casts, built some elements of my team, have financing lined up, and have three cash flowing properties that I am interested in at the moment. I’m 40, and my “why” is financial freedom in the next 5-8 years. I do not want to wait until I’m retired to benefit from cash flow, which is why I’m hesitant to go the route of self directed IRAs, 401ks and such. I understand that cashing out will cost me almost half of my money after taxes and penalties, but all my calculations say that even after 10 years, the remaining money as 20% down payments will earn way more for me than keeping the money where it is. I’m ready to take action, but I need a little confirmation that I’m not missing something, and this is why I’m coming to the experts! What do you guys say? Thank you!

Most Popular Reply

User Stats

115
Posts
49
Votes
Steven McCutcheon
  • Real Estate Agent
  • Freehold, NJ
49
Votes |
115
Posts
Steven McCutcheon
  • Real Estate Agent
  • Freehold, NJ
Replied

@Daniel Cayer

Regardless of whether you take out the money now or in 30 years when you are forcefully required to, it is still taxed. You will be only losing an extra 10% on a penalty, which at 40, you have plenty of time to recapture if it bothers you. Retiring off of a $1 million 401k doesn’t work today nor will it in 25+ years. Cash flow from buying real estate is income you are actually earning, and not just on paper. It allows you to keep reinvesting in yourself, trading up to buy bigger properties, and give you that financial freedom! A mutual fund will not.

Loading replies...