Trying to use 401k to invest in real estate

[Linda Doane]

Hey!

My husband and I would love to use some retirement money to invest in real estate. We have looked into buying directly from the retirement fund (employer refuses to roll it into a self directed IRA) as well as voluntary withdrawal. We were told that we can't voluntarily withdraw from the 401k / Roth IRA before age 59.5 or leaving the company - it's a law. Most people we have talked to are shocked, even the professionals that manage our retirement - that we can't have our own money, or even choose to self direct it. We're not sure we believe them - does anyone know if this is a law? Any thoughts on this?

Thank you!

Linda

[Bill B.]

Unless this the only money you have it’s a horrible idea. And if it’s the only money you have, it’s probably even worse. Remember you can not add any personal money to a property you buy with a retirement account. If it needs a new ac unit the retirement account must pay for it, you can’t even do any cleaning/repairing yourself.

Tack all this on top of the fact that you’d be investing a very tax advantaged sector, inside a tax advantaged account. And turning capital gains in to regular income. If you have any way to do this outside of your retirement account, do it that way. Borrow against your primary home, stop investing in your 401k and save privately. Sell a car. Almost anything would be less risky and financially a better choice.