My quest for retirement security

Realization - my employer sponsored 401k retirment plan is NOT going to cut it!

I had been managing my retirement account for years, with all the money in a 401K brokerage account so I could buy and sell stocks. The returns were always “just ok” but besides mutual funds, 401Ks just don’t provide any options. So in early 2021 with the new presidential administration in place, the performance of my retirement account became downright dismal; from 10-12% annual gains on average, and now at a disgusting -3%.

My search for an alternative retirement strategy began. There are precious few alternatives to stocks that I am aware of; bonds, options, currencies, gold and silver, entrepreneurial business startups or purchases, and yes real estate.

One night while surfing youtube, I ran across a David Greene video of him sitting on the front porch of a duplex being interview by someone behind the camera. That was my first “accidental” introduction to real estate investing. Youtube is an interesting beast. Once you watch something you are profiled. So on a regular basis I was prompted with other videos from all the names we know and respect; David Greene, Brandon Turner, Ken McElroy, Robert Kiyosaki and numerous others.

Yes, after about a few videos I had caught the bug.

But I had a challenge. The same challenge as many other would be REIs – money.

However, I had a niggling in the back of my head that if only I could use some of that retirement money. The big obstacle was that I still work for that company that is the sponsor of my 401K – I know what you are thinking, he’s one of those W2 losers. To be honest I was feeling like a W2 401K loser myself. However, while currently employed I could’t take any money out of my 401K– or so I thought.

I googled “when can I start taking money out of my 401k penalty free?”

The answer; 59 1/2. Ok, how old am I? I’ll be 59 ½ in “WOW” less than a month!

I didn’t fully expect to actually take that money out of the 401K because that would be considered income and I would have to pay income taxes on it next April.

But I was aware that I could roll it over into a self directed real estate IRA.

I had done this once before in 2006 with an older 401k from a previous employer and it was basically a disaster. The custodian was a major pain and mostly incompetent. All expenses for the property had to be paid out by the custodian out of the IRA, and it was a miserable experience. So while researching self directed IRAs I ran across “Checkbook LLC” IRAs. This type of IRA I had never heard of before. The self directed IRA would own an LLC and I could run the property and investments just like any other LLC with a business checking account and the bank of my choosing.

Fantastic! That would be amazing.

Check out my next post and my first big mistake - "how I wasted $1700!"