All Forum Posts by: Florencio Nayve

I rarely would advise to take a distribution from the retirement accounts and have less to reinvest because of the tax burden. It would be similar to not doing a 1031 exchange when you knew you had the ability and intent to reinvest all of the net proceeds in a replacement property.

Thanks for the advice, Jeff! So looks like the SDIRA route is the better way. I'm just wondering if there's a big advantage for the long term if the IRA or 401k is converted to a Roth IRA/401k before converting them to a SDIRA?

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Quote from @Dmitriy Fomichenko:

@Florencio Nayve,

As you stated you do have the option of establishing a self-directed IRA and rolling over your IRA/401k into it and then use it to buy rental property. The other option would be to take the distribution, which would be taxable event. Lump sum distribution will push you into a higher tax bracket so be sure to discuss with your CPA the tax impact.

What's best for me doesn't mean would be best for you, there is no "one size fits all" when it comes to investing. Decision like this would be best on number of factors such as your current tax bracket, additional tax liability of lump sum distribution, your investment experience, your short term and long term goals... etc. Feel free to give me a call and I would be happy to brainstorm this with you.

Thanks so much for the advice! We’re weighing the pros and cons of taking the distribution or doing a SDIRA. We’re trying to find a faster way to increase our retirement money. The main thing that we don’t like about purchasing a rental property with a SDIRA is the 40% downpayment, not so much with the prohibited transactions. If we take the distribution, we’ll be at a higher tax bracket and pay more taxes, but we’ll be able to put less money for the downpayment and might be able to purchase two properties instead of just one.

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Quote from @Jack Malpass:

Hi Florencio, I am not a Fiduciary nor advisor so I can't tell you what i would do in your shoes. However you can roll your Wife's old 401k into a self-directed IRA and her IRA into a self-directed IRA and get the tax advantages of doing so. Rolling a 401k into another retirement plan( SDIRA) does not create a taxable event unless you are doing a conversion ( Traditional to a Roth). Her IRA can be done as a transfer ( two like accounts Traditional - Traditional or Roth to Roth with no tax implications.

Thanks for your advice! We’re looking for a faster way to increase our retirement money so we’re trying to look at all the angles.

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Hello everyone,

My wife is turning 59 1/2 yrs old soon. We're planning to buy a rental property using her IRA and old 401k and we're wondering what's the best route to take. We're just old and confused. Is it better to withdraw her IRA/401K (and pay taxes) OR to convert the IRA to a self-directed IRA (SDIRA) to purchase a rental property. What would you do if you were in our shoes? Thank you so much for the help!

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Thanks for the advice. I’m not self-employed so I can’t get the solo 401k, but I will look into the Roth discount.

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Thanks so much for your advice. I will definitely get the services of a tax professional to guide me and show me the best route to go.

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Thanks so much for the advice. You have a very good point. But paying for the penalty and taxes seems too overwhelming in my situation right now.

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Quote from @Bill B.:

If you’re going to invest in real estate. (I anpprove) And if you’re willing to pay the taxes. (Not so much). I would recommend you just take the money out and invest it. There are almost no income taxes when investing in real estate, at least for the first 2.0 years if you’re doing it right. You avoid all the limitation/restrictions. You still pass it all tax free at death.

If you don’t convert to Roth or regular funds by paying the taxes. You’re going to live with the restrictions AND concert capital gains to regular income while also giving up the tax free capital gains at death. It’s lose lose.

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Hello Everyone,

I'm planning to buy a rental property using a SDIRA. My questions: Is it better or a smart move to convert my Traditional IRA account to a Roth IRA before I convert it to a SDIRA? What are the pros and cons? I'm aware that I have to pay taxes on that year that I'm doing the conversion, and it will put me in a higher income tax bracket. I'm just wondering if it's worth doing the conversion. Thanks a lot for your help!

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Thanks so much Mr Gesner for your advice. I will definitely look into seller financing. She's in her early 80s and might want all the money at once, but we'll never know. I know there are creative ways to do it. For seller financing, do we need only a lawyer to help us with the transactions or it is very important also to get a real estate agent to guide us through the process? Thanks again for your help.

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New Haven, Connecticut

All Forum Posts by: Florencio Nayve

Florencio Nayve has started 5 posts and replied 33 times.

Post: Withdraw IRA/401k or use Self-directed IRA to purchase a rental property

Post: Withdraw IRA/401k or use Self-directed IRA to purchase a rental property

Post: Withdraw IRA/401k or use Self-directed IRA to purchase a rental property

Post: Withdraw IRA/401k or use Self-directed IRA to purchase a rental property

Post: Converting Traditional IRA to ROTH IRA then to SDIRA

Post: Converting Traditional IRA to ROTH IRA then to SDIRA

Post: Converting Traditional IRA to ROTH IRA then to SDIRA

Post: Converting Traditional IRA to ROTH IRA then to SDIRA

Post: Converting Traditional IRA to ROTH IRA then to SDIRA

Post: First dive into real estate investing.