All Forum Posts by: Kingston Yi

Money from an old 401k can be moved to an IRA. You want a self-directed IRA that allows the purchase of rental properties. Many brokerage firms say they offer self-directed accounts, but when you ask about real estate, they will not hold that type of asset. You may find using an IRA owned LLC to be an easier path to buying and holding the property.

IRA custodians also offer "custodial accounts." These are different and wouldn't relate to what you're looking to do.

When searching for an IRA custodian look for a custodian that allows for alternative assets.

One big difference between owning real estate in a retirement account and owning it in your own name ?  Taxes!  The tax strategy is completely different.  The retirement account offers no write offs or deductions.  Do not underwrite these deals with the same criteria as you would for something you would own in your own name!  All expenses must be paid from retirement funds. ( You can't use any personal funds or credit cards to pay bills on the rental).  All profits must be deposited to retirement funds.  You must run this as a completely seperate business.  This is where the word "custodian" comes in.  In this case, the word custodian does not mean anything about children.  When you open your SDIRA or SD401k ... you use a company that will create a custodial account.  They are going to "see" every transaction and this keeps the IRS happy.  

  1. Open custodial account

   2. Transfer funds from retirement account

   3. New custodial retirement account buys real estate via pay cash or non recourse loan

    4.  All income and expenses go thru this custodial retirement account.  Note: you can Never hire a parent, sibling, child,grand child or yourself to work on the property and none of these people can live in the property.

    5. When you reach retirement age , you can access the funds.

@Kingston Yi move it into a Solo 401k instead of an IRA. No UBTI in a Solo401k.

Hi Kingston,

Is this an old 401k plan from a previous employer?

It's a simple process. First you would establish an IRA with a custodian that allows for alternative assets and complete a rollover form. The custodian would provide some delivery instructions, you contact your plan admin of the 401k to let them know you're rolling over and provide the delivery instructions and they will send the funds- about 7-10 business days for processing. Find the real estate deal you want to invest in and bring the contract to your new custodian where they will have you fill out a purchase authorization and sign the contract on behalf of your IRA. Your IRA will be listed as the owner on the deed.

Not tax implications for rolling over to another qualified account.

Hi Kingston,

Is this an old 401k plan from a previous employer?