All Forum Posts by: Dmitriy Fomichenko

I did not listen to the podcast, but here are my thoughts on investing through self-directed retirement vehicles: 

You should use it in combination with other vehicles/investment strategies. I agree with @Kyle Luman that if all of your wealth is in an IRA it would be difficult to retire early.

Having said that, it is still possible to access retirement funds early. Contributions from Roth IRAs and Roth 401ks can be pulled out at any time, tax-free. You can also employ the periodic equal distributions rule to access your retirement funds prior to retirement age without penalties (but again, there are limitations, and you must make a commitment). 

A Truly Self-Directed Solo 401k plan is a great vehicle to help escape a middle-class trap and build massive amounts of wealth tax-deferred (or possibly tax-free by utilizing Roth component of the plan). This plan allows you to contribute over $70,000 annually (possibly double that if your spouse also participates).  However, this plan is not for everyone, you must be self-employed or own a business without employees, and the contributions can only be made from business profits. There are more benefits such as a participant loan, exempt from UBIT on leveraged RE, unlimited investment options, checkbook control, and spouse participation. 

The bottom line is you should use multiple strategies that will work for you to get ahead and retire early. Good investing! 

@Maria Jeanette

Here is a list of a dozen lenders specializing in non-recourse loans:

https://www.biggerpockets.com/member-blogs/2810/50272-list-o...

@Brandon O.

If you are eligible, you can rollover 401k from a past employer into Solo 401k.

401k with the current employer typically locked up until you either reach a retirement age or leave that employer. I suggest you contact them and inquire about "in-service distribution". 

@Terra Padgett, please explain why you needed the LLC for Solo 401k.

You don't need an LLC for Solo 401k.

@Tidal Creek,

You can use the 60-day rollover rule to access IRA funds for 60 days, but how are you going to pay it back if you use the proceeds to buy the land? Because if you don't - the entire amount you pulled from the IRA will be taxable, plus penalties for premature distribution. I would not recommend it.

@Robin Cornacchio correct, there is no such thing as capital gain taxes for an IRA.

Robin, IRA is a tax-deferred vehicle. When you sell a property owned by the IRA - this is not a taxable event. Therefore, you don't need to use a 1031 exchange; you can take as long as you wish to find and then buy another property.

The only exception is if there is debt on a property, in which case there will be some UBIT (Unrelated Business Income Tax) implications. This tax is assessed on income derived from the leveraged portion of the real estate owned by the IRA, and also applies on the sale of leveraged property in an IRA. Note that a truly self-directed Solo 401k would be exempt from UBIT on leveraged real estate. 

Hope this helps!

@David Henderson,

Your question is unclear... You can have an IRA-owned LLC (aka Checkbook IRA) to buy real estate with it or make any other alternative investments. You can establish a personal LLC and use it to buy a business. All IRA-related transactions must be "arm's length", in other words, IRA can't get involved in any transaction with yourself, your immediate family members or any entities these individuals own or control. 

@Kwanza P.

What other assets do you have in your 401k?

Protect from what?