Please note that you are obligated to pay back their 401k (regardless of the performance of your real estate investment).Per the loan offset rules that went into effect with the 2018 Tax and Job Act: if you leave your job and the loan is current at the time you leave your job but then the loan goes into default because you left your job, you will have until your tax return deadline (including any timely filed extension) to make the loan current by depositing the outstanding balance into an IRA (and thereby avoid the taxes and penalties that would otherwise apply).If you are self-employed with no full-time employees & you can rollover the funds, you could set up a Solo 401k, rollover the funds and take a 401k loan from the Solo 401k.

I currently work a full-time job and I also own a small CPA practice that a I started a few years ago that has two full-time employees and it only requires my time during tax season.

Interview them like you're hiring an employee (because you are!)

Working with them will allow you to see what other investors are paying for property in different areas and give you a reference point that others don't find on Zillow, HAR, etc.As a long distance investor, you will need what the BP guys call your Core 4 (agent, lender, contractor, and property manager). 

So he is an employee , If you decide to let him go , just tell him you had to eliminate his position .And in 30 days he has to sign a lease agreement and deposit etc .

The taxes came from withdrawing a State Employee Retirement account.

I am new to the world of real estate but I have been in residential and commercial construction as an employee and a business owner for my entire adult life, so real estate investing, to me, seems like the obvious next step.  

Maybe this is something guys do to lower their expenses but I've never heard of a reputable contractor with employees who doesn't have comp.

After a while, Home Depot and Lowes employees know you by name. 

Such plans are available to those who have some form of self-employment and no full time employees.