The interest goes back on your 401k from what I understand.Second thing I would say is that you need to have an IRA.

Some people have suggested going to meetings where self-directed IRA people are hanging out, but that's probably the only strategy I've heard.

Do 401K and IRA money also considered in total net worth ?

Self directed IRA's?

With the recent passing of my father I have inherited $205,000 , however it is within the confines of a traditional IRA.

There are a lot of strategies about the vault that make sense, ie. the tax advantages, access to your money for leverage while it grows vs having it sit in a 401K or IRA, and recouping the lost opportunity costs of your everyday purchases, allowing your money the ability to continue earning interest and take part in more than one investment at a time.

They are not borrowing from their IRA.

Bob leveraged money in his IRA and 2.

My question is whether it would be better to pay the 20% penalty on this modest savings and keep the cash or roll it into a self directed IRA?

I’ve actually taken out 92k from our Roth IRAs over time (all tax free since it was just the principal-not the earnings) out over for RE (buying, rehabs and cap ex), and I just sold the stocks that had done well each time I tap into my stocks.