Using Your 401k

Here are some 401k Facts that will help you navigate using your 401k to invest in real estate:

  • If you have funds in a 401k from an OLD employer, you can move those funds over to a SDIRA and buy real estate with the funds.
  • If you have funds in a 401k from your CURRENT employer, you typically can’t touch those funds while you’re still employed (there are, however, 2 exceptions).
  • Exception 1: If your balance is at least $100k — Many 401(k) plans allow you to take a loan of $50k as long as your vested account balance is at least $100k. You pay interest on the loan but you pay it to yourself and you must pay off the balance within 5 years (but you can use the cash flow from the property to pay it off).
  • Exception 2: If you’re over 59 1/2 years of age — Many 401(k) plans allow you to take an in-service withdrawal at 59 1/2 years of age or older and roll-over at least a portion of your funds to a SDIRA.
  • Another Helpful Tip: If the funds in your 401k ARE usable but you just don’t have enough funds available to purchase a property, you can combine them with funds from your IRA, cash from your checking or savings account, or pool money with a spouse, family member, or friend to buy a property.