My Husband and I are starting a new journey. We are going to buy an investment property with his 401k he had from a previous job. I learned about this option about a month ago. You can legally buy real estate with your retirement money and not get taxed. It is not cashing out your retirement. You still have your IRA, it is just investing in Real Estate instead of Stocks and Bonds. There are so many steps to this process. 
We first found a company to be a “Custodian”. This is necessary because you can’t technically touch your money. It needs to be transferred. We then created an LLC for the property to be held under for liability and also more control as landlords down the road. We opened a bank account in the LLC’s name and just had the money transferred into the bank account from the custodian. Yay! We are on our way now. Next step is to find a property!
We decided to do this for many reasons. First, since both my husband and I are Realtors, we believe in Real Estate for both Primary Residents as well as investment options. Secondly, our money was just sitting there. This allows us to have an asset, and then once we get a tenant, the tenant in essence will be funding our retirement. Their monthly rent goes straight back into the IRA. Thus, we are “double dipping”. Once the home values go up enough we can always sell the property and then have the money from the sale plus all of the rent that was paid over the years. Our hope is to make enough from rent over a couple of years to buy a second property.
The nice thing about this strategy is we are not retiring for over 25 years. So this will build up as long as we want it to. If we get tired of being landlords, we just sell the house and roll the IRA back into the stock market or whatever we choose at that point. There are no capital gains and no tax penalties unless we take a distribution from it. Once we are at the legal retirement age, we can start making draws from it.
We are excited and I will let you know of our house hunting progress and the steps we make along the way. If this sounds like something you might want to learn more about, contact me at 480.734.3644. Happy Investing!
