It’s Not Your Father’s Retirement Account Anymore- The Basics of Using a Self-Directed IRA and 401Ks to Invest in Real Estate
A self-directed retirement plan is a type of structure that allows the holder to transfer tax free funds from a retirement account to acquire real estate. There are a number of rules however that must be followed in order to make such a transaction work. Let’s first start with a basic retirement account. Retirement accounts (such as IRAs and 401K plans) can be created by contribution subject to annual dollar limits or by rollover from a qualified plan. The owner usually cannot take out distributions prior to age 59 ½ without penalty. Understanding the Prohibited Transaction Rules of the Internal Revenue Code Anyone considering establishing a self-directed retirement plan to invest in real estate must be aware of the prohibited transaction rules discussed in the Tax Code. Internal Revenue Code…