Convert Regular 401k to Roth 401k with Leveraged Real Estate Structuring

Ken Lindow

Self-Direct Your Retirement Assets

Did you know that you could take charge of your own retirement funds and invest them in virtually anything that you believe can make you money, and where they are secure from stock market fluctuations? Yes, the tax law permits you to convert your retirement funds into self-directed IRA or 401(k) plan where you control them. Many individuals have purchased real estate and other assets as alternative investments for their retirement plans. If you invest with IRA funds, you still need an outside custodian that will permit you to invest in alternative investments. Whereas, if you set up a self-directed 401(k) plan, you will not need to pay outside parties an annual fee.

The conversion of retirement funds can be done at any time and will permit you to have checkbook control over your retirement assets. This flexibility allows you to seek out alternative investments that can increase in value either tax-deferred or tax-free until you retire. The self-directed plan permits you to acquire investments i.e. real estate with debt financing either with a bank loan or with private financing on the property. IRA funds combined with debt is subject to Unrelated Business Income Taxation while 401(k) funds that are combined with debt financing is not subject to this taxation. This allows you to increase your retirement investment assets in a way that cannot be done with most conventional retirement accounts.

IRS Rules Need to be Followed

There is no limit on the amount of retirement assets that you can convert into a self-directed account. The IRS and the Department of Labor both have various stringent rules that must be followed so as not to cause taxation of retirement assets. Generally, professional help should be sought to make sure that no tax laws are broken. If you have retirement funds that you want to diversify and control yourself while earning tax-free or tax deferred income until retirement, then establishment of a Self-directed IRA or 401K plan is an option to consider.