IRA And REI
Can I use the money in my profit sharing plan at my current job (not classified as an IRA) for real estate? I know you can use it if it is in an IRA. Any help on this one would be appreciated.
Can I use the money in my profit sharing plan at my current job (not classified as an IRA) for real estate? I know you can use it if it is in an IRA. Any help on this one would be appreciated.
You need to take a look at your individual plan. What are the rules regarding early withdrawal? Can you borrow from it? Is the money tax deferred now?
I can borrow from it, subject to normal income taxes and an early withdrawl penalty. How do you get around this in an IRA and not other investment vehicles?
Hey,
You are saying Profit Sharing Plan, but mention IRA, so do you really mean 401k plan???
You also say you can borrow against it, which is allowed in most 401k plans.
If it is a 401k, and you can borrow against it, you do NOT have to pay tax on the borrowed amount. The way it works is, your assets are liquidated and the proceeds are paid to you, BUT you have to pay your 401k the money back plus interest.
While many people recommend this as a way to start in REI, I strongly disagree.
For most people, REI is nothing more than a passing fancy. They buy a house, find out that REI is not as easy as they thought and give up. If you do that with your 401k money, you have screwed up your retirement money.
Need more specifics on your plan. When you borrow money their shouldn't be any taxes or penalty unless you don't repay the loan at which point it becomes a withdrawal.
I would recommend you research different IRA's and ask the questions to the company that manages the IRA's. They would know best how this will work for you and what you want to do with your money. All IRA's are not created equal. In order to do this in some cases, you have to have TRUELY Self-directed IRA, where you determine where and how your money is invested. Some claim to be Self-directed, but they give you 2 or 3 options to choose from. I use Equity Trust (formerly Mid-Ohio Securities) And they have answered every question I have had. They are the experts and they are only a phone call away. There are a few of them out there. Good luck
Quote:
On 2004-02-26 21:04, scootb wrote:
I can borrow from it, subject to normal income taxes and an early withdrawl penalty. How do you get around this in an IRA and not other investment vehicles?
This does not sound like a loan. It sounds more like an early withdrawl, hence the penalities.
John
Hi scootb
Take pejames advice and contact 'Equity Trust' and ask them for advice. I also have my IRA with them , and have used the ira to construct a home. Someone else had the property, I had the funds. We split the profit. The profit I made went back into the IRA. Im ready to do another!
Good luck Joe