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Real Estate 401k for the Self Employed over Brokerage Based Solo 401k Retirement Plans

real estate 401k
real estate 401k

The unlimited options provided by the self directed Solo 401k can help you decide to go for this plan

Nowadays, investing in real estate is becoming popular not just for personal investors but for retirement investors as well, specifically those who are from the self-employed sector. Real estate 401k is a kind of self directed Solo 401k plan, but actually this plan is not limited only to 401k real estate investment because you can direct your retirement funds to other non-traditional investment options like mortgage notes, consumer notes, gold, loans, private businesses and more. Although among these types of investment, real estate has been consistently the top choice.

If you are a small business owner who intends to set up a Solo 401k, you have to know that there are two types of this plan. The first one is the self directed plan mentioned above while the other is the brokerage based plan. The latter type allows you to make investments in stocks and mutual funds. However, unlike the self directed plan, the brokerage based is limited to traditional investments only. Same way if you have a self directed plan, you cannot invest in stocks unless you have a separate traditional 401k or IRA— which is better so that you could have a diversified retirement portfolio in your retirement account.

Discuss with your financial partner the best type of real estate 401k for your self employed retirement plan

In the self directed real estate 401k, your retirement savings can be used to buy a house to use for others to rent. This way you can act as the landlord, but you have to know and learn the duties and the rules involving this kind of business. You can also have your real estate 401k funds invested on companies building apartment complex and rental homes in which you can earn through shares of profit. If flipping houses is what you do best, your self directed plan can also be utilized in this form of investment. You can consult your financial advisor to discuss with you the best type of investment for your Solo 401k.

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