When a person leaves the employment of a company, they are given the option to keep their savings with the 401k custodian or do a 401k rollover into a new plan without any taxes or penalties. This is an ideal time to consider rolling your savings out of the old employer's plan and into a self-directed IRA. This will allow expanded investment options to your retirement portfolio, such as real estate.
More and more frequently, the choice is made to roll into a self-directed IRA because of the flexibility and vast array of investment choices available. Once in a self-directed IRA, the owner is no longer restricted to the investment choices offered by their employer plan, nor is the participant subject to any future restrictions imposed by a new employer plan. A 401(k) to IRA rollover that is done to a self-directed account offers the most flexibility and the only opportunity to TRULY diversify a retirement portfolio.
Why real estate? Real estate is a proven method for building wealth. Long-term real estate ownership historically has proven to be a strong vehicle yielding sustained appreciation... far superior to other retirement asset choices. Real estate is also an excellent investment to hold within a retirement account versus stocks and mutual funds because it earns CASH FLOW and doesn't solely rely on appreciation.
A typical client will take $150K from an old employer's 401k plan and roll it into a self-directed IRA. The process usually takes 4-6 weeks. Once the funds are in the new IRA, the IRA will take title to real estate that can include residential homes, commercial properties, trust deed loans, tax liens or raw land. It's the conservative, steady growth that our clients covet, removing some, if not a majority of their assets from the volatility of the market.
More and more are "unplugging" out of large corporately held retirement plans that are designed in the company's, not the employer's, best interest and moving into an individually controlled retirement account. This is the fastest growing segment of the retirement industry and will continue to see sustained growth.
