I was watching a hunting show a while back, and they said the their was a change in the law. They said now you are allowed to use your 401K for a down payment on investment land. I was wondering if anyone has heard of this, and if they know how to go about it? Thanks in advance.

Some plans allow you to borrow against the amount of money you have in your 401k. For instance if you have 10,000$ in your account they would let borrow half of it at a certain interest rate. After you pay the money back, they then dump the amount you borrowed back into your account minus the interest they charged you. It's kind of a good deal. If you look at it like you would be paying yourself back rather than a lending institution. However, if you quit or get fired while the loan is in effect, they will hang it in your a**.

The program I am reffering to is supposed to be new this year. They said that you can take out the money for the downpaymen with no penalties. I really want to do this, I would much rather invest in some hunting land, than the stock market. I am 100% vested, so none of the money belongs to my company. So being fired doesn't worry me at all. Aviation mechanics are in high demand, it is easy to get another job. BTW thanks for your respnse, but I don't want to borrow the money, I want to take it out.

get a hold of your plan supervisor or call the investment company's customer service # to make sure you can do it. land is always a GREAT investment!

you take it out and they will tax you, that money is tax free and when you get it out it's not. I think what deernuts is talking about is a secured loan wich will make your interest rate lower if you get a loan from the bank but you can also put up your house or truck if you own them. dont go taking out your 401k unless you are retired

I think you can set up a private real estate investment trust, known as a REIT. I would need to do some more digging on it but I am 99.9% sure you can take money from 401k to invest in land. I also assume the money has to stay in the investment. self direct 401k IRA just thinking outloud

IFFF you could buy land in your 401k...how would it be titled? It couldn't be titled in your name, since you could use it as collateral and borrow more money, and possibly be foreclosed on and lose it. The taxes should be paid by the 401k. How would that work? How about liability insurance? The 401k pays that too? Do you call your personnel gal at work for some cash to pay taxes and insurance twice a year? I don't think this is possible. A REIT is an exchange traded fund...exactly like a stock, Sure, you can buy these in your 401k...but 40 acres of crick bottom...I don't think so. You can take a loan out for ANYTHING. You're paying interest...but to YOURSELF. At some point you're required to make withdrawals on your 401k so Uncle Sam can get some tax money...how does that work on hunting ground? I just don't see how your plan can work.

I don't know either, I just saw it on one of the hunting shows on tv, and I am trying to see if anyone knows any more info. I am going to do some more research on this, and if I find anything out I will post on here. If anyone else has ever heard of this I would really appreciate some info.

This is a new one on my But I would like to know more about this. If anyone gets info please share and if I do I will too

I think I found the info on it, by the way I am a licensed agent locate ranches west of fort worth primarily for hunting/recreational properties. If you are interested in finding a ranch I will work with my cpa/attorney etc to get this 401k deal figured out.
Below is the info I found so far so it appears you can do it.
Copyright © Asset Exchange Strategies
What is a Self Directed 401(k)?
A Self Directed 401K, referred to after this as "one.K", is a 401K plan setup for your company. As the Manager of the company, you can act as the Trustee for the Plan's monies. This enables you to self direct investments on behalf of your 401K hence the term self directed 401K. The investments can be in real estate, other companies, or your own C-Corp. The use of this type of structure enables you to have investment and checkbook control over the 401K.


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Benefits of the Self Directed 401K (one.KSM):
1. 401K Plans do not permit direct ownership of real estate or other non-traditional investments in an 401K, so indirect investment via the self directed 401K (one.KSM) is the only choice.

2. When a (one.KSM) (Self Directed 401K) sells real estate or other investments, the capital gains are deferred through the 401K, like any other 401K investment. The headaches of 1031 exchanges are never necessary.

3. Ownership of the property in a one.K allows you, as manager, to have direct, hands-on control of and investment decisions over one.K assets, including control of the checkbook. Custodian involvement and hassles are eliminated, regardless of whether the investments are in securities, real estate or other assets.

4. A one.K can use its 401K funding as a down payment for a real estate purchase, with the one.K financing or borrowing the balance. The use of debt financing for real estate is not subject to UBIT tax.

5. Since you control and handle all one.K transactions, and act as the "custodian", then there are no expensive annual fees.

6. Litigation threats which accompany investments such as real estate are substantially reduced. This is done by isolating the investment inside a title holding company or Trust holding company, and away from the rest of your 401K funds and estate.

7. Continues to provide deferral of income and gains inside the 401K.

8. If the company sponsoring the plan generates income, then you can make contributions of up to $44,000 annually to the 401K plan ($15K for employee and $29K for employer for the year 2006)


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How does the Self Directed 401K (one.KSM) work?
1. Create Entity (LLC or C-Corp). NAFEP will create the entity with the appropriate state.

2. Create the Plan (Trust with Plan documents). NAFEP will create the Plan and file with the IRS.

3. Rollover monies from IRA or 401K to your one.K.

4. Setup Checking Accounts for the Company and the Plan.

5. Direct Investments by purchasing membership or stock in a company (your C-Corp or another entity).


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Strategies for using the Self Directed 401K (one.KSM):
* Purchase real estate
* Loan to yourself or others
* Buying or starting a business
* Use purchase options on real estate
* Flip properties
* License intellectual properties

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It can be done. The first big IF is whether or not your company allows you to roll a portion out into other qualified funds. Then basically you create a co. that is owned by the 401k, but you own the 401k. So, you have total control. There will be some $$ involved in setting this up. But, there are people who do specialize in this.