Yes, it’s possible to tap your self-directed IRA or 401(k) retirement funds. In other words, you may have a sum of money at your disposal that you weren't even aware that you could use.
Sounds like an amazing option doesn’t it? Well, it certainly can be. Not only do you have access to more money to buy that investment property, but you can also defer paying state and federal income tax on said property.
Having said this, buying real estate with your self-directed IRA funds is not without its setbacks. You can’t, for instance, buy your new home overseas, unless you want to pay full taxes and you can solely buy an investment property.
With your standard IRA or 401(k), a fiduciary custodian is responsible for your investment options. Through the IRS, this individual ensures that you follow the rules and invest your retirement money prudently. As a result, fiduciary custodians offer you a limited choice of investment options which are usually specific mutual funds.
However, by rolling over an IRA or 401(k) into a self-directed IRA, most of the investment restrictions go away, and you take on the full responsibility for your investment choices.