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Can I Invest in Syndications Using my IRA and 401k?

Updated: Jun 26

The answer is... Yes!

Most of us have accumulated funds in a 401(k) or IRA from previous employers, but many are unaware that these funds can be used to invest in real estate without incurring early withdrawal penalties. This strategy is not only feasible but also offers the potential for significant financial growth. Many investors have successfully used their retirement accounts to invest in real estate projects, reaping the benefits without the tax burden of early withdrawals.

Steps to invest with a IRA and 401k

Step 1: Find a Self-Directed Custodian

The initial step in this process is to transfer your existing 401(k) or IRA into a self-directed IRA (SDIRA) or self-directed 401(k). This type of account allows you to diversify your investments beyond the typical stocks and bonds to include real estate, among other alternatives. To find a self-directed custodian, you can start with a simple Google search, but it's essential to carefully evaluate each option. Consider the fees, both upfront and ongoing, and the types of investments permitted. Understanding the investment process for each custodian is also crucial. If you need recommendations, our team at Fort + Home collaborates with several reputable custodians and can guide you in the right direction.

Step 2: Sign the Private Placement Memorandum (PPM)

Once you've selected a custodian, the next step involves signing a Private Placement Memorandum (PPM). The PPM outlines the roles and responsibilities of all parties involved, the equity ownership distribution, and the legal stipulations of the investment. The custodian's representative will need to sign the PPM, and this process can vary depending on the custodian.

Step 3: Wire Funds from Your SDIRA to the Syndication

Transferring funds from your SDIRA to the chosen real estate syndication can take anywhere from 10 days to several weeks. Planning ahead is crucial to avoid missing out on investment opportunities due to processing delays. Once the rollover is complete, you can manage your retirement savings more flexibly and invest with greater ease.

Why Choose Real Estate for Your Retirement Investments?

Investing in real estate through your retirement accounts offers several advantages, including diversification and protection against market volatility. Unlike traditional investments tied to the stock market, real estate provides tangible assets that historically appreciate over time and offer both short-term income and long-term growth. Real estate investments are particularly valuable during periods of high inflation. As of March 2023, inflation rates have exceeded 6%, making it necessary for investors to seek returns that outpace inflation to preserve their purchasing power. Real estate can provide these higher returns, making it a compelling option for your retirement portfolio.

The Benefits of a Self-Directed Retirement Account

Self-directed retirement accounts allow investors to choose from a wide range of investments, including real estate, private placements, commodities, and more. This flexibility enables you to tailor your portfolio to include high-return investments that can accelerate your retirement savings.

Transitioning from a Traditional IRA or 401(k) to a SDIRA

To transition your retirement funds to a SDIRA, you can either transfer or roll over your existing account. An IRA transfer involves moving funds from one custodian to another without any fees or taxes. For a 401(k), a rollover is necessary, which allows you to move funds to an IRA after leaving your employer.

Real Estate Debt Funds: A Secure Investment

One attractive option for SDIRA investments is real estate debt funds. These funds invest in real estate loans and mortgages, providing stable, consistent cash flow through interest payments. They offer reduced risk compared to traditional equity investments and can provide significant tax advantages. Since the income from debt funds is generated through interest payments secured by real estate collateral, it avoids the taxes associated with unrelated business taxable income (UBTI) and unrelated debt-financed income (UDFI).

The Fort + Home Value Add Debt Fund

At Fort + Home, we offer the Value Add Debt Fund (VDF), which provides a consistent 9-10% cash-on-cash return with lower risk compared to traditional equity investments. By investing in our VDF through a SDIRA, you can enjoy monthly interest payments secured by mortgages on the properties. This fund is ideal for those looking to build short-term retirement wealth with high-yield, reduced-risk opportunities. Our fund managers anticipate a growing opportunity to acquire properties from distressed sellers over the next three years, making liquidity from investors crucial. The VDF is a strong investment choice for those seeking short-term returns in the real estate market. If you have any questions or need further information, reach out to us at We are here to help you secure a stable financial future and build sustainable wealth through strategic real estate investments.


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