Has anyone here ever moved money from a 401k to an IRA and self directed the investment to buy property? If so did you have to start an LLC or S Corp to do so?

Not all 401k plans will let you do a in-service transfer. Better check your plans "rules" before going any further.

Be very careful. I tried that approach when a group of us bought a ranch. It must truly be an investment property, not something you would use on a personal basis.

I would not move money to an IRA from a 401(k) you can access the money after you turn 55 without penalty in the 401(k). This is all a rigged game IMO to fatten Wall Street's pockets and prevent you from being able to access YOUR money. The IRA was developed to ensnare folks into their web that don't work for a big company with a good retirement plan. I am not saying you should not save I am saying that is the truth about what these investment vehicles really are all about. You don't want Gubberment intrusion into your life to tell you how many deer you can shoot... but many of the folks on here are happy as a pig in poop for them to hold their money hostage.

I have and did not incorporated in LLC or corp S

This is what I'm nervous about and I would be curious to know more about it. See in my simple mind an investment is an investment but i'm sure there's some obscure rule that says it has to be profitable with accounting statements and such each year. I havent delved that much into it yet.

Talk to your accountant first

IMO Current IRS rules are stacked against self-directed IRA’s. You have to report the FMV to the IRS every year which most likely means paying for an appraisal. All income and expenses have to be made/kept inside the IRA which means if you buy raw land you will have to contribute to the IRA every year in order to pay property taxes and any other expenses (timber sale income kept inside IRA etc). I could see rental houses being a real nightmare in this scenario. And as one user pointed out- it has to be investment property and can not be used for personal entertainment. Meaning you can’t buy the 40 beside your house and hunt on it (per IRS rules- enforcement is different story). And finally most self directed IRA’s are administered by a 3rd party fiduciary which charges a fee based in the value of the IRA every year.....overtime they would add up and must be paid by the IRA.

It does not have to be profitable and yes the investment can operate at a loss, but you cannot use the asset/land/ranch/property for personal use. Otherwise, my IRA would own my primary residence and some hunting land, and office. My recommendation is that you be really careful on this. The IRS will take you to the cleaners if they were to audit you and you had a lake house listed as investment property that you and your family were using every other weekend.

I have a couple self directed IRAs that invest with our company. It's certainly something that can work but I don't see where the returns have been better than other investment choices. The returns have been good across the board in recent years I think we all know that. If the market takes a downturn then I am not sure investing in something like real estate with a self directed IRA would do any better under that scenario either. The problem with this is that you are not diversified and all your money is at risk. People lose everything they have in real estate every day all day long. It's not for the faint at heart, some kiss the paper and let it ride and make it. Others go 100% broke.

When I think about a self directed IRA I think taking that money and investing in something fixed like bonds (returns aren't there) or investing in a public utility or REIT that pays a good dividend. Something of that nature which is relatively safe from market fluctuations. However, I am just not sure it is a good idea at all.

If you think you are going to go invest in 40 acres of Timber on your own, or something like that, you are going to lose your ass.

This. When I have crazy ideas I ask myself would a multimillionaire do this.

There is a reason why the feds put a cap on how much you can put into a ROTH IRA. They dont want a bunch of untaxed money floating around.

All this is good information. I appreciate all the input fellas. For full disclosure a few of you hit on the points I was looking at doing. I hate having all my retirement money tied up in the market and I was just going to pull some out of the market and buy some land. I would feel more comfortable with a couple hundred $k tied up in real estate right now than with all my dollars tied up in an inflated market. I think there's another real estate bubble due to all the folks leaving the big liberal areas and its about to burst. When it does we'll see roughly a 20-30% correction in the market. That's going to be tough.

I have a similar thought FreeStateHunter.
My little 25 acres is something that can be enjoyed, go up in value and be a good store of wealth. That's my hope/plan anyways.

Currently, I and Alabama Ag Credit are co-owners.

Subscribe to Ken Moraif with Retirement Planner's of America weekly email. He gives a weekly market update every Friday. When he says sell, dump everything into Treasuries. He is the reason I lost zero in 2008. He didn't give the buy signal until June 2009. It's free and he has been very accurate with his market predictions. Yes, he is predicting a big market correction due to inflation and record Federal spending. But he doesn't see it happening this year.

Here is his report from last Friday.

Link

Call IRA Innovations in Bham. Ive had an account with them for 8-10 yrs and been very pleased with their service. they gave me a book about all kinds of self directed investments that has been very helpful.. I've bought 3 land tracts thru them and made a very good return. keep account open 5 yr., roll profits back into account. after age 59 1/2 all profits are tax free. sounds good to me

I was going say call IRA Innovations also.