Do You Have Any Old Retirement Accounts Sitting Around? Unlocking the Power of Self-Directed Retirement Accounts for Passive Syndication Investments
If you’ve ever felt limited by the investment options in your company’s retirement plan, you’re not alone. Most workplace 401(k) plans, managed by providers like Fidelity, Vanguard, or Charles Schwab, offer a narrow range of investment choices—primarily mutual funds focused on stocks and bonds. For those looking to diversify and maximize their retirement savings, these options can feel restrictive. That’s where self-directed retirement accounts come in.
Why Consider a Self-Directed Retirement Account?
The primary appeal of self-directing your retirement account is the freedom to invest in a wider range of assets. Unlike standard 401(k) plans, self-directed accounts allow you to invest in alternative assets like real estate, precious metals, private equity, and, importantly, passive real estate syndications. These options can provide the kind of diversification that’s hard to achieve with traditional retirement accounts.
However, there’s a catch—while you’re still employed by a company, you generally can’t roll over your current 401(k) into an IRA or another plan. But once you leave your job, the game changes. You can take your 401(k) and convert it into a traditional IRA, which opens the door to forming a self-directed IRA. Many people have old 401(k)s from previous employers just sitting there, untouched. Converting these dormant accounts into self-directed IRAs is a golden opportunity to take control of your financial future by investing beyond the traditional stock-and-bond portfolio.
Making the Switch: From 401(k) to Self-Directed IRA
When you leave a job, you have the option to roll over your 401(k) into a traditional IRA. From there, you can convert that IRA into a self-directed IRA. This conversion allows you to invest in alternative assets, such as real estate syndications, where you can passively earn income through properties managed by experienced operators. I’ve personally done this by partnering with Vantage, a company specializing in self-directed IRAs. They helped me take an old employer’s 401(k) and convert it into a self-directed IRA, which I now use to invest in syndications and even participate in hard money lending for real estate investors.
What About the Self-Employed?
For those who are self-employed or run their own small business, the investment opportunities are even broader. If you’re the only employee (or if you and your spouse are the only employees), you can establish a Solo 401(k). The major advantage of a Solo 401(k) is the ability to contribute much more than you can with a traditional 401(k) or IRA—up to $66,000 in 2024, or $73,500 if you’re over 50 and eligible for catch-up contributions.
But it gets better. You can self-direct your Solo 401(k) as well, using a product like the eQRP. The eQRP offers a unique advantage by allowing you to invest in real estate syndications, private businesses, and other alternative assets, just like a self-directed IRA. If you’re interested in setting up a 401(k) for your business or want to learn more about the eQRP, we also have a referral link to get you started.
The Bottom Line
Self-directed retirement accounts offer a powerful way to diversify your investment portfolio, take control of your financial future, and potentially accelerate your path to retirement. Whether you’re looking to breathe new life into an old 401(k) or explore new investment avenues as a self-employed individual, there are options available that go far beyond the limitations of traditional retirement accounts.
If you’re interested in setting up a self-directed IRA like I did, please use the referral link to connect you directly with Vantage. It’s an easy process that can unlock new investment opportunities for your retirement savings. Also, be sure to download our free guide to help you evaluate syndication opportunities using our four-step FIRE framework.
