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Can my IRA or 401(k) Take a Mortgage?

August 31, 2014 by John Park Leave a Comment

Yes, your IRA or 401(k) can use funds as the down payment with the plan getting a loan for the remaining balance.  Of course, only the plan can secure the non-recourse loan and a disqualified individual (e.g., you, the account owner) cannot personally guarantee the loan or assist in securing more favorable aspects (e.g., interest) for the loan.  The non-recourse type of loan which means that if your plan fails to make payments, the only recourse the lender has is against the property itself.   Finally, UDFI (Unrelated Debt Financed Income) taxes may apply, so you will want to confer with your tax professional about what taxes may be applicable to you.

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Category: 401(k) Questions, IRA Questions

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About John Park

John

As co-founder of Fulcrum Self-Directed, John Park believes in the power of self-directed plans tempered by the individual responsibility to operate the plan in compliance with IRS and DOL regulations. As such, Fulcrum Self-Directed is in a unique position to assist a client in establishing an IRS compliance self-directed plan, while guiding clients with their responsibility to operate and administer their plan.

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