No, that is the reason why you are establishing this type of plan. As long as the plan is established or administered correctly, you will not pay taxes and penalties because you DO NOT take money out of your plan to purchase the real estate! Your 401(k) or IRA LLC will be the entity on record for purchasing the property. As they are either tax-deferred or tax-free entities, no taxes or penalties will be due. Of course, if either plan is making investments with pre-tax funds, taxes will be due on the distribution from your plan…whether the distribution is in cash or through a non-liquid asset.
Think of it this way, if you IRA or 401(k) plan purchased 100 shares of Apple, you do not pay taxes or penalties on that investment. Think of real estate, from an asset in the plan standpoint, as being the same transaction as your stock. The method of doing so is different but the tax ramifications are the same.
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