Couple, Both 60, Disagree Over Rolling $310,000 From a 401(k) Into a Self-Directed IRA for Real Estate — He's Excited, She's Terrified

Jeannine Mancini

Sat, August 15, 2026 at 11:00 PM GMT+3 8 min read

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At 60, this couple is getting serious about retirement. They're also discovering that they don't necessarily have the same idea of what retirement should look like.

The husband wants to move $310,000 from an old 401(k) into a self-directed IRA and use some of it to buy rental property.

He likes the idea of owning something tangible and collecting rental income instead of watching a portfolio of index funds move up and down with the market.

His wife isn't convinced.

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After decades of steadily building their retirement savings, she's nervous about putting a large chunk of it into properties that could take months to sell and come with repairs, vacancies and other expenses.

Neither one is necessarily wrong. But with retirement getting closer, they don't have much room for a decision that doesn't work out.

First, They Have To Get The Rollover Right

Before they even get to the real estate question, there's the matter of moving the $310,000.

If the money goes directly from the old 401(k) to the new IRA in a direct rollover, it generally isn't taxable at that point, and the mandatory 20% withholding that can apply when retirement-plan money is paid to the account holder doesn't apply.

They could also receive the money themselves and complete a rollover within 60 days. That's where things get more complicated. Retirement-plan distributions paid to the participant are generally subject to 20% federal withholding, meaning they would have to come up with the withheld amount from other funds if they wanted to roll the full $310,000 into the IRA.

At 60, he generally wouldn't face the additional 10% early-withdrawal penalty that applies before age 59½. But any amount that doesn't qualify for a rollover could still be taxable income.

For that reason, getting the rollover paperwork and process right matters before they start thinking about what the IRA will actually buy.

Real Estate Changes The Equation

A self-directed IRA can hold certain real estate investments, but not every IRA provider offers that option. The account also has to follow the same retirement-account rules as any other IRA.

And once the IRA owns a rental property, the couple can't simply treat it like a second home or personal investment account.

The IRA generally needs to handle the property's expenses, including things such as taxes, insurance and repairs. The owner also has to avoid prohibited transactions involving the IRA and certain disqualified people, which can include the account owner and certain family members.

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That's where his wife's concerns start to look a little more practical.

Their index funds aren't particularly exciting, but they can generally be bought or sold quickly.

A rental property is another story.

If the roof needs replacing or a tenant stops paying rent, the IRA needs enough cash available to deal with the expense. If most of the account is tied up in property, they have fewer liquid assets to work with.

Then There's Retirement

The couple also needs to think about what happens once required minimum distributions enter the picture.

Traditional IRA owners generally have to begin taking RMDs at age 73. The amount is based in part on the account's balance at the end of the previous year and the applicable IRS life-expectancy factor.

That doesn't necessarily mean they'll have to sell a rental property every year to come up with the money. Real estate can potentially be distributed from an IRA in kind.

But that's not necessarily simple, either. They would need to account for the property's fair market value and the tax consequences of the distribution.

The bigger issue is liquidity.

If they know they'll eventually need to take money out of the account, having a retirement portfolio that's almost entirely tied up in real estate could make those future withdrawals more complicated.

They Don't Have To Put All $310,000 Into Property

There's a fairly obvious middle ground that neither of them has fully considered.

They don't have to choose between leaving the entire $310,000 in traditional investments and putting all of it into rental property.

They could move the money into a self-directed IRA and use only part of it for real estate, leaving the rest in more liquid investments.

Maybe that's $100,000. Maybe it's $150,000. Maybe it's considerably less.

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There's no magic percentage that works for every couple. The right amount depends on what else they have saved, their expected retirement income, Social Security, spending needs and how much risk they're comfortable taking.

But putting the entire account into one or two properties would be a much bigger decision than simply adding real estate to a diversified portfolio.

This Is The Part They Should Figure Out Before Signing Anything

The husband isn't wrong that a self-directed IRA can be used for real estate.

His wife isn't wrong to worry about liquidity.

What they haven't answered yet is the question that matters most: How much of their retirement can they afford to tie up in property?

That's something they can actually put numbers around.

For couples considering a self-directed IRA, Advanta IRA offers support for self-directed retirement accounts and investments such as real estate.

Before they move the $310,000, though, they need to know what happens if the property sits vacant, the roof needs replacing or they suddenly need more retirement income than expected.

At 60, there's still time to take some investment risk.

There's considerably less time to recover from a retirement mistake.

And that may be the one thing both spouses can agree on.

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