How to Invest in Your Company’s 401(k) and Roll It Into a Self-Directed IRA for Greater Control and Growth

/ Investment Education / By / / 4 minutes of reading

For investors who want greater control, broader diversification, and access to alternative investments, the solution is to roll your 401(k) into a Self-Directed IRA (SDIRA). This strategy allows you to preserve the tax benefits of your retirement savings while unlocking new opportunities in real estate, private equity, gold, cryptocurrency, and more.

Saving for retirement is one of the most important financial decisions you’ll make. Many Americans begin this journey by contributing to a company-sponsored 401(k) plan. These plans offer valuable tax advantages and employer matches—but they often limit your investment options to a narrow list of mutual funds or target-date portfolios.

For investors who want greater control, broader diversification, and access to alternative investments, the solution is to roll your 401(k) into a Self-Directed IRA (SDIRA). This strategy allows you to preserve the tax benefits of your retirement savings while unlocking new opportunities in real estate, private equity, gold, cryptocurrency, and more.

Here’s how the process works—and how to do it wisely:

Step 1: Contribute to Your Company’s 401(k) Plan

If your employer offers a 401(k), take advantage of it:

  • Contribute at least enough to get the full employer match (this is essentially free money).
  • Max out your contributions if possible—$23,000 for 2025 if under age 50, and $30,500 with catch-up if you’re 50 or older.
  • Benefit from pre-tax contributions, which reduce your taxable income today, or choose a Roth 401(k) option if you prefer tax-free growth and withdrawals later.

Your company’s 401(k) is the foundation of your retirement savings. Even if it’s limited in investment choices, it’s a great way to build capital quickly with payroll deductions and employer support.

Step 2: Understand When You Can Roll It Over

You typically cannot roll over your current 401(k) while you’re still employed unless your plan allows what’s called an in-service rollover. However, you can roll over your 401(k) when:

  • You leave your job (retirement, resignation, or termination).
  • You’re eligible for an in-service rollover, which some plans allow once you reach age 59½ or after a certain number of years with the company.

Once you’re eligible, you can transfer your 401(k) to an IRA without paying taxes or penalties, as long as it’s a direct rollover.

Step 3: Set Up a Self-Directed IRA (SDIRA)

A Self-Directed IRA is like a traditional or Roth IRA but gives you the freedom to invest in alternative assets, such as:

  • Real estate (rental properties, commercial buildings, raw land)
  • Private companies and startups
  • Precious metals
  • Private equity funds (like Platinum Ridge Private Equity Fund, L.P.)
  • Cryptocurrency
  • Tax lien certificates and more

To get started:

  • Choose a custodian or administrator that specializes in SDIRAs. Not all IRA providers offer self-directed services.
  • Open either a Traditional SDIRA (if your 401(k) was pre-tax) or a Roth SDIRA (if your 401(k) was Roth). You can also do a Roth conversion if appropriate.
  • Complete all required documentation to establish your account.

Step 4: Initiate the Rollover Process

Once your SDIRA is open, initiate a direct rollover from your 401(k) plan:

  • Contact your 401(k)-plan administrator and request a direct rollover to your new SDIRA.
  • The administrator will either send a check payable to your new SDIRA custodian (for your benefit), or electronically transfer the funds.
  • Avoid taking possession of the funds yourself—this could trigger tax penalties if not redeposited within 60 days.

Your SDIRA custodian will guide you through the paperwork to ensure its handled properly and qualifies as a tax-free rollover.

Step 5: Start Investing in Alternative Assets

Now comes the exciting part: put your retirement dollars to work in assets that match your knowledge, interests, and strategy. With a Self-Directed IRA, you can:

  • Buy a rental property that generates monthly income.
  • Invest in early-stage startups or private businesses.
  • Diversify into commodities like gold or silver.
  • Fund private lending deals secured by real estate.
  • Participate in exclusive opportunities like private equity funds.

All income and gains earned in your SDIRA grow tax-deferred or tax-free, depending on your account type.

Key Benefits of Rolling Over a 401(k) into a SDIRA

  • Broader Investment Choices: Move beyond the stock market to pursue opportunities with potentially higher returns.
  • Retain Tax Advantages: The rollover process preserves the tax-deferred or tax-free growth of your retirement funds.
  • Greater Control: Choose how, where, and when to invest based on your goals and expertise.
  • Risk Management: Diversify into hard assets that may perform well even when traditional markets decline.
  • Wealth Legacy: Structure your SDIRA to benefit your heirs with smart estate planning.

Final Thought: Empower Your Retirement Strategy

Rolling over your 401(k) into a Self-Directed IRA is a smart move for investors who want to take charge of their retirement strategy. Whether you’re aiming to invest in real estate, private equity, or alternative markets, an SDIRA gives you the tools and freedom to build real, long-term wealth—on your terms.

Before making the move, consult with a qualified tax advisor or financial planner to ensure the rollover is executed properly and fits your overall retirement goals.

Take control. Diversify smartly. Invest with purpose. Your future self will thank you.

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