Private Lending for Retirement Accounts – Using a Self-Directed IRA or 401(k) 🧓💼

Did you know you can use your retirement account to lend money on real estate deals and earn passive income — all while keeping your gains tax-deferred or even tax-free?

This strategy uses a self-directed IRA or 401(k) to become the bank. It’s powerful, legal, and one of the most underused wealth-building tools available.

Let’s break it down.

🏛️ What Is a Self-Directed IRA (SDIRA)?

A self-directed IRA is just like a traditional or Roth IRA, except you (not Wall Street) choose the investments.

You can use it to invest in:

• Real estate

• Notes

• Private lending

• Startups

• Precious metals

Key Point: You must use a qualified custodian to hold the account.

💵 How Private Lending Works in a SDIRA

You lend money from your SDIRA to a real estate operator. In return, your IRA receives:

• A notarized promissory note

• A fixed interest rate (often 8–12%)

• Payments (quarterly or at maturity)

• Optional lien or deed of trust as security

Your IRA earns interest — tax-deferred or tax-free.

🧠 Roth vs. Traditional

• Traditional SDIRA: Tax-deferred (pay taxes when you withdraw in retirement)

• Roth SDIRA: Tax-free (you pay taxes now — but never again, even on profits)

Either way, you’re compounding wealth inside a protected vehicle.

🚫 Rules to Know

The IRS has clear rules:

• You cannot lend to yourself, your spouse, kids, parents, or controlled entities (called disqualified persons)

• You cannot personally benefit from the deal

• All returns must go back to the IRA, not your personal account

Always work with an experienced custodian or CPA.

💼 What About Solo 401(k)s?

If you’re self-employed with no full-time employees, you may qualify for a Solo 401(k), which:

• Has higher contribution limits

• Allows for self-directed investing

• Often includes a Roth component

Same rules apply: your 401(k) can act as a lender — and you keep growing it tax-advantaged.

✅ Final Thoughts

If you’re sitting on a traditional or Roth IRA — or rolling over a 401(k) — you don’t have to settle for market swings.

Private lending from a retirement account gives you control, passive income, and powerful tax advantages