Self-Directed 401(k), Self-Directed Traditional IRAs

Hello Quincy, I wanted to ask if I purchased a CD and borrowed against it is that allowed? I could borrow from my 401K. So I figured it would be somewhat the same concept. I just wanted to know for sure. Before I try to pursue doing it.

Quincy’s Response:

Unfortunately, the concept of borrowing from a 401(k) plan is quite different than borrowing from an IRA.  It is a prohibited transaction for you to borrow from your IRA, and also you cannot put your IRA up as collateral for a loan without it being considered to be a distribution.
Occasionally an IRA will borrow money on a non-recourse basis, but in that case the money is used by the IRA, not the IRA owner.  Sorry.

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