Real Estate in Your 401(k)? Here’s What You Need to Know
By Ken McElroy
If you’ve followed me for a while, you know I’ve always emphasized control, cash flow, and tax efficiency when it comes to building wealth. That’s why I’ve traditionally favored real estate over Wall Street. But a new executive order may blur those lines in a major way—by allowing real estate to become part of your 401(k) retirement plan.
Yes, you read that right. Real estate, your rental properties, private equity, or even shares in syndications, may soon be eligible investments inside your 401(k). And that’s not just speculation. It’s coming straight from a recent White House announcement that could open the floodgates on over $9 trillion currently sitting in retirement accounts.
Let’s unpack what’s happening and, more importantly, how you can prepare.
A Shift Toward Alternative Assets
The new executive order, dated August 7, aims to “democratize access to alternative assets” within 401(k) plans. That includes real estate, crypto, private equity, and other nontraditional investments.
But the key phrase for us real estate investors?
“Direct and indirect interests in real estate.”
That means not just REITs or Wall Street real estate funds, but potentially individually owned rental properties, private deals, or real estate funds that aren’t traded on the stock exchange.
Now, this doesn’t mean you can wake up tomorrow, log into your 401(k), and buy a duplex. The details still need to be worked out by the Department of Labor, Treasury, and SEC. But the door is officially open.
Why This Matters
Right now, most people’s retirement funds are tied up in mutual funds and target-date portfolios they barely understand. Meanwhile, they’re watching inflation chip away at their purchasing power year after year.
This new rule could finally give investors like you and me the option to put that money to work in something we know and control: real estate.
We’re talking about:
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Tax-advantaged growth (via Roth-style contributions)
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Steady cash flow from rental properties
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Appreciation potential over the long haul
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Asset-backed security compared to the volatility of stocks
And it’s not just big institutions who benefit. This could be a game changer for mom-and-pop investors.
How It Might Work
While there’s still regulatory work to be done, there are already structures in place that give us a preview of what’s possible:
1. Self-Directed 401(k) or Solo 401(k)
This setup gives you control to invest in almost anything allowed by the IRS, including real estate. The 401(k) owns the property, not you. That means:
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You can’t live in it or vacation there.
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All income and expenses must flow through the 401(k).
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You’ll need a custodian that specializes in alternative assets.
This is ideal for entrepreneurs or investors who don’t have a corporate employer plan—or who want to roll over their funds.
2. Private Real Estate Funds Within a 401(k)
Your employer may soon offer access to pooled private real estate funds inside your retirement account. These funds would handle:
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Property acquisition
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Management
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Legal compliance
You buy shares, not the deed. It’s passive—but potentially powerful.
3. Syndications and LLC Structures
Advanced investors could use their 401(k) to own part of an LLC that purchases a property similar to how many real estate syndications already operate. The key is to avoid prohibited transactions and make sure everything is arms-length and IRS-compliant.
What You Should Do Now
We’re likely 6–18 months away from seeing this fully rolled out, but here’s how you can prepare:
✅ Talk to your CPA or retirement plan advisor
✅ Consider rolling old 401(k)s into a self-directed IRA or solo 401(k)
✅ Vet custodians who specialize in real estate investing
✅ Study up on prohibited transaction rules (you can’t self-deal)
✅ Be cautious of high-fee fund managers who may rush into this space
Just because the gates are open doesn’t mean every deal is a good one.
Proceed with Caution
With any big shift like this, there’s bound to be hype, and bad actors looking to take advantage. Be wary of advisors pushing high-fee or overly complicated deals. Stick to what you understand, vet your partners, and make sure the investment fits your overall strategy.
And remember: real estate is illiquid. You’ll still need enough liquid assets in your 401(k) to meet minimum distributions later in life.
Final Thoughts
This could mark a turning point for retirement investing in America.
For years, real estate investors have had to choose between building cash flow or building retirement savings. With the right planning and legal guardrails, we may no longer have to choose.
And that, to me, is a step in the right direction.
Learn how my team and I find value in properties when you download my value-add playbook. Yours free!
