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Can I Invest In Real Estate Through My Employer-Sponsored 401(k) Plan?

At 1031 Exchange Place, we understand the importance of diversifying your investment portfolio. While employer-sponsored 401(k) plans primarily invest in mutual funds and other similar investment vehicles, some plans may allow you to invest in real estate through a self-directed 401(k) or by investing in real estate investment trusts (REITs).

  1. Self-directed 401(k): Some 401(k) plans offer a self-directed option that allows you to invest in alternative assets, such as real estate. If your employer’s 401(k) plan includes this option, you can allocate a portion of your contributions toward purchasing real estate. However, not all employer-sponsored 401(k) plans offer this flexibility, so you should check with your plan administrator to determine if this option is available to you.
  2. Real Estate Investment Trusts (REITs): REITs are companies that own, operate, or finance income-producing real estate. They trade on stock exchanges like other publicly traded stocks, making them an accessible option for investing in real estate through your 401(k) plan. If your employer’s 401(k) plan offers a variety of investment options, you may be able to choose a REIT or a mutual fund that focuses on real estate investments.

Please note that investing in real estate through a 401(k) plan can have tax implications, and there may be additional rules and restrictions associated with these investments. It’s essential to consult with your plan administrator or a financial advisor before making any decisions regarding your 401(k) investments.