The answer is yes, your clients can borrow against their 401(k), but make sure they understand the rules. He or she will have to pay that money back within a set timeframe or else they will pay penalties. In order to use an IRA or 401(k) to invest in real estate, the investor must work with a self-directed IRA company that acts as a custodian or third party administrator. The IRA funds must always be handled by the custodian, never the investor. Any real estate purchase must be used for investment purposes only. For example, you can't buy a vacation home and then use it personally. The investor also can't be actively involved with the property—meaning he or she can't bang a nail or paint a wall on a property owned by their IRA. They must remain a passive investor and direct others to do the work for their IRA. There are massive penalties for violating these rules. With that said, billions of dollars are transacted in self-directed IRA accounts, and it is totally legal to purchase property within an IRA or 401(k). You can self-direct their IRA or 401(k) to buy real estate, but you must speak with a custodian first to fully understand the rules. Some custodians I recommend are U-Direct IRA Services, The Entrust Group, and Equity Trust Company.