Can You Use Your IRA or 401(k) to Get a Golden Visa?
Contents
- Why the claim doesn’t hold up
- What IRAs can and can’t invest in — and where things go wrong
- What’s a “prohibited transaction”?
- Disqualified persons include:
- If your IRA:
- Solo 401(k)s and Prohibited Transactions
- The “dual-entity” structure myth
- It will be hard to implement anyway…
- Couldn’t you use a “Checkbook IRA”?
- So why was the claim published anyway?
- What does work instead
- #1. Planned IRA Distributions
- #2. Bridge Planning
- #3. Residency Programs Without Investment Requirements
- The Bottom Line
Earlier this year, one of the largest firms in the international migration business published an article suggesting that it’s “technically possible” to use your IRA or 401(k) funds to invest in a Golden Visa program.
Specifically, they recommended using either a “self-directed IRA” or “solo 401(k).”
They described it as a niche, complex option for sophisticated investors. They added the usual hedge: you’ll need “expert coordination” to make it work.
Now, we have a lot of experience in both of these structures and I can tell you from personal experience – while “technically possible”, it’s a bad idea.
The truth is – there is no way to use your IRA or 401(k) to fund a Golden Visa investment without causing the IRS to pull its tax-advantaged status.
In this article, I’ll explain why and some alternatives we suggest to clients looking to “leverage” their retirement accounts to fund a Golden Visa program.
Why the claim doesn’t hold up
Both IRAs and 401(k)s are governed by strict sections of the US tax code—mainly Internal Revenue Code §4975 (the prohibited transaction rules) and ERISA (for 401(k)s). These rules were designed to stop people from personally benefiting from assets that are supposed to be used for their retirement.
What IRAs can and can’t invest in — and where things go wrong
The IRS gives IRA owners a surprising amount of freedom when it comes to investment choices. Your IRA isn’t limited to mutual funds or publicly traded stocks. In fact, the law allows IRAs—especially self-directed IRAs—to invest in a broad range of assets, including:
Permitted IRA investments include:
-
Publicly traded stocks, bonds, ETFs, and mutual funds.
-
Certificates of deposit (CDs).
-
Private equity and venture capital.
-
Promissory notes or private loans (to non-disqualified borrowers).
-
Precious metals (if they meet IRS fineness standards and are held by a qualified custodian).
-
Crypto in a form allowed by IRS rules (i.e. held by a qualified custodian).
-
Certain types of real estate, such as rental or investment property held strictly for investment purposes.
-
Interests in limited partnerships or private placements.
-
You can even own a business that produces trade (i.e. non-investment) income, although there are practical reasons not to in most cases.
That flexibility is what draws many investors to self-directed IRAs.
But the freedom isn’t unlimited. Some investments are flatly prohibited, and others are technically allowed but almost impossible to execute without triggering serious tax consequences.
Prohibited IRA investments include:
- Collectibles (art, antiques, rugs, jewelry, wine, coins that don’t meet IRS standards, etc.).
- Life insurance contracts.
- Ownership in any entity (corporation or LLC) that has elected to be taxed under Subchapter S of the Internal Revenue Code (commonly called an “S corporation”) — because IRAs are not eligible S corporation shareholders.
- Tangible personal property used by you or your family (cars, boats, or homes)
And even with otherwise permissible assets—like real estate or private equity—the IRS imposes strict behavioral restrictions on how those assets are used and who they can benefit.
That’s where the prohibited transaction rules come in.
What’s a “prohibited transaction”?
A prohibited transaction doesn’t depend on the asset itself. It’s about who your IRA interacts with and how the transaction is structured.
The IRS considers a prohibited transaction to occur when your IRA engages—directly or indirectly—with a “disqualified person.”
Disqualified persons include:
-
You (the IRA owner).
-
Your spouse.
-
Your parents, grandparents, children, or grandchildren.
-
Any company, trust, or partnership you own or control.
-
Your IRA’s custodian, fiduciary, or any service provider connected to the account.
If your IRA:
-
Buys or sells property involving any of these people.
-
Lends money to or borrows from them.
-
Provides them with a benefit (like a place to stay or a business advantage).
-
Is improved, managed, or serviced by you or another disqualified person.
Then the IRS deems the entire IRA disqualified.
If your IRA engages in a prohibited transaction, the IRS treats the entire account as distributed as of January 1 of that year. You’ll owe ordinary income tax on the total balance and, if you’re under 59½, a 10% early-withdrawal penalty.
That means your IRA doesn’t disappear — but it’s no longer a retirement account. The tax advantages are gone, and what’s left is just after-tax capital sitting outside the retirement system.
Solo 401(k)s and Prohibited Transactions
Some promoters claim that using a “solo 401(k)” is a clever workaround. It’s not.
A solo 401(k)—also called an individual 401(k)—is a retirement plan designed for self-employed individuals or small business owners with no employees other than a spouse.
We most commonly see solo 401(k)s in cases where someone – or a someone and their spouse – have a business that doesn’t need employees. Consulting, real estate investing, and niche online businesses are all pretty standard examples.
It allows both employee and employer contributions, usually enabling higher annual savings than a traditional or Roth IRA.
Solo 401(k)s can also be self-directed, giving participants control over investment choices—including alternative assets such as real estate, private equity, or notes.
However, that flexibility doesn’t create a loophole.
Both standard and solo 401(k)s are subject to the same prohibited transaction rules, and to fiduciary standards under ERISA (the rules governing employer-sponsored plans).
Those rules exist to prevent self-dealing and require that the plan’s assets be managed solely for your benefit.
In a solo 401(k), you wear two hats: you’re both the plan participant and the fiduciary. That means the person managing the plan—you today—is legally obligated to act in the best interests of the person who will one day depend on it—you in retirement.
In other words, your present self manages that money for your future self. The decisions you make now determine what kind of retirement your future self gets to enjoy.
Using plan assets to chase a personal immigration goal, such as a Golden Visa property investment, directly conflicts with those principles. It’s a disservice to future you.
That said, the consequence of a prohibited transaction in a 401(k) plan differs from an IRA:
-
In an IRA, a prohibited transaction disqualifies the entire account. The IRS treats the full balance as distributed on January 1 of that year.
-
In a 401(k) (including a solo 401(k)), a prohibited transaction typically affects only the amount involved in the transaction. That portion becomes taxable, and penalties may apply, but the overall plan does not automatically lose its qualified status.
In other words, you don’t “blow up” the whole plan—but you still create a taxable event. And if the issue is serious enough or repeated, you may risk disqualification of the plan.
The “dual-entity” structure myth
The migration firm’s article also suggested that using a US entity plus a foreign entity could somehow make this strategy compliant.
We see suggestions like this a lot. It’s based on the bad idea that if you bury a foreign investment in enough paperwork, it will magically allow you to get around the rules.
But that’s not how the IRS works.
The IRS looks straight through layered entities. If your IRA’s investment benefits you personally—directly or indirectly—it’s self-dealing.
No number of shell companies or subsidiaries can change that.
Setting up a structure doesn’t make a prohibited transaction okay. It just adds paperwork to the audit trail.
It will be hard to implement anyway…
Even if you wanted to try this, you would be hard pressed to find a legitimate custodian willing to hold it.
Mainstream IRA custodians won’t touch a foreign real estate investment tied to your personal immigration status. (In fact, most won’t let you invest in any asset class that’s out of the norm and/or out of the US.)
Instead, you’re left with the specialty “self-directed IRA” firms that are willing to take on options like domestic or international real estate, offshore asset management, domestic or international precious metals etc.
And most of them will not willingly go along with such an investment because they know it’s a prohibited transaction. To allow you to do it would create liability for them. So they don’t.
Couldn’t you use a “Checkbook IRA”?
A “Checkbook IRA” is a marketing term for a self-directed IRA LLC—an IRA that owns a limited liability company you control.
The IRA funds the LLC with the blessing of the custodian, the LLC opens a bank account, and you—acting as the LLC’s manager—can “write checks” to make investments directly.
Yes, this setup gives you full control because most custodians offering Checkbook IRAs don’t provide oversight over what happens inside the LLC; they only approve the setup of the company. That’s why it’s risky.
The same prohibited transaction rules still apply. If the LLC invests in something that benefits you personally, or deals with a “disqualified person,” you’ve still committed a prohibited transaction.
The IRS looks through the LLC and treats your actions as if the IRA itself made them.
And even if you were willing to take that risk, it wouldn’t get you a Golden Visa anyway.
Every major Golden Visa program—Portugal, Greece, Malta, and others—requires the individual applicant to make the qualifying investment personally.
You can’t apply through a company owned by your IRA. The investment has to be in your own name. In other words, a non-starter.
So why was the claim published anyway?
If you’ve been around this business long enough, you’ve probably seen this; a bait-and-switch.
It shows up more often in foreign real estate – you see a pretty listing online, contact the broker, only to be told the listing “just sold”. Then they offer you a property they happen to have available.
But the same tactic sometimes shows up in residency and citizenship programs.
The goal of that kind of article isn’t to educate you. It’s to get you to reach out. Once you do, you’ll be told that your situation doesn’t qualify for the strategy they described — and then you’ll be steered toward something else they can sell you.
That’s why they phrase it carefully. Saying something is “technically possible” doesn’t mean it’s compliant or practical.
I don’t think that’s ethical but it’s clearly working for them.
What does work instead
Now, I don’t want to leave you thinking there aren’t any options.
In fact, if your wealth is mostly in retirement accounts, you still have legitimate ways to pursue a second residence or citizenship goal—without creating any hassles.
Here are a few to consider:
#1. Planned IRA Distributions
If you’re 59½ or older, you can withdraw from an IRA—and in many 401(k) plans, depending on the rules—without penalty. You’ll pay income tax on what you withdraw, but you can time and size withdrawals strategically.
For Roth IRAs, qualified withdrawals are tax-free.
#2. Bridge Planning
If you’re not ready for a full distribution, consider using other funds first—cash, brokerage assets, home equity—and plan to take distributions over time to reimburse yourself.
That keeps the investment clean and avoids a single large tax event.
#3. Residency Programs Without Investment Requirements
If your goal is residency, not necessarily property or business ownership, look at programs that don’t require capital investment:
-
Pensioner / retirement visas: Especially popular in Europe and Latin America.
-
Various digital nomad visas: Dozens of countries offer them now.
-
Income-based options not tied to pension or digital income: Lots of places have these as well.
These programs focus on income, not capital—and they can often lead to permanent residency and/or citizenship over time.
The Bottom Line
Strategies built on “technical possibilities” or complex structures often sound appealing, but they rarely hold up under IRS scrutiny.
There is no reliable way to use an IRA or 401(k) to fund a Golden Visa investment. Attempting to do so risks losing your retirement account’s tax advantages and triggering unnecessary taxes and penalties.
If your goal is a second residence or broader international diversification, the right path is straightforward: use after-tax funds and plan within the law.
That’s where experience matters.
For decades, we’ve helped clients safely navigate cross-border investments, residency programs, and international asset planning. If you’re exploring a second residence or citizenship, we can help you do it the right way.
About The Author
We have 40+ years experience helping Americans move, live and invest internationally…
Need Help?
We have 40+ years experience helping Americans move, live and invest internationally…
