Smart Investing with Solo 401(k) and Self-Directed IRAs: A Guide for Moving to Portugal

In a time of political uncertainty, many Americans are exploring a “Plan B” for their future. Portugal’s Golden Visa program offers an ideal solution, providing EU residency and a pathway to citizenship without requiring immediate relocation. With its political stability, affordable living, western lifestyle, widespread English proficiency and high quality of life, Portugal checks all the right boxes.

However, the program’s €500,000 investment requirement can be a hurdle for those lacking liquidity. What if you could fund this investment using your existing retirement savings—like a 401(k) or IRA—without impacting your daily cash flow? In the blog, we explore how Americans  can strategically leverage their retirement accounts to invest in Portugal’s Golden Visa, opening doors to global opportunities while preserving their financial stability.

What Is A Self-Directed IRA?

A Self-Directed IRA (SDIRA) is a retirement savings options in the United States. A Self-Directed IRA is a type of Individual Retirement Account (IRA) that allows for a broader range of investment options compared to standard IRAs. With an SDIRA, you can invest in alternative assets like real estate, funds and so on.

If you have a traditional 401(k), you may be able to roll over to a SDIRA, please check with a SDIRA provider and your employer on this.

From 401(k) or IRA to Golden Visa: A Pathway to Portugal’s Residency

If you’re considering a move to Portugal or simply looking to diversify your investments internationally, leveraging a Self-Directed IRA (SDIRA) can open up unique opportunities. These retirement accounts allow you to strategically allocate funds toward Portugal’s Golden Visa program, providing both financial growth and a pathway to European residency.

How Self-Directed IRA Work for Portugal’s Golden Visa?

By setting up a Self-Directed IRA, you can legally and tax-efficiently invest in Golden Visa-eligible private equity funds. This strategy enables you to tap into your retirement savings without affecting your cash reserve or personal savings.

What’s more, you have the flexibility to fund your Portugal Golden Visa partly with your cash and partly with your IRA!

There is three prohibited transaction rules that you cannot do with SDIRA accounts. 

1. Life insurance – not applicable here
2. collectibles – not applicable here.
3. No transactions within your direct lineage and that includes the account holder themselves. 

There are mainly two ways to set up your structure with your SDIRA.  One is using LLC and the other is to use a Trust.  

Under the perspective of the third rule above, setting up with a trust seems to be much more compliant, as we spoke with on of the SDIRA expert.  “With the trust structure,  the investment go directly into the fund, even though the subscription shares are in the client’s name, the investor never actually touched the money, it went to another institution, it’s being used for the betterment of their retirement.  Instead of going through a LLC that they own and control.”

Key Opportunities Of Investing with SDIRA (Self Direct IRA)

1. Global Diversification

• Redirect retirement funds into international investments, such as investment funds that are eligible for Portugal’s Golden Visa program.
• Protect against U.S.-centric risks, such as economic volatility or currency devaluation, by diversifying into non-U.S. markets.

2. Access to EU Residency Without Liquidating Personal Assets

• Instead of selling assets or using personal savings, you can use retirement funds to meet Portugal’s investment requirements for the Golden Visa program.
• Gain a foothold in the European Union without disrupting your existing financial plans.

3. Retain Tax Advantages

• Investments made through a Self-Directed IRA maintain their tax-advantaged status, ensuring tax-efficient growth over time.

4. Pathway to EU Citizenship

• The Golden Visa program allows you to obtain residency in Portugal without requiring immediate relocation.
• Over time, this can lead to permanent residency and/or citizenship, granting you the freedom to live, work, and travel across the European Union.

5. Stability in an Evolving Global Landscape

• Portugal’s Golden Visa program is one of Europe’s last remaining stable and transparent residency-by-investment programs.
• As global mobility becomes more restricted, Portugal stands out as a desirable and secure destination. For instance, neighboring Spain recently suspended its Golden Visa program, highlighting Portugal’s continued appeal.

Why Choose a Portugal Golden Visa Fund?

Portugal’s Golden Visa program offers non-EU citizens the opportunity to gain residency rights through investment, with eligibility for citizenship after just five years—without the need to live in Portugal full-time. This makes it an attractive option for those looking to invest globally while securing EU residency. 

Key Advantages of Golden Visa-Eligible Investment Funds:

• Professionally Managed: These funds are managed by experts, offering opportunities for solid returns.
• Minimum Holding Period: A required investment period of at least five years, aligning with the Golden Visa eligibility timeline.
• Transparent Legal Structure: Investments are typically made  Portuguese Venture Capital or Private Equity funds, which are regulated and designed to meet the program’s requirements.

How to Use Your 401(k) or IRA for a Portugal Golden Visa Investment?

Step 1: Evaluate Your Account’s Eligibility

• Confirm whether your current IRA or 401(k) (especially from a previous employer) is eligible for a rollover into a Self-Directed IRA (SDIRA).
• Many traditional IRAs and 401(k)s qualify, allowing you to unlock these accounts for international investments.

Step 2: Choose an SDIRA Custodian

• Select a custodian with expertise in international investments, particularly in Portugal’s Golden Visa program.At The Golden Portugal, we can recommend vetted SDIRA custodians who understand your unique needs.

Note: Always talk with your SDIRA provider to learn about any risk involved, particularly in tax-related, for your investment structure.

Step 3: Set Up Your SDIRA or Solo 401(k)

• Open your SDIRA account and fund it by rolling over assets from your current retirement account(s).
• Ensure your custodian allows for direct international investments into regulated Portuguese Golden Visa funds.
• Note: one of the main requirement for Golden Visa application is that the investment declaration must be in the main applicant’s name.  Please make sure your SDIRA provider allows you to use your own name as the ultimate beneficiary owner. We have encounter SDIRA provider that makes this possible for our client and others that is not able to cater to this request. The Golden Portugal team is experienceD in guiding client thru the whole process.  Please talk to us now！

Step 4: Select a Golden Visa-Eligible Fund

• Identify a regulated Portuguese fund that qualifies for the Golden Visa program. There are many funds that invest in different assets, from bonds to renewable energy, from international school to agriculture.  What’s more investors are allow to split their investments into several different funds to diversity their investment and build a euro based portfolio. 
• Note: not not golden visa fund allows investment thru SDIRA. And not all set up of using SDIRA are they same.  Some of the funds require investors to set up LLC company in Portugal (which we don’t recommend us to the complexity and additional and ong8ng fees involved)
• The Golden Portugal team can help you screen and identify the best fund options that can be invested via SDIRA based on your goals and requirements

Step 5: Make the Investment

• Wire money from Your SDIRA directly to the Portuguese investment fund.
• In many cases, you won’t need a personal bank account in Portugal to complete the investment process.
• Note: You also have the option to set up an LLC in the US.  The advantage of this is……. Your SDIRA provider should be able to provide this service.  Please talk to your SDIRA provider on this.

Step 6: Submit Your Golden Visa Application

• After making and documenting your investment, work with a legal team specializing in Golden Visa applications to submit your application to Portuguese authorities.

Key Investment Benefits for U.S. Investors

1. Tax-Efficient Growth

Maximize returns with tax-deferred or tax-free growth through a Solo 401(k) or Self-Directed IRA (SDIRA), whether Traditional (tax-deferred) or Roth (tax-free).

2. Greater Investment Control

Take full control of your retirement funds by investing in Golden Visa-eligible private equity or venture capital funds, while diversifying your portfolio globally.

3. Regulated and Secure Investments

Invest in vetted and professionally managed golden visa eligible  funds, and get your second residency / citizenship while enjoying financial growth, to achieve both financial freedom and global mobility.

 How We Can Help You

At The Golden Portugal, we specialize in helping Americans make the most of their retirement accounts to access Portugal’s Golden Visa program. Here’s how we can assist:

• Setting Up Your Accounts: We can recommend IRA provider that we have worked with before for setting up your SDIRA. 
• Investment Opportunities: Our team will help you identify Golden Visa-eligible investment funds that can be invested via SDIRA. 
• End to end solution: From getting your NIF to opening bank account, fund selection and subscription to legal guidance and submission, we guide you through each step of the way.

Important Considerations & Potential Complexities

While investing in Portugal’s Golden Visa program through a Solo 401(k) or Self-Directed IRA (SDIRA) offers significant advantages, there are important considerations and complexities to keep in mind. Here’s a breakdown of key areas requiring attention:

• IRS Rules & Prohibited Transactions:
  • Any violation of IRS rules regarding “prohibited transactions” by the investor can result in the disqualification of the IRA and full taxation of the invested amount.
  • It’s essential to ensure the investment structure does not provide a “current personal benefit” that could be scrutinized by the IRS. Talk with your SDIRA provider to ensure compliance.
• Investment Structures:
  • Direct SDIRA Investment: As outlined in the steps above, many custodians now facilitate direct investment from an SDIRA into a Portuguese fund.
  • SDIRA with an LLC: Historically, and in some specific circumstances, a structure involving a Self-Directed IRA forming an LLC (where the IRA is the sole shareholder and the investor is the manager of the LLC) has been used. This LLC then makes the investment. This structure requires careful setup to ensure compliance and that beneficial ownership is correctly attributed for Golden Visa purposes.
• Due Diligence & Professional Advice:
  • Fund Compliance: Ensure the chosen fund and its management team accept investments via SDIRA structures and understand the implications for Golden Visa applicants.
  • Legal & Tax Counsel: It is advisable to obtain a qualified legal opinion from a U.S. tax lawyer. They can provide clarity on potential U.S. taxation impacts, including any tax consequences of investing via this structure. 
  • Transparency: Absolute transparency regarding the beneficial owner is critical for the fund’s KYC (Know Your Customer) and AML (Anti-Money Laundering) processes. All documents proving the IRA holder’s control of the investment must be obtained and filed.

By addressing these considerations and working with experienced professionals, you can maximize the potential of your retirement account investments while ensuring compliance with both U.S. and Portuguese regulations.

Real Client Story: Turning a Self-Directed IRA into a Golden Visa Opportunity

P.S. The Golden Portugal team is deeply grateful to Kate and Bill for generously sharing their journey in such detail. Their experience offers invaluable insights for future clients considering the same route. Below is their real, unedited account—with only minor personal details masked or altered for privacy.

Meet Kate and Bill, an American couple seeking long-term residency options in Europe as a “Plan B.”

Here’s how they did it, what they learned, and what they wish they knew earlier:

Regarding IRA financial (a self direct IRA provider):

Doing the initial setup was easy with them. Just fill out the paperwork and pay the fee. 

It took a few weeks to transfer in our traditional IRA and 401k into IRA Financial. 

I had already liquidated the IRA assets a few months earlier, so this was just moving cash. This is important, because liquidating investments can add extra time. And it went really quick because IRA Financial was able to do the standard process where they reach out to the original custodian for you and receive the money in a wire. 

The 401K took longer because I requested the transfer from the vanguard side, and had them issue a check. This took a long time in the mail. 

I love that you can consolidate both 401K assets and IRA assets into the SD-IRA. 

We did the LLC option, which costs an extra one time fee of $1K. The annual charge for their service is about $500, which is fairly low when I compared services. 

Fund A said that the LLC was unnecessary since IRA financial can wire the money with all the right details. However, we were unsure about this path since the bank account wouldn’t have Kate’s name on it (IRA financial’s would), so we weren’t sure it would work for Fund B. I am glad we did the LLC in the end. But there are a few extra things to know in this path

IRA financial doesn’t tell you how to fill out the paperwork. But I read online that it is critical that the LLC have Kate as the one and only officer of the company. So we did it that way. 

Setting up a checking account for the LLC can take extra work, especially if you do it yourself. IRA financial has an option to do a quick bank account setup for you that is managed by them. This ended up being a good choice for us and probably saved another week.

The LLC bank account added an extra week of time because the money had to be moved from IRA financial’s custodian account over to the new checking account. 

When you go to wire the money with IRA financial, they send you forms which are not obvious how to fill them out. I was planning to give your team copies of how we filled the IRA financial form for Fund A and Fund B so your next client doesn’t have a problem (👉 Thanks in Advance, We will add those annotated forms to our internal toolkit—so future clients can skip the guesswork and get it right the first time.!). Going back and forth with IRA financial on this took a whole week. 

You get passed around at IRA financial quite a lot….I think we worked with 8 different people, one for each little piece. We did get a little stuck once, but after reaching out to a manager we were expedited through the rest. If you read the reviews, you can see this has happened to some folks before. If you expect a small amount of trouble going in…not a perfectly smooth process, then I think the value provided by IRA financial and the low fees make it totally worth the small trouble, overall. 

The is the structure of their investment:

Regarding the overall process:

We couldn’t use my IRA/401K because I am still working. So the assets are tied up with my employer. This caused us to shift our entire application into Kate’s name and changed all the primary documents. This choice needs to be made VERY EARLY in the process. You can’t change this part easily. 

You also can’t easily add money to either your 401K nor your IRA. There are annual caps to the IRA ($8K). And to use your 401K you probably can’t be working anymore. That’s why we had to use an additional bank account to make up the money. 

Fund A was explicit in their presentation that they would accept both IRA and non-IRA investments and issue investment certificates for both. I didn’t confirm this with Fund B (nor confirm the opposite). But this is why we did the extra investment with Fund A and not Fund B. 

We decided to split our investment to 200K with Fund B and 300K to Fund A after consulting with our financial advisor and discussing our personal preferences and risk tolerances. This choice was entirely financial and actually made it more difficult to do the setup. We could have simplified by selecting a single fund, or by wiring the IRA to one fund and our make-up money to the other. “We didn’t do this because the investment lasts for years, but the setup effort is one-time. I’m glad we chose to put in the extra effort now to have the investment mix we preferred”. 

When I did documentation for the funds, I had to prove every one of the boxes below. So for Fund B they wanted proof of retirement and statements all the way to the wires. And Fund A wanted my employment proof as well, along with the vanguard joint account. 

We had to do the extra hop through a solo owned bank account (not a joint account) for Fund A to do the right paperwork. The good news is that they allowed the funds to originate from our joint account which was funded by my job. They simply had to pass through the bank account. 

We did have an extra day dealing with the bank wire because of their fraud team stopping the original wire. 

My advice: “expect a few hiccups. And the more accounts and moving pieces you have, the more bumps along the way. But they are typically only a day or two, and it works out in the end”. 

Lessons for Other Americans Considering This Path

1. Plan Ownership Early

If only one spouse has accessible retirement accounts, make sure to structure everything in his/her name from the start. Changing ownership later can be complex and may cause unnecessary delays.

2. Document Everything

Be ready to provide thorough documentation, as each fund has specific requirements. Key documents to prepare include:

• IRA/401(k) account statements.
• Proof of employment.
• Wire transfer confirmations and transaction history.

Having these documents organized in advance can save time and help you navigate the process more smoothly.

3. Expect Minor Hiccups

The process may include occasional delays—like back-and-forth emails or unexpected banking issues—but these are minor, short-term hurdles. With patience and preparation, you can overcome them and stay on track to achieving your goals.

Takeaway: A Few Hiccups, a Lifetime of Options

Kate and Bill’s journey shows that while the process may have its challenges—forms, wires, and coordination—it’s all worth it in the end. In just a few weeks, they:

• Established a future-proof investment.
• Secured their Plan B.
• Opened a pathway to EU residency and citizenship.

If you’re waiting for the “perfect” time to start your journey, this is your sign. Begin now, navigate a few manageable steps, and gain a lifetime of global freedom.

The verdict? Absolutely worth it!

Ready to Explore This Pathway?

Investing your retirement funds in a Portuguese Golden Visa can be a transformative step toward financial security and global mobility. Portugal’s stable political environment and the strong reputation of its Golden Visa program make this an ideal time to act.

Here’s how The Golden Portugal can support you:

• Vetted SDIRA Custodians: We can connect you with experienced custodians who understand these investment structures.
• Golden Visa-Eligible Funds: We’ll help you find the right funds that accept SDIRA investments.

Contact us today, and let us help you plan your future in Portugal!

Disclaimer

The Golden Portugal is not affiliated with any of the third-party institutions, financial service providers, mentioned in this case study. All references are included solely for educational purposes to illustrate a real client’s personal experience. This is not financial, legal, or investment advice, nor an endorsement of any specific service provider.

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