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The typical workplace 401(k) plan gives you few choices for your investments and limited time frames for making any changes in them. If you're an avid investor, you'll want much greater flexibility in your investing.

A self-directed 401(k) plan may be just what you need. It offers something known as a "brokerage window," through which your employer may allow you to invest part or all of your 401(k) plan as you see fit. Your employer decides whether to offer this feature, as well as the types of investments from which you can choose.

Self-directed 401(k) plans follow the same rules and requirements as other 401(k) plans. If your employer allows self-directed 401(k) plans, make sure you know these Internal Revenue Service rules before you take the wheel.

1. Annual contribution limits
The limit on your elective deferrals -- the maximum amount you can have deducted from your taxable income and placed in your 401(k) account -- is $17,500 for 2014. The limit is increased regularly for inflation. If you're age 50 or older at the end of the year, you can make additional elective deferrals of up to $5,500 in 2014. Your employer's plan may, however, impose a lower limit.

If you work for only one company during the year, you shouldn't have to worry about going over the limit for your 401(k) plan contributions: Your employer calculates this for you.

If you work for more than one company, however, it's easy to go over the limit for elective deferrals. One employer doesn't know how much your other employer already let you contribute to a 401(k) plan.

If your elective deferrals for the year are over the limits, it's your responsibility to notify your plan administrator and have the excess contribution returned to you before April 15 of the following year. Otherwise, the excess contribution does not reduce your taxable income and you must pay tax on it when you withdraw it -- effectively taxing the same income twice. Leaving excess deferrals in your account can also cause the IRS to disqualify your plan.

2. Disqualified investments
If you have a self-directed 401(k) plan through your employer, don't take the "self-directed" part to extremes. For one thing, your employer can still limit the types of investments you make. Some employers may limit you to mutual funds, for example.

You won't get away with investing in anything for which you may receive an immediate benefit. If it sounds too good to be true, you'd better check the rules. Forget using your 401(k) to buy collectible automobiles, art, or vacation properties that you expect to use. Nor can you pay yourself to manage your own 401(k) plan investments -- that's already been tried.

If your employer allows it, you can invest in securities, investment real estate, gold, currency, and other investments.

3. Transactions between related parties
Don't entangle your 401(k) plan with your family members, either. For this purpose, "family members" are your parents, grandparents, children, grandchildren, or spouse's children or grandchildren.

That means you can't lend your 401(k) money to any of these relatives, let them live in property owned by your 401(k) plan, invest in the relatives' businesses, or otherwise cause your family members to benefit from the plan.

4. Distributions
The rules for taking distributions from a self-directed 401(k) plan are the same as those for any other 401(k) plan. Your employer's 401(k) plan may allow for hardship withdrawals when you have immediate and serious financial needs. If you take such a withdrawal, you may have to pay a 10% penalty to the IRS in addition to income tax, unless you meet an exception. It's possible to qualify for a hardship withdrawal and not meet an exception to the 10% penalty.

You can roll over the amount from a self-directed 401(k) plan to another qualified retirement plan or IRA, just as you can with any other 401(k) plan.

It's your money, and you should be able to buy and sell investments as you choose, taking the risks and reaping the rewards. If your employer offers a self-directed 401(k) plan, you can do just that.

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