EP 19 – OPEN FORUM SHOW – Self-Directed Retirement Plan Questions

Join Mark and Mat as they answer your difficult Self-Directed retirement plan questions. Mark and Mat dive deep into all of your questions on Self Directing your Roth IRA, 401(k), Traditional IRA, Coverdale, HSA, and more. 

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Mark Kohler: Welcome, everybody, to this week’s episode of the directed IRA podcast, this is Mark Kohler, the, I would say, the color commentary of this amazing show. And we have the brain Mat Sorensen. He’s also a person. He has feelings. But we just the first brain today is that OK Mat can we just rent your brain for this podcast?

Mat Sorensen: I guess I mean, on this topic, that’s all it’s good for outside of this, you wouldn’t want to pay a buck for it

Mark Kohler: Cup of Joe,

Mat Sorensen: As I’ve been told. So I’ve been told no one cares what you think. Well, this is an open forum this week. So this is what you wanted us to talk about. So if you don’t like what we’re talking about, well, you should submit questions because other people did and they’ve set the agenda of what we’re going to go over today. So we got a lot of questions from some real estate staff, IRAs. And Solo(k)s was using an S-Corp, a Solok by crypto, doing it peer to peer rather than buying on an exchange, doing a Roth conversion. We got some great questions along all those lines. So we’ll be digging into them. And remember, for those of you listening for like, oh, why don’t you guys talk about this, go to DirectedIRA.com/Podcast And submit a question. We will bring it up at the next open forum as long as it’s not weird and crazy.

Mark Kohler: Well, I. Could not say what you said better. I love it. And don’t forget, also, this is broadcast on iTunes, Stitcher, Spotify, YouTube. You know, it’s true. We’re getting some views on YouTube. We are on camera. So for those of you that would like, sometimes we go to the whiteboard. I don’t know if we will today, but if we go to the whiteboard, that’s the benefit of watching this on YouTube. But please, if you do catch it on YouTube, subscribe and then you’ll get a ping when and hit the bell icon. So when a new podcast is up, you’ll get a little notice and you could watch it on your phone while you’re jogging on your treadmill or bike or driving down the road recklessly watching the video, which would be totally inappropriate. But it’s almost a double whammy. Not only would we put you to sleep with our very relaxing voices, but it would also be the video distraction, too, would be not a good combination. So we’re here now. I’ve got a couple of news updates. Can we do some news updates before we dive into questions?

Mat Sorensen: Yeah. What’s going on with Brad and Jennifer? Are they still together? It’s going to last?

Mark Kohler: Oh dude it’s on.

Mat Sorensen: Brad Pitt and Jennifer Aniston. Are they really back together? I’m still confused. I really haven’t looked into this. I’ve just been listening to Mark, OK?

Mark Kohler: I really looked into it. This has been confirmed on people, US, Star, and TMZ. So you’ve got the final four right there. And if you can’t trust those news outlets, I don’t know what you can trust anymore. Yeah, no fake news there. Absolutely not. But in all seriousness, we’ve got some news on news from the IRS this week. And this was in our newsletter and also some postings on our social media. So you should be aware of this by now. But if not, the April 15th to May 17th extension for filing your 1040 has now been granted also to the contributions to HSAs, IRAs, Roths, SEPs and Solo(k)s. So if any of you are still considering doing a retire oh, and don’t forget the education savings account, the ESA or Educational IRA, which I continue to meet clients have no clue it exists. We’re really going to try to up our game on that in the next few months. But there are some wonderful retirement account strategies that are still available to contribute to for 2020. Up until, May 17th.

Mat Sorensen: Yup, even SEP IRAs for those who are so proprietors or Solo(k)s. If you’re a sole proprietor because your tax return deadline is April 15th, now is May 15th or sorry, May 17th. So, yeah, yeah. I mean, good news from the IRS. It doesn’t come often, but. Take a look, we’ll get now.

Mark Kohler: Yeah, totally. You know, once I visited. The IRS building in Washington, D.C., takes up a whole block, it’s huge, huge, yeah. And then I went to a tax court hearing just watched and it was. Yeah, I mean, if you like Court TV or reality TV, there’s nothing more thrilling. They’re going to a tax court hearing. I think there were two people in the audience besides the judge and two lawyers arguing about some, you know, tax law minutia. That made no sense to me at the time. This was years ago. But while I was there, It really exists. You’re.

Mat Sorensen: Probably not on I mean, the top 10 list of places to visit when you go to D.C. You know, it’s not on maybe the Supreme Court was, but the tax court. Let’s skip that one deer.

Mark Kohler: You’re a tax lawyer. That was like going to Disneyland. You know, you get a tour of the IRS, you know?

Mat Sorensen: Yeah. Yeah. We’re going to go to the Postal Service next, kids. And, you know.

Mark Kohler: Oh, my gosh. It was interesting. It was right around the corner from the Lincoln Theater, the oh my word

Mat Sorensen: Ford Theater, Where Lincoln was shot.

Mark Kohler: I’m a total Lincoln buff, a computer blue Ford Theater. Yeah, it’s amazing because you you watch the reenactments in the movies of Lincoln’s assassination and the Ford Theater looks like this big deal. And when you’re in D.C., right around the corner from the IRS building is the Ford Theater. And it’s like the size of a subway, you know, I mean, it’s just like there’s a McDonald’s in Chicago’s bigger, you know. And so it’s just amazing how far the development the country has gone since then. OK, so I don’t have any other news, do you Mat

Mat Sorensen: That the only other thing I was going to say is the Self-directed IRA summit is coming up. Yes, April 23-24. We’re going to be streaming it virtually. It’s going to be Kick butt Mark and I will be doing it. We’ll have other guests on there will be in the studio, it’ll be pro and it’ll be recorded. Of course you can go to SDIRASummit.com to register and we’re going to do a live version in the fall, just so you know. But for now, we’re still kind of keeping a cold friendly and this will be streamed live. So you can watch it from the luxury of your home in your underwear or whatever you want to do. So just keep your camera off. If you’re going that route, yeah that was it?

Mark Kohler: Yeah, I’ll let you choose the first question. I’m pulling up questions here as we go, OK? Exciting stuff.

Mat Sorensen: All right, so this was a question on Social from G with. She was asked if investing in real estate with a few partners, what is the best entity set up for my Self-directed Solok, sorry if my Self-directed Solok is involved. OK, so if you’re investing into a piece of real estate with some other people and you want to use your self-directed 401k, and this would be the same answer, by the way, for those with an IRA, the best in any set up is going to be a multimember IRA or 401K L.L.C.. So this entity is going to be set up. You’re going to set the ownership of it generally based on the dollars invested. If each person’s putting in, there’s less set of four partners. Everyone’s putting in 50 grand. Each of those four partners, let’s say, gee, with your Solok being one, is going to get 25% ownership of that LLC. LLC goes out and buys the property, LLC gets the income, pays the expenses and pushes the cash flow down to each partner 25%. Now of course yours being your self-directed 401k so that’s the ideal entity set up will be the multimember IRA or 401k LLC. You know I’ve got a whole chapter in my book on it. If you have the directed IRA website, I’ve got some videos on it under the IRA/LLC page. So there’s some couple of things to know about it there, but really good strategy. Just use the multimember 401k or IRA/LLC.

Mark Kohler: Ok, I like it. Mat knows his gig there. I will now talk about Chuck’s question.

Mat Sorensen: Can I ask his follow up. Sorry before you get to Chuck because G with had a good follow up. I forgot, he said. He says when partnering with individuals on real estate, will a non-recourse loan still be required? That’s a good question. So let’s take that 401k. Yeah. Oh yeah. Yeah. What do you feel about.

Mark Kohler: OK, I’ll ask you this next one from Chuck. Take some Chuck. I know I said at the beginning this is the Mat Sorensen show, but I’d like to check in once in awhile. Is that a problem? It’s good to say it’s OK.

Mat Sorensen: I can’t help it.

Mark Kohler: OK, no, I love it

Mat Sorensen: I get so excited

Mark Kohler: Don’t. We are such geeks. We’re so excited we’re like let me answer it.

Mat Sorensen: I mean it is a good one. I’m nuts.

Mark Kohler: Ok, so what was the question again. And now I’m just wondering. All right. I got it. I got it.

Mat Sorensen: I got it. If individuals not disqualified. Just other friends. Yeah.

Mark Kohler: Ok, so let’s say the answer is no. It does not have to be nonrecourse. Now, let me give you an example. Let’s say Mat, me, and Corey, our studio producer here, is going to form a little LLC to buy real estate Mat throws in his IRA. I throw in my Solok and Corey says, oh, I got five or ten grand, but I’ll tell you guys, I got some sweet credit score. I got a great credit score. I’d like to be involved and I’ll sign on the loan and Mat I go killer. We don’t have to go get a nonrecourse loan, Corey. he’ll be a person as a partner. Is that allowed? Sure enough, not a problem. And Corey is not our family members. And so we are just going to say we’re in. So we designed an LLC. It would be a multimember IRA LLC or 401k LLC, Self-directed LLC and Corey would be able to go out and get a maybe a better loan with more favorable terms, with a personal guarantee. And that would be his contribution to the LLC. Now, let’s do a doctorate level here, you may say, well, what is the ownership percentage is going to be? Well, would a person contributes services or credit to an LLC, what Mat and I  typically do is say, what are you going to promise that person? So in our example, maybe we go to charango. OK, Corey, for your contribution of credit, we’ll give you 20% ownership. And Corey says, OK, that’s worth it. You take the remaining 80% and the capital contribute contributed by our IRA and 401k, has to be pro-rata over that 80 percent. So if Mat puts in 30 grand and I put in 30 grand, then we’re 50/50 on the 80 percent. Our retirement accounts, but our paralegals know how to create a spreadsheet that would say, what’s the service partner’s share? And then the remaining amount has to be divided based on the amount contributed. So the par value is equal for everybody’s dollar. Everybody’s dollar is treated equally. OK.

Mat Sorensen: Yeah. Now this works well with the service partner, a credit partner, but only if that person is non-disqualified to the retirement account. Let’s change the example instead of Corie. Let’s say it’s let’s say it’s Mark’s son and he’s a qualified person to Mark’s. That’s going to cause a private transaction issue for Mark with his retirement account being one of the partners. So so that service partner or credit partners always got to be non disqualified to all the retirement accounts involved.

Mark Kohler: Yeah. Now, when we first got started doing this 20 years ago, we were on the literally the wild Wild West when these LLCs started to be designed. And I say is humbly we were. We were there at the forefront with some of the only custodians in the country that were doing this literally 20 years ago. And we would allow an IRA owner to provide their credit for a certain value to the LLC. But since then, based on DOL regs interpretation of the prohibited transaction rules and all that, we have backed off that we do not allow that when are in our LLC is and would not stand behind the structure. But be careful if someone says you can’t because it’s mine and Mat’s opinion that either you or disqualify party cannot sign on that debt to take it off the nonrecourse realm, go out and find a Non disqualified person to do that.

Mat Sorensen: Yeah, and there’s been some cases on that in 2013 when we’ve we’ve haven’t done that structure in like 2008 or so. But so any of you your statute of limitations on those. But Yeah. Know, but, you know, I think what was the case, it’s the I was the case in 2013 that kind of didn’t get on this point directly but got a little close to it. So. So just use a non-disqualified person if you need a credit partner and don’t sign on it. Oh it’s Peacon flac versus commissioner that was the one. Sorry. So just use a non disqualified person

Mark Kohler: That’s above the street you know. And I run. I’ve had that.

Mat Sorensen: I mean not, not the bum off the street but a dentist sounds offensive.

Mark Kohler: We just lost every dental plate. We had all our dental listeners off.

Mat Sorensen: Yeah. I mean you got to take your shots when you can. I hate going to the dentist. Oh yeah. But not a dentist that bought a commercial building with his IRA, used an LLC and his brother model. No, no, no. He’s using a U.S. using a commercial bank to get the loan. And the bank was hung up on this that he wasn’t going to guarantee the loan. They were like, why won’t you guarantee it? He’s like, I can’t. It’s my retirement account. And so finally he said they said, well, we need someone of similar credit then to guarantee the loan if you really want this on these terms. So what he did was actually he got a friend of his who was a dentist, OK, not a not disqualified person. Another friend, the person was a dentist and he paid him from his IRA LLC $10,000 to sign on the loan and take the risk. And he showed the guy, here’s what I’m buying. Here’s how much money I’m putting down on it. Here’s the equity in it. Here’s the ten already in it. And the guy’s like, All right, cool, I’ll take $10 grand. He took

Mark Kohler: No ownership in the LLC.

Mat Sorensen: He took no ownership. He just took a ten thousand dollar payment. And the bank was like, OK, we you know, this guy’s got to credit assets, too. You’re sure you want to sign on this? Sure OK, there you go.

Mark Kohler: Sounds like my wife, as long as I have a warm body lying next to me. I’m good.

Mat Sorensen: So, yeah, you know, the dentist, the dentists are aggressive. They always find a way on this stuff. And I think I like that solution. Actually, I work. I help them do that one.

Mark Kohler: You know, in dentists out there. This is true. It is funny. Don’t be offended when we’re doing a kind of a table roundtable with all of the attorneys and CPAs. And we’re because we do twice a week, we have kind of roundtable training amongst our professionals in the law firm, in accounting firm to just talk about issues we’re all facing and learn from each other. I’d hope every law firm and accounting firm is doing that and whatever is kind of a little wild and crazy strategy, someone to go, this is a dentist. And I don’t know. You guys are just creative. I don’t know what they do in dental school. I think it’s creative. Tax planning is in the third year of dental school or something. You know, they go they’re going to take them. OK, here’s a question from Chuck. OK, this is from our website. Chuck says, I’m just going to boil this down. He has a Solok for a corporation. That’s right. He has a corporation that manages his Rental Property, LLC or S-Corps. And this 401k is a Solok, and he thinks he might have a problem because he has ownership in another company that has a 401k, and really what he’s getting into is the affiliated group rules. And so, Chuck, I I’ve got two concerns with your statement here, and I’m not your question. It’s a little long. So I’m just going to say this. If you have S-Corps owning rental property. We’ve got an issue, so you’ve got to get a second opinion on that structure, which it appears is in your hypothetical here. Number two, if you have a solo 401k for your company, you own 100 percent of, but you also want a majority of another company with a group 401k. We’ve got concerns, too. You’re going to have. Affiliated group rules where you can’t play in two 401ksk when you have a group of employees on the other side down their separate line of business rules that you might be able to get around with if you have lots of employees over 50 and meet some other tests. But I think we’re going to have a problem here. So Mat, you want to just kind of say that another way for Chuck, and I think this is good for everybody here and maybe not with Chuck Chuck’s actual hypothetical, but say it another way. What should people worry about in this when they consider a Solok?

Mat Sorensen: I think if you have any entity with employees that you or you and a spouse or some certain family own 50 percent or more of. OK, and and that has employees in it, you’re not going to do a Solok period, I don’t care if you’ve got another business that’s not even related to it. It’s just not going to work. Now, maybe there’s if you have a spouse involved, there’s some work arounds. If a spouse has a truly separate business, they can do a Solok. There’s a special spousal rule there. And if you as the other spouse have your business with employees, you can be doing different 401(k)s there, but you don’t get to participate back in the spouses. But here, I think if you want any business, 50% or more that has employees, so it’s not going to work. The 80% rule is another one of the rules, but that’s kind of a secondary thing. So. I don’t think it’s going to work on anyone on the Solok. Just be careful. Solok is meant for people to have no employees. The purpose of it is they don’t want anyone to base a business owners to basically say, well, I’ll just run on my income over to this business and fund my Solok and do all these cool things. But my company over here that I also control, I don’t want to give them a 401k. And so the IRS is trying to protect these workers over. Just say, well, you want to do all this cool stuff for you under the rules, but you don’t want to give it to your own employees over here in this company you also control. So that’s why I think you’re not the issue.

Mark Kohler: Ok, can I ask a question of Mat that gets onto the incredible book series, Fifty Shades of Grey? I know it sounds very inappropriate.

Mat Sorensen: I know the movie. I just know the movies.

Mark Kohler: Yeah. You still love the movie. You just know of the movie. I mean. Mat Road. Mat wrote an article called The Fifty Shades of Grey when it comes to your retirement account. And Jed Wood has a question regarding this. This is good. Everybody is a very common question. Jed says, I understand it’s prohibited for one of my retirement accounts to own a business that I’m also an owner of or materially participating in or in the management. Is there a threshold of an owner ownership percentage for me personally in that company? That’s kind of a threshold that would allow my IRA to maybe make loans to that company or participate as an investor in that company, and another way of saying it is, when does Jed’s ownership get to be a problem in a company where his IRA or Solok or Simple or HSA or any of those things might be a partner in that company? Mat, where does your shades of gray come into play?

Mat Sorensen: Ok, so, yeah, there’s there’s 50 Shades of gray here. So there’s three different. Categories here, OK, if Jed owns 50% or more or Jed and his spouse, kids, anyone disqualified to Jed owns 50% or more of that company never going to be able to do it. Sorry, the

Mark Kohler: Technical term is hell no.

Mat Sorensen: Yeah. Or on the flip side here, what Jed is asking if his IRA owns 10% of that company. OK, or let’s say it owns 50% of that company can Jed work there, no, OK, we don’t want you transacting with a company that your retirement account has control of because that’s also deemed to be you. So, all right. So now let’s say let’s change it, though. Let’s say that Jed’s IRA only owns it’s between 11% and 39%. Well, that’s the Thirty Nine Shades of grey. It’s not as popular as 50 Shades, but still, you know, it’s a good one.

Mark Kohler: Yeah, that’s article made for TV movie Coming Out 50 Shades of Grey in your Roth IRA. Yeah. Boy, it’s going to be a barnburner.

Mat Sorensen: Yeah, no, I mean, people are going to be lining up. So so in that area, it’s a gray area. You have your IRA has a pretty significant amount of control. And what we’re concerned about is the IRS saying, all right, are you personally benefiting Jed because your IRA has such a big stake in this company. Are you benefiting by working there? Would you get a job there and be able to get the pay and compensation you get if your IRA didn’t own, let’s say, 35% or whatever stake you are here between eleven and thirty nine. So it depends. There’s a lot of things you could put in place to get around that or try and mitigate that risk, making sure your comps normal, making sure there’s a committee or other people who determine your compensation, not you, where I think you can have some defenses to that if the IRS raise an objection. But if it’s 10% or less, I’m not really worried. You don’t have enough ownership and control. And when we say 10 percent here, that’s your IRA. You anyone prohibitive to your IRA, your spouse, kids, all those people, if you got ownership, only gets to be 10 percent or less. I’m not worried about that. There’s cases in private letter rulings on that. As long as you’re not doing something weird where it’s like, all right, you invest 10 percent of your IRA into the company and we’ll give you a raise. That wouldn’t work, of course. So but if you’re in the single digits, I’m not worried. You don’t have enough control to really take advantage. And it’d be hard for the IRS to say you were benefiting unfairly because you were just you were in single digit ownership. OK, I like it. That’s the three categories, 50 or more don’t do it. Eleven to thirty nine percent, remember? Thirty nine shades of gray, 10 percent or less. Don’t sweat it unless you’re doing something weird

Mark Kohler: And it’s difficult. Some people call us up and go, well, I want you to write a comfort letter and some you maybe you’ve never heard of that term. And that means will you guys tell me that it’s OK and that if I get audited, you’ll pay the penalty or defend it like you’re going to guarantee it’s kind of like buying insurance that I’m not too grey in this thing. Yeah. And sometimes it’s possible we might write a letter depending on the facts and circumstance, and it’s not cheap, but because you’re you’re really we pay thousands of dollars in malpractice insurance for I think it’s over two million dollars. Yeah, tens of thousands. It’s that doing this type of a cover letter is like an OBGYN delivering babies. It’s one of the most high risk, most litigious actions a doctor can take by delivering a baby, because if anything goes wrong, the doctor, the OBGYN is going to get sued. And so if we’re going to write a comfort letter for a kind of a higher risk strategy, we charge for that type of letter. And we’ll let you know if we feel comfortable doing that. And and also, we’ll just tell you what your risk is that no one’s going to jail and on the street, depending on what you’re risking with the investment, it may be worth it. So that’s what we talk about

Mat Sorensen: Down at directed IRA. Sometimes we’ll get clients to sign a waiver saying, hey, I know this is a little aggressive or that hasn’t not settled cases in this area. I’m aware of the the laws and I’ve consulted with my own tax legal counsel or my CPA, you know, someone licensed and qualified, an attorney or CPA that can advise you on tax rules. So sometimes we do that. But a lot of times I get letters from people’s lawyers, you know, not even our law firm. Just I got one yesterday for a hedge fund that someone’s part of the management team in the hedge fund and they want to invest their IRA in the hedge fund. I’m like, cool, I need a letter from your lawyer saying it’s not prohibited because you’re on the management team. And the letter came in the next day.

Mark Kohler: So does that dollar bill

Mat Sorensen: Dollar is that dollar bill

Mark Kohler: For those of you that are billion fans on prime Dollar Bill had to get a letter to go in to watch the show.

Mat Sorensen: I don’t know. The dollar bill is a guy that uses his IRA. He seems like a guy that doesn’t he’s a very he’s not he’s not smart. He’s not hip to the hop like that.

Mark Kohler: I don’t know. I like dollar bills, but OK, I’m in season three, so. No, no, spoiler spoiler alert. Don’t don’t ruin the show.

Mat Sorensen: Ok, Wendy Rhodes, would you try to. Wendy Rhodes. Oh yeah. She would use her story to Smart she knows what’s up.

Mark Kohler: Ok, OK. Here’s another question from Instagram. This is for Dr. Jonathan. Jonathan, I’m sorry. I don’t know if your doctor if your name’s Jonathan, but I don’t get your handle, so forgive me with that. But he says, what’s the best use? What’s the best time to sell a mutual fund or sell it partially based on my tax bracket. Best accounting method FIFO? Well, first of all. This is a question that we would probably, in a consultation, want more facts. Is this a mutual fund in your retirement account? Is it in an IRA versus a Roth? Is it in your personal name? It sounds like it is because you’re worried about your tax bracket. So let me just give a couple piece of advice that I think are good for everybody on the show, too, this listening. When you go to sell any sort of asset, it could be real estate, could be a mutual fund, could be on an ownership stake in a startup or an equity of some sort. Private equity. It is proper it is a good move to look at your bracket, if I sell this, what is the what is the tax ramification going to be on that next dollar? On my tax return and. Now, when is the best time for you? I don’t know. Dr. John, I mean, that everybody’s going to have a different threshold of why am I selling it? Is it to deploy it into a Roth? Is it to use it somewhere else where I can get a better rate of return? Many times I’ll tell the clients, pay the damn tax, get out of it. It’s not getting you a decent rate of return. You could redeploy it somewhere else and get a better return. So don’t let the tax tail wag the dog. If it’s a bad investment, rip the Band-Aid off and pay the tax and get out of there. But I will say this last week’s podcast, and we did it on YouTube for a reason as well, we did some diagrams that show these different ladders or time frames or thresholds where it’s a good time to sell or convert to a Roth IRA and whatever, kick you to a next bracket. So whether that was we were looking at it from the perspective of Roth conversions and what tax you’re going to pay when you convert to Roth, but the same concept in the same diagram that we used would be applicable here. Look at what when are you going to fall into the next bracket and what’s that rate going to be? And I think that last week’s podcast, we hope that’s all I got Mat any thoughts on? non-Special. OK, Mat your view.

Mat Sorensen: Oh, sorry, I was saying I like that answer. I was as 100% satisfied

Mark Kohler: With I use a lot of big words there. You did.

Mat Sorensen: He did. And he’s got some throwback, some, you know, some other stuff we got out there. I appreciate that. All right. I got it from Jasmine. I like this one. OK, Jasmine says, Can we buy crypto directly from a friend or P2P? I mean, that’s like peer to peer with our solo 401k

Mark Kohler: Mat technical answer.

Mat Sorensen: Oh, yeah. Hell yes. Yeah.

Mark Kohler: There’s either hell no or hell yeah. So yeah. So I’m sorry if your kids are listening to this, you got bigger issues. Maybe if you’re driving down the road making your kid listen to our directed IRA podcast,

Mat Sorensen: That’s some serious parenting.

Mark Kohler: Yeah. That is when they’re like,

Mat Sorensen: Um, they’re, they’re phone, they’re not paying attention. You could be looking

Mark Kohler: At someone say to hell word. OK, yeah. OK, so Jasmine. Oh, Mat’s an expert at this Mat. Tell her. Tell her about Crypto.

Mat Sorensen: Well, OK, let’s go through our different the different structures so you can have a Iara that owns Krypto. All right, you can Bitcoin, whatever, whatever crypto you want to have sold a couple of different methods to do that or a solok? Now, the first thing to keep in mind, to have crypto, you need a wallet. How do I get a wallet? Well, you need a bank account that links to the wallet.

Mark Kohler: Yeah, it’s not Nordström. I mean, I can’t find my wallet. I go to Nordström. They have really good wallets.

Mat Sorensen: But they do. Yeah, yeah, yeah. OK, good, good call. Thanks for clarifying, this is a different wallet. It’s a kind of think of it as a digital wallet of sorts and it holds just like your you know, this is my wallet, it’s on the back of my phone. Here we go. Yeah. Hold my cards that have that set around. Yeah.

Mark Kohler: And you want to see my Castanza wallet, because for those that are throwback, where is my wallet

Mat Sorensen: And you’ve got all your receipts in there for the last 10 years.

Mark Kohler: It’s bordering on that. I’m an accountant.

Mat Sorensen: You’re you’re like Froyo punch card from three years ago and it’s like six punches in. But you’re like so close to the free ones.

Mark Kohler: You people. A little digression if some of you would laugh at this when we would do like our firms getting a little bigger now. And so we have to be a little more PC and formal in our staff meetings. But in a few years back, when we’d hold staff meetings and do little raffles and play bingo and the employees didn’t appreciate the prizes, a lot of times it was like, what’s in Mark’s wallet? And I have a coin. Got a Starbucks card with three punches, four. And you get a free latte. Who’s who wants this? You know, it’s like and it’s only redeemable in Illinois.

Mat Sorensen: Yeah, you’re welcome.

Mark Kohler: Oh, yeah. Everybody’s like, oh, what a crappy company I work at. You know, they’d be like, I get a real gift card or do I get Marks four punches on his subway card.

Mat Sorensen: We’ve stepped that up now. It’s kind of a it’s kind of an ongoing joke of I actually have the gift cards. That’s what I used to give out the gift cards. I can’t remember if I used it or not. It’s like I could be like there could be twenty five bucks on it or not give you a dollar left. I don’t know. I’m too lazy to call the number on the back to check the balance.

Mark Kohler: We really did that. It was like, oh yeah. But I,

Mat Sorensen: I still do it down here.

Mark Kohler: I’m going to give away a, a lottery scratcher and there’s ten scratches and I’ve already scratched up nine and not won anything. But you just lost one. OK, so ok.

Mat Sorensen: Ok so Jasmine, ok so you’ve got to have a wallet. That’s where we got sidetracked here. OK, you can have a wallet now in a soul. OK, you know you can have what we call a custodial solo card directed where we hold your money and you tell us how to process stuff. We do your statements and your tax reporting or you can have a Solok where you control the bank account. We we set those up all day and you can have a bank account in the Solok name that your desire for. That’s one of the cool things about it. So your trustee of the. OK, well, that’s Solok could be linked to a wallet. That solo case bank checking account could be linked to a wallet. And you could use that wallet to then buy peer to peer Jasmine, some with a friend. Can’t be a disqualified person, though, right now, Grandma. But you could with a friend, peer to peer and totally fine. You could be buying just like to be buying real estate from a friend or something. Right. With your IRA not prohibited, of course, most people are going to buy on an exchange. And because you can sell immediately on an exchange or let’s say Jasmine later when you want to sell. Right. You might not have someone immediately when you want to sell it. So you could then load the the crypto up onto an exchange or linked to a wallet with an exchange. And then you could, of course, just sell back the crypto to an exchange in exchange for dollars.

Mark Kohler: Yeah. Now a couple of side tips, if I may. We first recorded an entire podcast on tax ramifications of crypto recently and wonderful podcast. We’re doing an entire webinar in two weeks that will be live on Entrepreneur.com for their organization. And if you’re getting our newsletter, you’ll see the link for that in the upcoming newsletters for the next two weeks on where you can register. It’s free and we’re going to be using a whiteboard talking about cryptocurrency, tax ramifications and strategies. So there’s we got a lot of info on this. So don’t feel like we’re trying to hide the ball. We’re going to move on to our next question here in a moment. The next thing I’d say to is for those of you that want to hold the keys or use cold storage type of strategies, this is a good opportunity for Jasmine because she’s talking about having an LLC probably in the name of her 401k. And for those that are a little more hardcore, maybe you’re doing some mining on we’ve we did a I did a whole YouTube video on how to mine in your Roth and it’s gotten a great response with diagrams and everything. Please go check that out. So there’s a lot to learn here and I think is a lot of fun. But by last tip too is. And I want to give full credit to my partner, Mat, I mean, this was a I’m all joking aside, he worked his butt off for the last two months. We just launched this in the last few weeks. But it was a lot of work building relationship with Gemini, which is one of these custodians that allowed it just exchange. I mean, there’s different terminology out there. But he brokered a deal with Gemini, which good luck trying to get anybody on the phone there. Mat had to, like, go stalk someone and get them to talk to them. But we got to know you got her done. But you can literally right now, at DirectedIRA.com Create a Roth crypto account, a Coverdale or education IRA crypto account, an HSA crypto account, a Solok crypto account, and within 24 hours have money transferred into it, have an account at Gemini and be trading crypto boom. And if you’re someone you were like, we already have a self-directed Roth or self-directed this fine go open an LLC and try to get a wallet even I’ve been waiting for a week and a half at Coinbase trying to get a wallet. But if some you want to do some immediate trading. And Jasmine, this is where the peer to peer is can be a challenge because you’ve got to get a wallet in the name of your 401k or an LLC and that could be difficult. But if you want to just get buying crypto immediately, people, the account is very, very easy to set up. You can transfer money from another Roth account of yours or another 401K of yours and be up and trading within 24 to 48 hours. Now, I hope I didn’t create too quick of expectations Mat, as are the timelines. You’ve got to have the money ready to go.

Mat Sorensen: But yeah, yeah. As long as you get the money ready to go because we’ll get the account set up within a day and then we’ve got to wait for the transfer. Many people are transferring funds over. Now, if you already have a self-directed IRA with us, it’s easy. We can just move it from your existing self-directed IRA. And then you got about a day turnaround for Gemini. So I’d say, you know, it’s really about two days turnaround time, one day for us to get your account set up, one day for Gemini, because we actually set up your Gemini account. It’s under directed trust company’s name under your IRA. So you’re not going to Gemini not to log in, fill out all applications. You’re just going to get verified on Gemini as a trader. So, yeah, we’ve simplified that. Now, if you’re moving money over, you might have a three to five business days. If you’re sending money from TD Ameritrade or Fidelity or something as a transfer. So there could be a little delay there. But I’d say about a week is reasonable for a lot of people who are just doing this, moving from a brokerage IRA or something, or an old employer 401K trying to send a little money over to do some crypto within a week. You could be you can be trading. So and we’re setting up a lot of them and still, of course, all the bread and butter, too. But it’s just a new thing that we’ve seen a lot of interest in.

Mark Kohler: Mat, I’ve got a good question I’d like to do if you’re OK after you.

Mat Sorensen: Ok, I got Tom Tom’s got a good question here. Yeah. What do you got?

Mark Kohler: Ok, I’ve got this is on Instagram. This is from the Official Jinno Valdés. The office or official. OK, OK. The official call of the official is that like

Mat Sorensen: A real Donald Trump, is that like the official

Mark Kohler: Someone the official says, should I have my son go through for a Roth IRA? My son Jason is only 18. So let me repeat that. This is really, really good. Some of you may be a grandparent. You might be an aunt or an uncle trying to provide some financial literacy for your Family. So if some of you were single, I’ve got a person I was talking to this morning, a woman that has a foster child, she’s helping right now. So it just all sorts of things. So who should I go through for my son to set up a Roth IRA? He’s 18. OK, now I’m going to I’m going to give three options. And you’re going to hopefully be grateful here that I’m not self-serving. I mean, I could just say go to DirectedIRA.com And set up an account and you could. And if you went to Director IRA and set up a Roth for your son, I’ll tell you when that would make sense. And it could very well make sense. But let me give you two other options. If I may, the first one and I teach this around the country to college students in classrooms and on the Web, whenever a chance I get to teach financial literacy to families is just set up an app, get an app that’s very user friendly and start teaching your kids how to save, just save. Just how to save. How much? A little Dave Ramsey video and compound interest. Watch a little video of mine on YouTube, on Roth IRAs. And I think if you could just say set up an ACORNs account, you can’t set up a Roth with Robin Hood, I believe Stash. You can, but I think ACORN’s all the way around is the most user-friendly and easy way to start saving in a Roth IRA. And what I’ve done with my kids is I say for every dollar you save in your ACORN’s account, I’ll match it. And that’s kind of got them exhilarated. And so they can learn about using affiliate partners, they can do roundups, they could do it weekly deposit, and that just gets the process started. So that’s option one. And it’s a Roth IRA. Now, I use acorns for saving, but not investing. You’re going to choose a portfolio thing of three to five percent or eight if you’re lucky. So don’t worry about the rate of return you’re teaching saving the second option, is you say. You know what? I want to teach my kid how to do a little more day trading. I want him to get involved in picking stocks. I want him actively involved on an app and how to get into the game, stop run up and kind of learn and get maybe even give him a fake account. There’s websites out there you can do some paper trading with fake money just to kind of get familiar with it. But I would go with probably an Ameritrade type account, a Roth, Ameritrade, Scottrade, to a partner

Mat Sorensen: Like TD Ameritrade and

Mark Kohler: TD Ameritrade. Sorry, TD Ameritrade has a great app. You can open up a Roth and have your son just start playing with that. The third option, as you say, doctorate level, like, let’s take it to the next level. You say, hey, son, I’d like you to be a part of my next project. Why don’t we do a little cryptocurrency trading together? Let’s make his Roth a partner in an LLC of yours. Maybe he wants to self-direct right in Gemini and do some crypto. Then you can come over to Directed IRA. We do have a brokerage option, but it’s not what you want to day trade with. It’s more like, yeah, let’s buy some stocks and sit on it for six months. But he could definitely have a Roth account here at directed IRA. Three hundred dollars approximately to set up. You can pay for it out of your own money and but save that Roth money for the contribution of the Roth. But at that support you’re going to be a little more actively involved in it may not be the best fit right out of the game. So that’s why I bring up Acorns and TD Ameritrade or directed IRA. When you’re really actively want to get engaged together in a project Mat, what would you say?

Mat Sorensen: Yeah, I totally agree. I think to directed IRA is not the place for every retirement account. It’s just not. But if you want to self-direct and buy alternative assets, it’s the best. I mean, that’s what we’re building it for. And so if you want to day trade crypto, you can’t do that at TD Ameritrade. You’re not going to do that at acorns. OK, we have the capability to do that. If you want to buy real estate or invest in a startup or all those things, I mean, that’s what we are doing at Directed IRA. We’re built for that. TD Ameritrade is built to let you buy and sell stock. That’s their business. That’s what they do. They don’t want to go out of their lane. They make a ton of money at it. Why are we going to do anything else? Right? Why are we going to bother with crypto? And they’re starting all kind of try to get on the bus now. But so. Use us if someone you want to do the self-directing. That’s why we’re here for but we’re not for everyone. That’s not just say we’re not for everyone and even my own kids, one of them has an account here. The other one, we just do a brokerage account. They just want to do stock. And it’s like, well, it’s cheaper and easier. Just do it on an app, you know?

Mark Kohler: And what I did is set up my kids with acorns and I used my Wells Fargo to do roundups. And since Mat and I are cosigners on a number of checking accounts, I just had to choose Mat’s account for the roundups. So that’s funding the Roth IRA. It’s a it’s a wonderful strategy. And he doesn’t even know about it.

Mat Sorensen: It costs you nothing. It’s like free money.

Mark Kohler: And Mat’s like I’m like I’m like this.

Mat Sorensen: What is it, eight cents acorns that hit my account, like every other day.

Mark Kohler: Is this eight cents for Mat? Sorensen is that you won’t even notice. So if you want to call me, I’ll give you your account number. You can use that for roundups for your kids.

Mat Sorensen: Yeah, I was I was dying the death of a thousand cuts and I didn’t even know it. Lincoln Lawyer.

Mark Kohler: Lincoln lawyer. Oh, dude, that was good.

Mat Sorensen: That’s good. Matthew McConaughey. Line up. Matthew, you’re dying a death of a thousand cuts and you don’t even know it.

Mark Kohler: Yeah, my man crush.

Mat Sorensen: Ok, all right. Tom’s question. I liked it. OK, Tom says my IRA with directed IRA Baby, I appreciate that. Tom is invested in a real estate syndication which has both private lending and equity profit on the sales portions. I want to do a Roth conversion, have the forms from the syndication group and have arranged to change the ownership to my Roth IRA. I received a heads up, quote unquote, that this could be problematic with the IRS and generate a prohibitive transaction. Can you comment? If so, is there a workaround? OK, I don’t there’s not a problem and I don’t think you need a heads up or anything that the IRS has an issue with it. In fact, the IRS is going to love you because what are you going to have to do when you do this Roth conversion? You’re going to send them money because you’re going to get taxed on this conversion. Now, here’s I want to make sure you get the process down here, Tom. And I presume you’re doing this because you believe this investment’s going to go up in value over time and you’d rather be Roth and have it come out tax-free rather than come out taxable at retirement, if that’s traditional. So to convert. You’re going to have to do a conversion with us, directed IRA since directed IRA, baby’s the custodian. So we have a form that says, please convert this asset and you can specify a specific asset over to Roth will open up a Roth account here if we haven’t already, and then we’ll move this asset from your traditional IRA over to your Roth IRA and you’ll change the records with your the syndication group. Like you said, you’ve asked about doing then. They’ll change that over and then they’ll start paying any profits or distributions to your Roth IRA. But to convert it, we’re going to say, well, what’s the value of that LLC? So you’re going have to give us the value of the LLC

Mark Kohler: Or your or your ownership in this syndication

Mat Sorensen: Of your ownership interest. What if we have the value of the syndication? Maybe it’s a limited partnership, but LLC, generally we let’s say it’s worth one hundred thousand dollars. Just to keep it simple here, you got 10 percent ownership in it with your traditional right now, will that value is going to be ten thousand bucks and we’re going to convert that ten thousand of value to your Roth IRA. You’re going to have taxable income on ten thousand dollars. So that’s the basics. I don’t think it’s a problem. It takes a little bit of paperwork. You need to make sure you have a value from the syndication group, but will rely on them if they give us a value to say, here’s here’s what the fund is right now. And some of them do that year to year, some of them don’t. And you’ll have to get a letter from them saying, here’s what it’s worth and here’s what you’re. And then you can either sometimes they’ll tell you your specific ownership or they’ll say, here’s what the funds are worth and you own two percent.

Mark Kohler: And I want to add a couple perspective on this that might help for some of you that might be a little confused here, Tom. Here’s another way to look at the conversion is not taking place at this indication. You’re just changing the ownership to a different era. That’s all they need to know. You don’t need to talk about Roth conversion with them at all. In fact, if they’re trying to alert you regarding tax planning, tell them to shut the heck up. I mean, that’s not their job. So you’re just going to I’m saying I’ve done a Roth conversion on my IRA. It’s a new account. No change, my damn ownership. And so the conversion is taking place at directed IRA, not at the syndication. So that’s one thing I’d say. The other one is why they might have thought it’s prohibited is because you’re taking your IRA that owns an asset and moving it to another IRA. Now, generally, that would be prohibited. You can’t transact with another retirement account of your own, but that’s not what’s happening here. All you’re doing is changing the character of the original IRA. That’s blue to green. So it’s really the same IRA. You’re just converting it to a Roth and that’s not prohibited. The IRS is like, that’s fine. You’re not selling your syndication object to a different retirement. Like if you’re trying to sell it to another IRA of yours or your kids. IRA, absolutely. That be a problem. But that’s not what’s happening here. It’s simply a conversion. The IRS gets it. It’s cool. And I will say this, too, is another side note. This allows you to be a little aggressive because what you do need from the syndication is a letter stating the value of what your ownership interest is. Now, they may say, well, you bought in for this for four hundred grand. Yeah, that’s about what it’s worth right now. Or they could write a letter, go well since you bought it is worth 600 grand. Now see this is where you want them to be a little cautious because they want to tell you it’s worth more, but you don’t want them to tell you it’s worth looking back. Where’s the line here? I mean, this is this is a big line.

Mat Sorensen: Yeah. Yeah. And so there’s a couple of things. One, you just have to go with the value they’re going to give you because you can’t certify with the value is. So they can certify that or you can go to a third party person that will appraise the value. So and we’ve had clients over the years, a lot of those appraisers will take a fair market value reduction because it’s a smaller, closely held entity. It’s not publicly traded. It’s hard to sell, and so they’ll discount it. So let’s say your investment would have always been worth one hundred grand. They’ll discount it down maybe 30% for because of lack of marketability and some other issues to do. It’s a pretty aggressive tax strategy. I don’t do it myself, but you can do it. You’re going to need a legit appraiser for business appraisals, some with some credentials that’s going to sign off on that. And there’s some out there. If you need him, I can get you to some. So but just bottom line is, and I think Mark’s point is, was spot on. You’re not doing this with the syndication group. This is happening at your IRA. So just we have the Roth conversion form. You need to get the value so we can determine what is taxable on the conversion and then we convert it and it’s over your right. And now the future is tax-free. Baby, the future’s bright.

Mark Kohler: Don’t let the syndicaton you’re going to need to wear shades. Oh, I love it when Mat’s on it. Today, I thought I was color commentary. You know what leave the jokes to me that’s make making jokes and I can’t keep up you so smart. All right, I don’t yeah, don’t let the syndication company jack this up, it’s like a bank. They’re on a need-to-know basis. Just get the frickin value, get the lowest value can do the conversion a directed IRA and tell them shut the heck up. All right. I like this James comment. He says, is it permissible? And this is a really good question because this is an attack strategy question coupled with a retirement plan question. I can read the question and then I bet any of you that have an S corp out there and are married. This is what you want to know this if you’re single with an S-Corp two words prenup. OK, is it permissible for a couple to have one S-CORP? With two separate solo 401K plans, each with a separate EIN one for each spouse. If so, what are the advantages and disadvantages long term and short term of doing so when both spouses are paid a salary from their joint S-Corp, but only one is the owner of the S-Corp versus having one solo 401k covering both spouses, each with their own account. Are there additional considerations of both spouses are owners of the S-Corp? Wow. OK, now, James, I would say this in general.

Mat Sorensen: I know what happened to James. He got online. He worked with somebody that doesn’t know what the hell they’re doing. That person knew a little bit and totally screwed it up.

Mark Kohler: Well, hopefully, James,

Mat Sorensen: It’s kind of like the crappy doctor that knows enough to kill you. It’s like to not do any favors here. Oh, my Gosh. What a cluster

Mark Kohler: What I’m hoping, James, is that you haven’t set anything up yet and you’re just researching. I’m that’s what I’m hoping here. You know,

Mat Sorensen: We would never do that, by the way.

Mark Kohler: Yeah, that’s James. First thing is, I think you’re overthinking this. And let me just tell you the easy answer. And I don’t know if I even have an answer. I don’t think you could set up two solo 401ks for on S-Corp, could you? I don’t think you could?

Mat Sorensen: No because you’re one of them. Only one of them owns it. And so the so really, the company is going to adopt an S-Corp specific for one person who is an employee and not an owner. And I just it doesn’t make sense. It doesn’t make sense. I don’t know how you mean. It just does not make sense to me.

Mark Kohler: So let me tell you what to do, James. And for everybody out there, you’re going to love this. First concept in a husband-wife relationship whenever possible, we want one S-Corp. Now that’s a general rule. We teach all of our tax attorneys from the inception of our firm 20 years ago. So if you call us, that’s going to be our primary goal. Now, sometimes we can if I have a spouse, a wife is a lawyer and a husband is a doctor, they’re going to have to have their own S-Corps under Department of Professional Licensure rules because a lawyer can’t own a doctor S-Corp, a doctor can’t own a lawyer S-Corp because it’s a state rule. But in the eyes of the IRS, you can literally have one S-Corp. This is a state problem for licensure. So whenever possible, I want a husband or wife to have one S-Corp. It’s just easier that way. And soon you may go. Well, Mark, you probably have a bunch of S-Corps because you don’t law firm. No, I only have one. I don’t want a bunch of S-Corps. I don’t need the extra headache either. So don’t think that I’m just saying this to pacify everybody. But I do something different. Nope, I have one S-Corp.

Mat Sorensen: Yeah. And by the way, we set up S-Corps in our law firm. This is counterintuitive. We want to set more S-Corps up so that.

Mark Kohler: No, no, no, Number two both spouses don’t have to own it to be employed. My wife does not own my S-Corp because she’s not a lawyer. She can’t but could she be an employee? Sure. Could she be on the board of directors? Absolutely. Are my kids getting ten 1099s for being subcontractors? Absolutely. So again, don’t worry about the ownership. We want to try to have one S-Corp between a spousal relationship. Next concept. One 401k is sufficient and everybody out here, here’s a concept I really started to learn a few years ago from the infamous Mat Sorensen is think of a 401k like a honeycomb, a piece of honeycomb, and all those little cells are the accounts within a 401k. And you can have traditional cells you can have, which are a lot sweeter. The Roth cells are a lot sweeter than the traditional cells, if you could. But you’ve got the sweet

Mat Sorensen: At first because you’re going to tax indexes. They taste really sweet at first, just a little bit later on the back.

Mark Kohler: Yeah. So but if you have a honeycomb, it is so easy for your spouse to have his or her cells that are traditional or Roth and for you to have your accounts that are traditional or Roth. So 401k is built for this. It keeps it simple. It keeps it easy. We have a solo 401k plan here at our office for $999 and you get to meet with an attorney. We designed the 401k for you and your spouse or you and your parents or kids, and you can have a solo for one that even involves partners and their children. So a Solok can actually have a lot of little honeycomb cells in it. And I have a honeycomb kid. Rah, rah, rah,

Mat Sorensen: Love, honey comb.

Mark Kohler: I get exposed to jingle, honey comb kid rah rah, rah, rah. Don’t you know that jingle?

Mat Sorensen: I don’t know that one. I mean,

Mark Kohler: I guess that’s eighties. That’s eighties throwback

Mat Sorensen: 90s. I mean, I was I was eating honeycomb in the late 80s, so.

Mark Kohler: Ok, yeah honeycomb kid that was their jingle and you know, life cereal. He likes it Mikey. Like remember. OK, some of your old time like that. OK, but James don’t overcomplicated.

Mat Sorensen: Ok, the life kid, the little punk kid you know He’s like millions anyway is High maintenance kid. OK, Dave this is the last question I have. Dave asks in a checkbook IRA or sometimes called an IRA LLC, our deposits going back into the checking account or the IRA account through the custodian. How does the IRS know you’re commingling funds if it goes into the checking account? I think it’s not comingling funds if it’s going to the checking account. All right. So, Dave, if you’re doing the checkbook, IRA, or we sometimes we call an IRA LLC, this is where your IRA owns an LLC. The LLC has a bank account. The IRA is investing its cash into the LLC bank account. Your manager of the LLC, you have control of the LLC bank account you’re buying up. Let’s say you buy a property, a rental, receive the income, and that’s going into the checking account of the LLC. OK, you only send money back to the IRA custodian, let’s say directed IRA. If your IRA is with us, when you want to take a distribution or you want to transfer somewhere else, otherwise the cash can stay in the LLC. You can use it to buy the next property or use it to cover repairs or do an improvement or whatever. And you can’t touch that money in the LLC and you can’t commingle your personal funds in there if your IRA owns this. One hundred percent is your IRAs, LLC, it’s not yours. So you’re not touching the money, you’re not putting money in personally, you’re not taking money out. Everything goes back through the IRA because the IRA owns the LLC. But now the question, Dave, about how does the IRS know you’re whether you’re commingling, they don’t just like they don’t know that that business expense that you took on your return was legit or not. Did you was that meal really a business meal, Dave, with those really business Miles? OK, our tax code is like an on your honor system. Right. And you’re subject to audit, I should say so. So on, your honor, do your best OK at all without reference counts for

Mark Kohler: That’s that’s that’s OK. That’s not a scout motto or scout law. Promise one of the two.

Mat Sorensen: Ok, you scouters out there. So OK, Mark was a scoutmaster. Pretty, pretty dang good one too by the way. Thank you. So but the tax code is kind of like it is seriously. It’s like this on your honor system and so you need to make sure that bank account is clean. OK, just because you have control of it doesn’t mean you can have the heck you want with it. So you got to make sure it’s clean and you are subject to audit. So if you get it. But believe me, if your IRA gets audited and you have an IRA LLC, that’s the first thing they’re asking for since the bank account statements and they’re going to look to any payments to you or money you put in or anyone with your same last name. I mean, that is the low-hanging fruit. So just keep it clean and and you’re fine. But that’s that’s how the structure works. It does not need to go back to the IRA custodian.

Mark Kohler: Ok, we’ve got three questions left, and I’m going to do these kind of rapid fire and let Mat and comment on each one quickly as well, if you would like to. The first one is from Will. And it’s actually a long question, but a short answer. You just said love your podcast, appreciate all you guys are doing. And I want to say thank you so much. And he said he was listening to the podcast on cryptocurrency. And basically his question is, I’d like to do forex trading. I’d like to do trading in futures and I’d like to can I do that, too, in my retirement? How would I do it? And all that, frankly, will it’s it’s the same concept setting up an account with your Roth 401K or your HSA or your Roth IRA. You’ve got you throw those terms out there like you said before, if you’re going to be doing a lot of trading, you might do it in a TD Ameritrade type account rather than come to directed IRA. If you want to set up an LLC because you need a little more creative type trading status, we’d set up an LLC for your Roth 401K, then you can start doing Forex and all these other things you do mentioned margin accounts. Be careful with margin accounts because if you’re going to sign up personally to allow for the broker dealer to issue credit, you’re typically not going to do margin trading in a retirement account. So I’m just going to say that quickly. I think it’s really the same concept. You’re good to go when you do a phone call with one of our tax lawyers will help you set up the right structure for you. Mat anything you would add.

Mat Sorensen: Nope, that is the something he got some of the question on margins are going to be some margin restrictions. You’re not guaranteeing debt and and stuff like that. So that is a wrench. You have to work around.

Mark Kohler: A Crypto. I mean, sorry, an Instagram question here. This is from Dinrra misere Komova. I’m sorry, people. I apologize. Something she says, will I have to pay taxes if I buy rental property using the Self-direct and Roth 401k? I don’t think ever. You’re not going to have UDFI, which is to related debt financed income, you can use nonrecourse loans. You’re not going to pay tax on the growth and you’re going to be able to pull it out tax free if you buy real estate with a Roth 401K. Holy crap, I can’t envision a situation where you pay tax except property taxes annually

Mat Sorensen: Right year, that’s it the thing goes up and you sell it for a gain. You sell it back into a Roth IRA, no tax, and then you get to pull it out of retirement. Obviously, if you took it out early before fifty nine and a half, you might have some penalty in tax. But yeah, wait, fifty nine and a half have that thing for five years. Totally tax free,

Mark Kohler: You know. And I’m going to give a plug here again for our Self-directed IRA Summit. It’s a two-day summit where we’re going to try to create as many as many a workgroup breakout sessions collaboration as we can. There’s a lot of people in the room that have mdillions in Roth IRAs, Roth 401(k)s doing real estate transactions and others. And we really want to use this summit is a chance for everybody to kind of network a little or not as much network, but learn from each other. And I was talking to Mat about having it a little anonymous idea of a bucket where people can throw in ideas and tell us what they’re doing or what they want to do and not be on the spot on the zoom camera looking like an idiot or feeling like they’re the smartest one in the room or whatever. So we’re going to try to make it really, really fun and collaborative. So if you want ideas, if you want to learn the strategies and the technical pieces, you’re going to love that Summit. It’s just a few hundred bucks. It’s in three weeks, approximately Mat. Anything you’d add.

Mat Sorensen: Yeah, it’ll be awesome. I mean, there’s no more comprehensive way to learn self-directed stuff. And this is for someone that, you know, whether you’re brand new to it or you’ve kind of like heard the one hour webinar on it and maybe gotten your toe wet a little bit. This is where to go deep on it. And we’ll have, of course, Mark and I and others on there that can really answer your questions and drill down on what you’re trying to learn. And there’s going to be a lot of topics too from Roth accounts to real estate to crypto to, you know, for supercharging your your account. I mean, we’ll be hitting all that.

Mark Kohler: BackDoor Roths back door 401(k)s. OK, the last question is kind of a fun one. John says not Dr. John Different. John says, do you have to go to law school after your CPA? Well, you don’t have to do anything, but if you want to be really smart, you got to both like some of us on this podcast. But no, I actually had my CPA license before I graduated from law school. Devon Months, one of the attorneys in our office is wrapping up his CPA after law school. And some people go take what’s called an LLN, which is a specialty program for one to two years. And Kevin’s wrapping that up. Kevin Kennedy in our office as a lawyer. So he’s going back for LLM. Some people go to law school after their CPA, so go out and get it after, before or after. So and whatever works for you. But I think the combination is really, really powerful and I’ve loved it.

Mat Sorensen: Yeah. Obviously, having an attorney and a CPA like such as, you know, Mark Kohler, I mean, they don’t make all attorneys and CPAs aren’t like Mark Kohler. But but but it is a it’s a nice combination of professional credentials, obviously. And but most CPAs don’t go become attorneys and most attorneys don’t also go become CPAs. It’s just for the you know. The super ambitious I don’t know what’s the right word?

Mark Kohler: I don’t know.

Mat Sorensen: Yeah, like the ones that just that just love to learn nerdy stuff, I guess. I don’t know,

Mark Kohler: Self mutilate, just just to make it brutal. No, I love it. To quote Walter Mitty. I’m that spotted white leopard out there that Sean Penn’s trying to photograph. I would say there’s a there’s about one if not one out of a hundred, I’d say one out of one hundred and fifty lawyers might really have that credential. Another might be lawyers that specialize in tax like Mat Sorensen, who specializes in tax. So you might see 10 percent of lawyers in the tax realm, but even fewer with the actual credential. But go do it. Go for it. We’d love to hear from you. Yeah, Mat take us out.

Mat Sorensen: All right. Well, thanks, everybody, for tuning in. If you love the show and if you’re still listening, you like it. All these dumb cheesy. I shouldn’t say dumb. I mean, we had some pretty smart answers today, so. But give us a five-star rating that’s I was trying to get to and make sure you’re going to DirectedIRA.com/podcast to leave your questions even if it’s not open form week. You know, we do this every three or four weeks. It’s fine. Just go drop it in there. We go back and look from the time we did the last open forum to try and pull out these questions. And we can grab them and talk about what you want to talk about and the questions you have about how to take control of your retirement, your retirement with a Self-directed account. Thanks or thanks for being here now.

Mark Kohler: See you next week.


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