EP 21 – Strategies For Moving an Old IRA or 401k to a Self-Directed IRA
Mat and Mark cover how to move your money from an old IRA and 401(k) to a Self-Directed Account. They cover some game-changing strategies including the In-Kind Rollover strategy, which will help you maximize the returns in your retirement.
Mat Sorensen: Welcome, everyone, to the directed IRA podcast with Mat Sorensen and Mark Kohler, we’re just delighted to be with you today, talking about our favorite topic, self-direct and IRAs for light it.
Mark Kohler: Delighted. Speak for yourself. It’s April 15th.
Mat Sorensen: Yeah, but the IRS gave us some. What do we want to call it a mercy, a punt?
Mark Kohler: They gave us some mercy. They’re like, there’s a new 5th down. You can punt, yeah, we have four down, but yeah. But there’s still deadlines today. Payroll deposits, first-quarter estimated tax deposits, all sorts of state deadlines where they said IRS is doing whatever they want in our state we still want your extension or return. And that’s a little, you know, tip there. Folks, if you haven’t checked with your accountant on any state deadlines that you might be missing out, get there. But I don’t know, April 15th, it’s just in my blood. I just kind of anxious.
Mat Sorensen: It’s just you’re like, you know, how many years in in life are you of being an accountant? Let’s say, you know, April 15th, you’re just your body’s in your mind, is on that rhythm of you’re supposed to you’ve taught yourself to dread this day.
Mark Kohler: It’s a biorhythm. It’s some might say it’s that time of the year
Mat Sorensen: That time of the year?
Mark Kohler: And uh it’s not a good
Mat Sorensen: Mark’s going to be grumpy. He’s you’re not going to want to talk to him. It’s just going to be edgy. It’s that time of the year. Yep.
Mark Kohler: I’m looking for any opioid in the medicine cabinet. I’m like, poppin. Let’s go. Let’s go.
Mat Sorensen: Yeah, well, I mean, here’s the good news on it also to your contributions. New 2020 contributions for your IRA, Roth IRA, HSA, ESA, solok, SEP IRAs for those that are sole proprietors. That is not today or April 15th, depending on our listeners. That is May 17th for 2020 contributions. So there’s some good news in all of this mayhem and confusion.
Mark Kohler: Yeah, and that’s a good tip for some of you. That may be new listeners no matter where you’re at on the income scale. One percenter. 99 percenter, no matter where you’re at, scaless, one percent that I’m not. Yeah, whatever you’re whatever you’re making, you can still contribute to a Roth IRA through the back door. We have a great little video on that and a prior podcast on the back door, Roth. We also have a sweet maneuver on how to set up your education safe educational savings account or educational IRA. They’ve been around for years. I’d love them more than the 529. And there’s some nice little loophole to get an account set up where you’re the trustee. And then you can have Grandpa and grandma make a contribution who might be in a lower tax bracket. So there’s a lot of tips to still things to do before May 17th.
Mat Sorensen: Yeah, and that’s sometimes called the Coverdale or ESA. That’s one in the same. But it’s not a 529, as Mark said. It’s not. That’s a different one. We don’t love that one because you can’t self-direct it. You’re stuck and do whatever the state fund is you throw the money into. All right. Well, today we want to talk about those of you who are new to Self-directing or maybe you have an existing Self-direct account. You got some other dollars you want to self-direct. How do we move that from where you’re at already? Where you’re at Fidelity or Vanguard or TD Ameritrade, whether it’s an IRA or 401K or a Roth IRA. We’ll talk about where you’re sitting now and how you get over to the cool party to Self-direct to invest in what you want to invest into. So those are called rollovers and transfers in general. We’re going to break it down today.
Mark Kohler: Well, and I thought we were going to talk about the immigration crisis on the border of Arizona and Texas, but we’re not going to go there today. Right.
Mat Sorensen: I know zero information about that. That would be.
Mark Kohler: It’s bad. I’ll just say that now. I will say this. So on the immigration note, I was just going to pull up some of the criteria, but we ought to do a show just on this. A qualifying non-resident alien can have an IRA. So as you’re thinking about some of these topics of immigration and retirement accounts, two wonderful topics people cover. At a general level.
Mat Sorensen: I love how you tie those together. I love that. You know, you’re a pro.
Mark Kohler: Thanks. I’m going to weave a tapestry here on the podcast. So if any of you know an immigrant that just ran across the border, you might be able to say you can have an IRA. That’s probably the first thing they’re looking for. Not water, not food, shelter, the like. I jumped across the border. I swam the Rio Grande because I want a Roth IRA.
Mat Sorensen: I want to I want an IRA and we get it. We get it. That, you know, that’s one of the great inventions of America that people come here for. OK, well, all joking aside, and for those that we offended, I should say Mark offended, thank you. Thank you, everybody, for not turning us off yet. Yes. We have something important to say about your retirement.
Mark Kohler: That’s right. And no matter what side of the aisle you’re on, the border is a concern.
Mat Sorensen: You’re just going to keep digging.
Mark Kohler: There’s no I’m just I’m sticking myself out. I guess I didn’t think I was that dangerous of a comment, but you’re making me sound like a political statement. OK, all right. Now, I want to start this topic off with an important point just yesterday. I called my partner Mat Sorensen, and I said Mat. My Roth IRA at Directed IRA is all jacked up. I thought I made a contribution last year. Did I do the conversion already? I don’t. I’ve got all the steps messed up. And you go, Mark. You said you should know this, you are the most high maintenance client we have and I’m the CFO of the company, but I’m not in the operations. And that’s where really Mat and Aaron do such a great job of just making sure our team at Directed IRA is on the phone. You get an actual person if you call. Now, if you don’t have to use our company on this podcast, we’re just going to tell you how we do it to make it easy for you. But I’m going to say even yours truly, Mark Kohler, I’ve been learning the proper steps to make it easy and it can be a little tricky. So coming from the most high maintenance client at Directed IRA, because I don’t dip my toe in the operations side of the business every day. Yeah, I feel your pain. People.
Mat Sorensen: Yeah, least less. Do you think that there was errors made? It Directed IRA. Let’s just say they were self-inflicted wounds, from what I understand, of someone putting the wrong year on something when making a contribution.
Mark Kohler: You know, what did you need to say that? Did you need to say that?
Mat Sorensen: I did. I mean, I did. I just had to defend, you know, the intelligence of everyone here.
Mark Kohler: It’s not Directed IRAs fault. I will.
Mat Sorensen: I wanted to make sure he was confident in this. And it can happen to anyone. It could happen to anyone. Yeah.
Mark Kohler: Ok, so. All right.
Mat Sorensen: I’m trying a roadmap of how maybe we should hit this.
Mark Kohler: Yes. And I’ve got to step one that I really like that I did with the client just last week. But you get the roadmap and then I’m hoping my step one is you’re step one. Let’s see how it goes.
Mat Sorensen: All right. Me too. All right. OK. Let’s walk through first, we’re going to go over those of you with a 401k,
Mark Kohler: Ok, that’s not my step one. You’ve already screwed it up?
Mat Sorensen: Well, I want to when you come back to your step one.
Mark Kohler: All right, fine.
Mat Sorensen: Maybe you screwed it up, right?
Mark Kohler: OK, let me say step one.
Mat Sorensen: This is the problem of having a 50 50 partnership. Yeah. Yeah. There’s a lot of give and take.
Mark Kohler: You’re going to love step one,
Mat Sorensen: You know, you have to assert yourself.
Mark Kohler: See, you already skipped step one. So that’s let me just give you my step one. I have so many clients call and go. I don’t even know what I have. OK, so I sit fair. So last week I told the client, I said, concede you will concede to that. And so I told him I told this wonderful client in Eureka, California. I said, Hey. Do a little audit, look for any statement you have from any old brokerage, from your financial adviser, anything that’s come in the mail in the last two or three months, you all know, you throw it in a drawer, it’s like gibberish. It’s a foreign language. And I said, create a little spreadsheet. I want you to put down any identifying terms on those statements. Do you see the word IRA? You see the word 401K write down account numbers, create little columns. This little spreadsheet is going to help us figure out what to do next. So I think a lot of people just need to figure out and she was all I have this little IRA I didn’t even know about. You know, people find things when they do that. Yeah.
Mat Sorensen: One thing we like to do at Director IRA, is just send us your statement. We will interpret what you have. Sometimes you have two things sometimes people have a 401K of traditional and Roth. But it doesn’t say that on your statement. It says pre-tax and post-tax and it’s confusing. So we will help with that. We also want that statement anyways because it goes with our transfer, our direct rollover forms. So we will include that anyways. That makes it easier for us to help get the form done for you so you can send that to Directed IRA. If you opening an account here, we’ll use that to help, you know, what account to open and then we’ll use that statement too to get your transfer rollover of funds over.
Mark Kohler: And I would recommend this first step. Mat is create a Google sheet, create a Google sheet that you can share with people on your trusted group, could be your spouse, your mom, your dad, a child, and even your tax lawyer. Because on the law firm side, we may be meeting with you while you’re doing some of this work at Directed IRA. And the lawyer is going to say, what do you got? And you’re like, oh, oh, I did a Google sheet with the customer service people over Directed IRA. Let me tell you what I’ve got. And then they share the Google sheet. We can build a picture diagram. We can determine what should be in an LLC, what needs to be in your trust or your beneficiaries after it. So I think this audit is really helpful. Before you try to transfer, would you would you fair? Absolutely. Yeah. And you should get that was my more ways.
Mat Sorensen: You should be tracking that anyways.
Mark Kohler: You should. But that wasn’t that bad.
Mat Sorensen: Someone I like. Step one. OK, step one. That was good step one, step two. OK, let me give the roadmap. Do I want to give the whole roadmap. I’ll do it fast because I want to make sure you understand we’re going to hit what you may be situation you may be in.
Mark Kohler: Ok, where are we going to go before we hit the road.
Mat Sorensen: So let’s say you have an old employer. Retirement account 401K 403B another retirement account, you had an a prior employer, let’s say you have a retirement account 401K, whatever it may be at an existing employer. Can I touch that money and move it to Self-direct? What if I just have a Roth IRA or a traditional IRA Sep IRA? How can I roll that over or transfer to Self-direct, so we’ll go through those and there’s a different account types, even HSA ESAs and all those inherited accounts, we’ll go through those. Those are luckily a little simpler. But we’re going to start with the four one case prior employer, existing employer, and then we’ll go through the different IRA, HSA, ESA account types.
Mark Kohler: This is classic. OK, now Mat, our producer, is going to let us know if we can play at least the audio of this without having problems. This is on YouTube, so I’m just going to go for it. We are going to watch the vacation roadmap scene with Chevy Chase is 60 seconds long. Now, this is classic for those of us who’ve seen vacation because you literally I didn’t even know this until I just pull it up. They’ve got an Atari computer right there in front of this crappy TV and an Apple two E, if any of you remember that from the 80s, we had an apple 2E and he gets up and says, here’s where the family truckster is going. This was the road map, you know, so this clip I’m going to highly recommend for everybody. As Mat talks about the road map, the first thing I think about is Chevy Chase, the family Griswold trip to Wally World and the Family Truckster. I mean, I didn’t even look at my that just came from memory. That was not even I was not reading Wikipedia or anything, OK? That’s how important that scene is for everybody. OK. All right. So the producer said we can’t show it here because of copyright issues. But Mat, it’s a classic, right? You as a
Mat Sorensen: Classic and you know, the they get to their destination of Walley World kind of buzz kill,
Mark Kohler: You know,
Mat Sorensen: The best road map
Mark Kohler: Trivia. You ready for some trivia? Who’s the security guard at Wally World who played the security guard? Who? I don’t know who is it? John Candy. I can remember if he had to do the roller coaster ride with them and
Mat Sorensen: I got to watch out and see that. And I think
Mark Kohler: It’s been along well. OK, so there’s a road map and we want to get to the promised land. We want to be able to self-direct our retirement account, invest in the what the heck we want. And I’ll tell you this right now, I alluded to it at the beginning. The road map we just gave you is very straightforward. Your financial advisor is going to make it sound like you’re trying to get a patent on plutonium. They’re going to say, you can’t do it, you shouldn’t do it. It’s a bad move. It’s going to cost you. And if you even listen to Steve Cramer on Mad Money, he’s going to say you’re you’re an idiot. Let us Wall Street do it because they are terrified of Self-directing. They do not want you to do this. This has been the M.O. of Wall Street when it comes to Self-direct for almost 40 years people. So this is you’re the driver of the family truckster. If you want to go to Wally World, Wally World, you can do it. So this is it.
Mat Sorensen: All right, so fair warning, yeah. OK, let me get into some some of the process here and how this works. OK, let’s start with what we talked about, first old employer 401K 403B is probably the most common we see coming over that want two self-direct you don’t work there anymore, OK? All right, here’s the first thing to know. This is called the direct rollover. That’s the words you’re looking for forms are process that your old employer, it’s called a direct rollover. Now, this is unique in that you initiate the rollover at the prior 401k or 4O3b administrator. So wherever your prior employer plan was, let’s say it’s at Fidelity, you are going to initiate the rollover of those funds as what’s called a direct rollover, meaning it’s going from a 401k or 4O3b into an IRA, let’s say a directed IRA. We will receive the funds. Then you will submit a rollover contribution form or a rollover form saying, hey. I just had Fidelity sent over one hundred grand from my old employer, 401K deposited into this account, and then we’ll hold it or so.
Mark Kohler: All right. Now this is where I’m already derailed. OK. Now, when I call my former employer to initiate this transfer,
Mat Sorensen: You’re going to call the administrator of the plan.
Mark Kohler: Ok, I thought step two would be open the account at Directed IRA where you want it to go because aren’t they going to ask for the account number?
Mat Sorensen: Correct. I presume you already have the account set up.
Mark Kohler: Oh, you presume. Did you see this is why I’m here people, I’ve got your back because you don’t want to be a high maintenance client at directed IRA like me. So yes. Step 2. Yeah. Once you figure out what the freak you’ve got
Mat Sorensen: Obviously you won’t rollover something here unless you have an account. But let’s not. That is an important point because here’s one thing we want to make sure we’re doing, and this is why what Mark said. What freakin account do you have. Yeah, a lot of times we’ll have clients that have an old employer 401K that is traditional dollars and it’s Roth dollars. And they only open up, let’s say, a traditional IRA here. Well, then we’ve got to open up a Roth to receive the Roth dollars that are part of that old employer 401K, you could send it somewhere else. You don’t have to send both sets of funds here, but that’s important to do. And you do need those accounts set up so that then the rollover can happen seamlessly.
Mark Kohler: Ok, now this is why. OK, step two people, I’ve got your back. When you find out what you have, if I may recommend before you call your employer. This is just for the 401k 403B situation will come to the IRA, this, Mats, really good because this is where I jack it up. You call Directed IRA and you talk to the team and you go, here’s what I’ve got and tell them what you’re trying to do, say I’m trying to bring this old 401k and they’re going to go, is it traditional or Roth? And you’re going to go help me out. And that’s where you’re in step one. You’re figuring out what you have. And if you go, oh, yeah, I’m going to bring traditional and Roth money, they will email you immediately or walk you through online right there to get the account set up. So that part’s done. So I would say step two is if you’re going to throw a football, you’ve got to have your receiver in mind. So you want to make sure you’ve got that destination already figured out and Directed IRA to help you do that. Now, maybe in conjunction with this, you’re doing a consult with one of the tax lawyers doing some bigger planning. That’s fine. But Mat they can call Directed IRA and they’ll say, OK, this is what your goal is before you called the employer. Let’s get the account set up, because they’re going to want to know the account numbers.
Mat Sorensen: And I know some of you know what you’re doing. You know what your 401k is. You know, whether it’s traditional or Roth, you’re already ahead of the game. You’re like guys. I know for those of you that don’t or if you’re not certain, we want the statement. OK, send us the statement. It’s like if you’re not familiar with all the retirement planning rules because it’s not your job every day, you may not understand the lingo that’s on the statement to determine what the heck you actually have. We can help. We can help interpret that. So we see, you know, which account set up to then, as Mark said, be the receiver of the funds coming over.
Mark Kohler: And now, by the way, what I’m doing right now is I’m diagramming this out on a piece of paper. I’m going to have one of our graphic designers help us out in the law firm here. And if you could catch this podcast on YouTube, we because we simulcast on Spotify, iTunes, Stitcher, and all the podcast platforms, but also on YouTube. So you can see the link for this to go to the YouTube version of this. When you go to DirectedIRA.com/podcast, I’m going to have a little diagram that shows these steps. It’s going to look really cool, kind of like a little bouncing ball. All right. So some of us need that Mat because we don’t want to be called high maintenance. I love that. OK. All right. Now, step two, I opened my account of where things are going or identified. Which accounts is going to then step three is I this is the 401k track 403B, I call, I call the company. Do I call their HR. Who do I call? Do I call the statement phone number on the statement administrator.
Mat Sorensen: So let’s say you got your company, you used to work at used Vanguard, you would call Vanguard. And you would say, I want to do a direct rollover of my funds to an IRA. Now, if you have most of most people have traditional dollars in these accounts, and that’s it. That’s nine out of 10 or maybe eight out of 10. So you’re typically going to go to a you would have set up the traditional IRA and step two. So you’re going to tell on a direct rollover to all the funds to a traditional IRA. They’ll have a form for this. Now, some employers must approve that. Some plan administrators already have a list of this is a former employee, they don’t work anymore, let their money go wherever the heck they want. So there could be a different procedure. But you’re going to start with the administration company for the plan, the vanguard, the fidelity, nationwide, whoever it is that’s doing your plan, administration that you’re getting your statements from.
Mark Kohler: Do what do will the broker-dealer initiate that company approval? Or I may have a step three myself to go do it.
Mat Sorensen: Generally, they’re going to initiate it if it’s required.
Mark Kohler: Ok, now what if it’s A 403B, which is more of a government type plan? Do I. Is it going to be a broker-dealer just like.
Mat Sorensen: Same process I mean, it could be a Fidelity or Vanguard or. No.
Mark Kohler: Ok, so I called them up and then you already jumped to step four, you said then you’re going to call Directed IRA back and say, all right, the money is on the way. I filled out my form.
Mat Sorensen: You will call. But they’re going to have a form typically because you’re going to have to fill out a form. But it’s not our form. It’s on the 401k or 403b when moving from a 401k or 403b to a self-directed IRA. Regardless of the account type. The form you’re submitting to get money out of a 401K or 403B is that plans form
Mark Kohler: What’s the name of that form?
Mat Sorensen: A direct rollover. Sometimes they’ll call it, it’s a very generic form. It’ll be like a withdrawal form or even a distribution form. But you’re going to not do a distribution. Of course you’re going to say in that form, send it to an IRA, check this box. It’s not taxable.
Mark Kohler: And I’m not taking that direct rollover form and sending it to Directed IRA. I’m going to give it right back because they want it in writing, because if I call them go move this money, they’re going to go fill out the damn form. So I’m sending out for back to Vanguard in this example. And you want to write.
Mat Sorensen: Yeah. And you’ll have the Directed IRA account info for the account you set up in step two. So they know send it over and they’re going to code it to us to go into this account.
Mark Kohler: Ok, but Directed IRA doesn’t know you did this, so that’s where you came to step four and you said we’re going to fill out a form at Directed IRA to let them know what’s on the way.
Mat Sorensen: Exactly. That’s called the. So we have a rollover form on the fund your account section in the forms on our website. Just go to the home page in forms, fund your account. And this is any place they’re going to have a form for this to say, hey, I had $100K or whatever the amount is come from fidelity. It’s being deposited into my IRA, they’re.
Mark Kohler: Rollover form, and what I love at directed, IRA, is when you get on the website at the main page, there’s pull-down menu for forms and, you know, put and what is the category that this would would be and this would be in fund your account, fund your account, because I think everybody you’re trying to fund your account, you’re throwing that football. I want to have directed IRA receiv the money and receive the football. And they’re going to you know what, people if you’re watching YouTube, you would have seen Mat rolls eyes. I don’t need that. I smiled. I love the receiver. I thought that was a eye rollover.
Mat Sorensen: No, no, that was that was good. I was delighted. Mean, I was thinking I was thinking, are we like are we Jerry Rice? Like, who are we? If we’re like because we’re like the best receiver at Directed IRA.
Mark Kohler: Oh, yeah. I’m Steve Young. You’re Jerry Rice
Mat Sorensen: Jerry Rice. OK, maybe Montana to Rice. I mean maybe Steve Young.
Mark Kohler: But I know I know some of you listeners are at the engineer Mat level. You guys are like Kohler, shut up. I just want to hear Mat tell me what to do. But I would argue there’s a lot of people on the show. They’re like, thank you, Mark, for thinking of us little people that are not as smart as Mat Sorensen. That’s because I.
Mat Sorensen: Got some technical rules in this next step.
Mark Kohler: What the hell. OK, step four rollover form. Fill out at Directed IRA. I got to write this down. Directed IRA and I’m going to submit it and let them know what money is on the way from where. Yep. OK, it’s on the way. All right. So now the money is on the way. By the way, how long is all this crap take from direct
Mat Sorensen: Direct rollovers of the longest. This is the biggest pain. These 401k administrators are slow. I would say it’s about a week to two weeks. We’re going to we can I mean, we’re just over here waiting to receive we’re waiting for them to frickin throw the ball to us. OK, so don’t call us and complain. Call them and put pressure on them. Hike the ball. Yeah. And so if you think about this, these 401k administrators are 403B, whatever, maybe any employer plan, they lose money when they send your money, when they send your funds out. So there it’s not a high priority over there, you know what I mean? It’s not like the first thing they’re trying to get to during their day now to the end of the road. Don’t worry about hustling it. Let’s just take some time. So the transfers from IRA to IRA, which we’ll get to hear in a little bit, those go pretty quick, but the old 401k or 403B, take some time.
Mark Kohler: Ok, now I want to do a quick. Side note, if I may go back in step two, when you’re opening your account, keep in mind, if you’re going to do a crypto account, you’re going to want to let Directed IRA know that. And you may say you have this latitude. Let’s say you have one hundred grand. Oh, this is good. So I’m going to be technical here because I can I can be technical. So let’s say you had one hundred grand at an old 401k and you go, I’m going to roll it over to Directed IRA. So in step two, you’ve identified what you have. Now, let’s say that old 401K was half Roth and half traditional. You got $50k $50K, so you called directed IRA. You’re talking to the team. They’re awesome. And I was just there last week and they bought lunch Mat did. We were all together hanging up. You called it. You call them up and go. They’re going to ask you, well, what do you want to do when you get here? And you’re like, well, I’d like to do a little crypto trading, OK, did you want to do that in your Roth or your traditional. Oh, I’ll do I’ll do Roth, but I only want to do half of it in crypto IRA. OK, cool. So we set up a crypto Roth account and you want to make a note? I’m going to send 25 grand to the crypto Roth account number. So you’re going to write that down. Then you go, oh, then I want to just do some basic trades. I just want to put it back in stock it just sit on it for a little bit with the other Roth. Yeah, that’s the other Roth money, OK. And that’s a Roth regular Roth account because you’re going to want the trading option on it to just buy some stocks and sit back until you have something more creative. And then you go, oh, but with my traditional money, I got a real estate project I’ve been thinking about in my spouse is going to come in, my kids are going to come in and we’re going to form an LLC and really take that 50 grand of the traditional money and do a cool LLC and go buy some real estate. OK. They’re going to set up a traditional IRA account and then they’re going to say, get your appointment with the law firm so you can get your LLC going so we can approve it and get the money to fund that LLC. OK, now think about that. You’ve got three accounts set up. 25/25/50 each accounts doing a different thing. That’s the beauty of this people. You’re in control. You’ve just kicked out the driver of the freakin family truckster. You’re going to the promised land people and you’re in control. But that’s three accounts. So when you go over to step three and you fill out a direct rollover form Mat, I want to ask, would that require three different forms?
Mat Sorensen: If you were going to do it that way, which thanks for making the complicated example, that rarely happens. But yes, you would do 3 forms.
Mark Kohler: I thought you’d appreciate that. Talk about passive-aggressive.
Mat Sorensen: I like when I blow up. I like gees this sounds complicated. I thought you meant it was simple?
Mark Kohler: I thought, I can’t win people. I can’t win either. It’s too simple or too complex.
Mat Sorensen: Jeez. Now if you had traditional and Roth funds in your 401k, you would have had to do two anyways because those are two separate accounts. Even at your 401k administrator, they had that close tracked as two different accounts and pots of money anyways, which we have to do the same thing on the IRA side. But if you want to do crypto, in addition to doing regular self-directing or brokerage, the crypto IRAs are their own unique account. Those are linked to a Gemini trading accounts. They are their own unique account, separate from the other Self-directed assets.
Mark Kohler: All right. Well, I’m in step for the money’s there. I thought it was all over. You’re saying there’s something else I got to do
Mat Sorensen: No, but I was going to say let me give another scenario to that’s common and not what I mean, that happens, what you’re talking about, but not the three. The two happens where you do need to do to direct rollover forms for the traditional and Roth. But it could.
Mark Kohler: You throw out an example? I’m all about teamwork here. If you throw out an example,
Mat Sorensen: Here’s a code. Welcome. It is a common order. Now, if someone has an old employer 401K, like, we’re giving this one a lot for people that want to do crypto, they’re like, man, I’ve got this ten thousand bucks. And this old employer for one K, it’s never been enough to do much. I couldn’t buy real estate or do any other self-directing, but I like to throw ten thousand in a crypto, but I want it to be Roth. This is an old employer for one K that’s traditional. How do I get that over. Because it’s traditional now I need to get it to Roth because I want to do crypto with Roth money. I want the tax everything up this thing.
Mark Kohler: Right, fair enough.
Mat Sorensen: So in that instance you would do a rollover to a traditional IRA. At directed a traditional Crypto, and then it gets converted to Roth. Now we have an all inclusive. It’s almost like a great resort in the Bahamas. We have an all inclusive Roth conversion app for people that just want to do this, where that we have one application. You set up a directed that opens a traditional IRA to receive the roll over of traditional funds. It has a Roth conversion election in it that you say convert this immediately once you get it, and put it into a Roth IRA account for me. So that’s a common one we’re doing right now for a lot of people rolling over some of these smaller old employer 401ks that like I just want to throw some of this into crypto. It’s never been enough to worry about, but and it’d be cool to do some crypto money with it. And you don’t have to go to Roth. You could just leave it as traditional. But just a little tip there on that process. We try to simplify it all in one package, but not as traditional. Then you’ll convert it to Roth, OK?
Mark Kohler: Now, if you’re watching this on YouTube, you’re going to see the little box that says step five if you want Roth. And I put convert to a Roth once you’re at directed IRA, but I would just add this bring this up when you’re in step two. Because you’re going to get frustrated if you don’t mention this in step two, the teams are going to go, Oh. You’re being Mark Kohler, now you’re high maintenance and tell us this
Mat Sorensen: Is directed, IRA, or, you know, you’ve made a mistake and chosen some other company. I mean, it’s the same same thing.
Mark Kohler: I will say this, and this is totally being honest and transparent and not self-serving or commercially. If that’s all it is. You start calling some of these custodians out there. You’re lucky to get someone on the phone. And if you do, they’re just going to tell you to go to the website and they don’t know what they’re doing. You can talk to someone at directed IRA every day that knows what they’re doing. They’re going to help you get through this. And that’s that’s why we’re number one in the customer satisfaction of the country right now. And it’s we’re just booming. So be patient too if we’re a little busy. OK, so step five, you convert to a Roth while you’re there. If you’re going to do it now, step six would be. Start investing, yeah, right
Mat Sorensen: There in the party. Yeah, the party will start mingling,
Mark Kohler: Start start giving out your phone number to start partying and start investing. OK. Now, that is the 401k 4O3b track.
Mat Sorensen: For old employer,
Mark Kohler: For old 401k,
Mat Sorensen: We’ve got a little a version, a separate version, I don’t know what to call it here. Separate process and procedure for 401K plan or 403B where you still work.
Mark Kohler: Ok, and you said I was complicated. All right, so I’m still still working.
Mat Sorensen: It’s not an old 401k I still work there, might even still be contributing, you know? Well, I get the money out to Self-direct?
Mark Kohler: Ok, so track. All right. OK, now, we’ve already gone through step one. You’ve identified all the accounts. You’ve called up your administrator. You find out how much you have. So I’m going to call that the audit. You know, just make sure you’ve got what you know, what you have and then step two. I would say on the face of it, it’s going to be rare, you can access it. So what do you what do you say step two, you’ve got money at a current job. You know what it is? What are my options? What do I do?
Mat Sorensen: I like this is where you want to determine this is step two. Can I even use this money like we’re determining what it is? You know, maybe this let’s say it’s a it’s a traditional 401k. Can you still work there? It’s all traditional dollars. Now, if you are over age fifty nine and a half and for some plans it’s 55, you can move the whole thing out if you want, even if you still work there once you’re at retirement plan age under the plan, which for most is fifty-nine and a half. And some plans do it at fifty-five. You can do the whole thing out. And in that case, if you are traditional for I think it would go to a you’d open up a traditional IRA, do the direct rollover form
Mark Kohler: So your can we do it one step at a time.
Mat Sorensen: It’s the same steps as the last one.
Mark Kohler: Ok, ok. But I’m just. So did you say fifty-five and over fifty nine and a half and over
Mat Sorensen: Depends on your plan. No. If for everyone it’s at least fifty-nine and a half. Some plan to let you do it earlier at fifty-five.
Mark Kohler: Ok, so. Right. See that’s a nice important detail I wanted to clarify. OK, so if I had some plans and now when I call them. Should I trust them or should I try to read the dumb plan?
Mat Sorensen: Yeah, now here’s the thing. In this situation, there’s so much confusion on this, and the front line person you call at the 401k administrative place is going to be like, we don’t you can’t do it because they don’t know. They just don’t know.
Mark Kohler: The answer is to say no.
Mat Sorensen: Yeah. And so when in doubt, say no. So it might take a little take a little bit of prodding to say I’m already at retirement plan age. That’s what you would that would be the words you would say. Now if you’re let’s say fifty seven and you’re like, I don’t know, I’m not 59 and a half, I need to know if my plan does it. At fifty seven, ask for your plans. Summary plan description and adoption agreement. This is something you should be entitled to get probably in your account when you log on or your employer can provide really the plan administrator ask for that if you’re not feeling like you’re getting the right information, because that’ll say what retirement plan age is under the plan.
Mark Kohler: Ok, now on. Oh, I had a good question here, so I ask for this document summary plan and description document if I’m confused, can I say. Thank you and take that and send it over to Directed IRA. Or what I should I go to the law firm for a consult at that point?
Mat Sorensen: Yeah, what I would say is ask for get elevated help at where you’re at. So if you’re at Vangard, let’s say, and the person you’re talking to is like, I don’t think you can do that. You know, you’re like, no, I’m retirement plan age. I can roll out whatever the heck I want. They should know that you can I would overcome their objections and try to get to their supervisor. You might have to be a KAREN or, you know, sorry for the Karens up there. But, you know, the millennials know what I’m talking about. You might have to ask for the manager, OK, and get the help that you need by someone that actually knows what the heck they’re doing there, because at the end of the day, it’s someone there that’s going to have to push the button to let the money go out.
Mark Kohler: So don’t be a total jerk.
Mat Sorensen: Yeah, don’t be a total jerk. But just, you know, just make sure you’re getting the right answer. And if you’re like guys, I’m 60 and they’re refusing to send my money out, then give us a call and we’ll look into it. But I want you to exhaust your own options first, because, frankly, we’re not authorized to go talk on your account anyways at your 401k administrator. So I can’t call over there and be like, hey, Sally Jones, you know, moving money. She’s 60. They’re not going to talk to us.
Mark Kohler: Ok, now. There’s a fine line, everybody, between being assertive and a jerk um, I’m all over that continuum. Some days I’m assertive, some days I’m a jerk. OK. I don’t know, little personal therapy there. That was a moment of self reflection, folks. Everybody’s like, what the hell is he talking about? OK, now you’re saying I can take out all my contributions and matches, or is it just my contributions, the whole kit and caboodle? Do I have to invest it?
Mat Sorensen: Yes. You have to be vested
Mark Kohler: What’s best for me. Tell everybody what vesting means.
Mat Sorensen: So some of your 401k money or employer plan, the company’s matching or putting in money for you and the company’s money vests over time, meaning it’s in the plan and it’s invested, but you don’t have access to it if you leave immediately. So let’s say it’s a three year vesting schedule. You know, the money you put in in 2018 is now fully vested because we’re in 2021. But if you were to have left in twenty nineteen. That money that went in twenty eighteen to the company put in would not be vested, so you would lose that?
Mark Kohler: I would say this to another way of thinking. It’s not investing. It’s vesting, meaning the company’s putting handcuffs on you. They’re saying if you join our company, we’re going to match and this percent, but you got to stay at least three years. You can’t take it out with you until you’ve been here for so long.
Mat Sorensen: Ok, a lot of vesting has kind of gone by the wayside because the most popular four one K plans are now safe harbors and those have automatic 100 percent vesting when the company puts the money in. So vesting is still a thing for sure. But and you want to check that. But many of you may not. The company may be putting in money, but it’s a hundred percent best when it goes in anyways. OK, that’s a good consideration.
Mark Kohler: Now, this would also be on the summary plan description document. Yep, exactly. OK, I’ve been listening, taking notes now. No, now I’ve heard you have to call your company or the H.R. department. You’re saying just call Vanguard or Fidelity. I’m confused and say it’s a small business. I’m not calling my AT&T or Microsoft. I don’t know who will any direction. They’re for people.
Mat Sorensen: They’re still going to call the whoever does the plan administration know and that manages the plan. Who you’re getting your statements from, start there, if you don’t like her, may have to approve something many small business 401k plans, the employer, the H.R. department, actually has to approve money leaving in particular or a distribution or maybe doing it for 20. Well, the employer has to approve that.
Mark Kohler: And I would say I like what Mat said about exhaustion, your options, because they’re not going to talk to us at the law firm, accounting firm or directed IRA because we’re not you. So if you just call HR and go, I’m confused. I just want an answer here. Who am I supposed to call? They should point you in the right direction. OK, so I’m a step two and I find out and I’m going to say step two, if you’re over the age 55 or older, you’ve got to start asking, let’s say I’m going to jump to step three and say I’m underage Fifty five. What are my options there?
Mat Sorensen: Ok, of this maybe scenario three, maybe or not step three.
Mark Kohler: But I’ll work it out. I’m the visual guy, OK? You’re just the brainy guy.
Mat Sorensen: You’re doing the pictionary. You want to go Pictionary, go OK. You still have options. That’s the cool news. A lot of people stop here and like, I can’t self-direct. I can’t self-direct anything because I still work there and I’m not 59 1/2, and so I can’t self-direct. Well, let’s say you’re 40, you still work there. What can I self-direct? The employer dollars that have been put in the plan that our vested can always be rolled out.
Mark Kohler: Really, no matter what kind of plan that’s like federal law and plan.
Mat Sorensen: Now, the company may restrict it, but the retirement plan rules always allow those dollars to be rolled out even when you work there. And are not 59 1/2 yet, it’s a little weird because a lot of people think, well, that makes no sense. Now I can roll out the money the company put in for me, the employer put in, but I can’t roll up the money I put in as an employee. Yeah, that’s the rule. I don’t know why it was done that way. It’s kind of dumb. But the the money that the employer puts in, maybe the match, let’s call it, as long as that the money, that part of it that’s vested can be rolled out and that’s usually traditional dollars. So it gets to a traditional IRA. Now there’s a catch to that. OK. That’s the general guideline.
Mark Kohler: Ok, before you do the catch, let me ask this. You said you can always do that, and then you said unless the employer restricts it, that is that the catch? That’s the catch. OK, explain.
Mat Sorensen: So legally and in the retirement plan is vested employer dollars can be rolled out whenever you want. Whether you’re forty fifty nine and a half, 70 doesn’t matter. You can roll out the money to an IRA of your choosing. The company is allowed to restrict that though. Now, most companies, surprisingly, do not. I saw a survey that said 2/3 of company plans allow you to roll out. This is called an inservice rollover or some kind of an in-service withdrawal, most 401k plans, like I said, allow for this. Now, this bucket of money is usually a smaller piece, because if you’re throwing in, you’re maxing out the employee part, the company’s doing a little Match this this matching company part may not be the largest piece of your 401K, but it’s something you might have to work with.
Mark Kohler: Ok, let me say that that’s what I was going to ask. Is this called an in-service rollover? Is that what it’s called as well? If I’m 55 and older, it’s the same term, or is it a different term when I’m 55 and older?
Mat Sorensen: Same term. The same term when you’re fifty five or fifty nine and a half old, depending on your plan?
Mark Kohler: Well, right now, the only other way to access it if I’m currently working. Is to quit. or get fired.
Mat Sorensen: Where I am now, sometimes that I had a client recently have this is if the company changes their administrator or changes their plans, you’re allowed to rule out. So sometimes if the company makes a plan change, you’re able to roll out. And I had a client strike while the iron was hot. There’s a there’s a window there when you could do it.
Mark Kohler: Well, and also, I would think that would be as if the company’s acquired or as a reorg or something like that. And at that point, you’d be able to rule out everything
Mat Sorensen: Like they were acquired, probably not if another company just bought their stock, probably not. Now, if they change the plan because of that, because they’re like, well, we’re going to move everyone over to the plan with the big company. Now, maybe the
Mark Kohler: Plan is I. What if what if I’m a part of a small business company and I go and I go into the owner like I literally know the owner, which is a lot of small business owners would say, and I go, hey, we got the safe harbor plan. I really want to self-direct. Can they do anything? Can the employer that’s literally and control the plan do anything or do you have to ask them to say. Go check out Mark and Mat’s podcast, go adopt a different 401k because your 401k sucks, I can’t self-direct.
Mat Sorensen: Well, I mean, it’s possible to have a self-directed 401k plan where the small business owner can sell can self-direct any employee working at the small business because self-direct are law firms 401K, you can we can self-direct it. I self-direct it’s super freaking complicated. OK, so you small business owners that are out there like I want to self-direct this is I’ve been waiting to hear this, I’m kind of 401K or I want to set one up but I’ve got 10 employees. I can’t do a Solok. I want to use my existing four on a different topic in the show. It’s possible super freaking complicated. Probably not worth it unless you’re very, very committed. OK, for me, it’s hard to do.
Mark Kohler: I’m going to tell our studio system or with you, can you put down a show topic group self-directed 401kK that can be Self-directed. And I’m not saying that’s topics coming out next week or the week after because we’re trying to find the best company to send those clients to. We don’t set those up here directed IRA or KKOS Lawyers, so don’t call and go, Oh, I want this group for one K the Self-directed. We hope to be able to give you direction or
Mat Sorensen: Know where to go. We’ve done it is the problem, but they’re very complicated and hard. And my experience is it’s so much work that the typical small business owner gets overwhelmed with it. So it’s not like an easy solo k or IRA. But back to the transfer rollover rules. Begin this, if you have a 401K, you know, small business, big business at Dunder Mifflin 401K you know, whatever the employer contribution, it’s possible to roll those out if they’re vested in what’s called an in-service rollover. Now, this is the one where you really have to be the squeaky wheel because the typical person at this 401k administrator knows the general rules, that they don’t know the loopholes. So they’re going to tell, you know, oh, you still work there. Yeah. You can’t roll that out. They don’t know the little loophole. It’s like, no, I just want to do an in-service rollover of the employer money. That’s one hundred percent vested. You got to kind of keep pushing and I have to ask for the manager supervisor so so to speak,
Mark Kohler: I would say this too.
Mat Sorensen: To get the right.
Mark Kohler: I would throw this out for everybody as well, and in our track, number one, when you have an old 401K. There’s no real question to call up and ask, can I do this because it’s an old 401k, so don’t feel like you have to ask permission in this track. Number two, where you’re currently employed, there’s this permission kind of can I do it? Piece or step. I would not call Directed IRA and open an account in anticipation of this happening. Do your homework first, go to the employer, call the broker-dealer, I’m calling this step 2a or 2b depending on your age, but you’re going to call and figure out what you have once they go. Yep, you can do it in-service rollover. Here’s how much you’re going to be able to do approximately. We’ll get that to you later. But at least you know you can do it. Then you go to setting up the accounts. You’ve got that receiver. You send out Jerry Rice on his pattern. All right, dude, you’re going to do a you know what’s about. I don’t know if could run
Mat Sorensen: With it like a fly around or go around the post skinny post
Mark Kohler: Post route, I’ve heard of the post route before. Obviously, all of you are like, what are you, an idiot? Pretty much. I just watch it on TV. OK, so you’re going to say do a postcode and so you’re going to send your receiver out there to get the ball. So I would figure out if you can even throw the ball first. All right. Now, track number three, huh? Which we took. We ate the frog. We did the hard ones first. Yeah. Track number three, I got an IRA, not a 401k. I just have a frickin IRA sitting somewhere. It could be at acorns. It could be a TD Ameritrade, it could be an app. It could have a million dollars in it. It could have ten thousand dollars in it. It could just it’s just somewhere sitting. Could be at a bank.
Mat Sorensen: Yep. Yep. Now this is an easier process like Mark said, but it follows the same procedure here, a little different form and process. But we want to identify what do you have? She’s got a traditional IRA. If it’s a traditional IRA, you’re going to set up a traditional self-directed IRA or if you want to do crypto, a crypto, traditional IRA. So you’re going to match up the account time with the funds where the existing accounts coming from.
Mark Kohler: Ok, so step one and two are the same?
Mat Sorensen: Yeah, yes. And the nice thing about IRAs or Roth IRAs or SEP IRA or even you say you’re moving, those can always be moved. You can always date, you can go from Morgan Stanley or Merrill Lynch with that account. Merrill Lynch, Charles Schwab, Charles Schwab, to directed IRA. You can always change the custodians as many times as you want. And it’s called trustee to trustee. You never touch the money in the middle. It’s going from one IRA provider to another.
Mark Kohler: Ok, hold it. All right first. Is this called a transfer or a rollover? I never know which version is called the transfer. OK, so the 401k stuff that we did track one or two is called a rollover.
Mat Sorensen: It’s called a direct rollover. Direct rollover because the rollover is a different thing called a direct rollover. Oh, my hell.
Mark Kohler: Ok, to write and.
Mat Sorensen: Write your Congressman, you know, I don’t know the IRS did it.
Mark Kohler: Track one and track two were called direct rollovers. Now, this is called a transfer, a trustee to trustee transfer. OK, trustee to trustee transfer. Now.
Mat Sorensen: Was step three or four when you request the money, because this is where it gets very different?
Mark Kohler: Oh, I’m not to step 3 yet. OK, I’m still writing and I need to ask this, OK? I thought there’s a 60-day rollover thing. Like if they don’t want to do a trustee to trustee, they’re going to send me a check. Yeah, that’s a whole other track. Right.
Mat Sorensen: A whole other track. Don’t do that one. We don’t like it. Client’s mess it up. You get 1099. It’s a you have to do a bunch of stuff on your tax return possible. Don’t do it. Unless
Mark Kohler: We’re not even going to talk about it today.
Mat Sorensen: We can hit it. I mean, but just what you can do one 60 day rollover every 12 months with your retirement accounts. But I do not recommend it, the 60 day rollover is what happens is you have 60 days to deposit that money into an IRA. So they’re going to send you the money personally and they’re going to 1099 you like. It’s going to be taxable, like you’re going to have a 10% early withdrawal penalty, but you have 60 days to redeposit it and then you’re in a claim on your ten forty so long as you did. And within 60 days that I redeposit it, it’s not taxable if don’t assess me the penalty, OK?
Mark Kohler: I’m just going to put on the diagram for those that are on what thinks get in the background going here step. I’m going to call it step 3A is. You ask kindly for a direct trustee to trustee transfer. And they screw it up, you’re not going to ask them to send you money, you don’t want a 60-day rollover because you only get to do this once a year and you don’t want to use your get out of jail free card on this transaction.
Mat Sorensen: So here’s the big step. And this is what’s different in the trustee to trustee transfer.
Mark Kohler: Ok, step three, B, this is where what you really want to do.
Mat Sorensen: Yeah, I’m listening. But you want to do it will solve all your problems, OK? Call us at Directed IRA the where you’re moving the money to, because we are going to submit the transfer form for you. This is a different procedure. You don’t go, let’s say, your money to Charles Schwab. OK, your IRA is already there. You’ve been buying stock and you want to send all of it or a portion of it over to Self-direct. You set up your account with directed IRA account, you want to have already made sure it’s the same account you have over it, Schwabe, and then we will complete that. You will complete a transfer with us. Use that to attach your existing statement.
Mark Kohler: Which name that form. It’s a transfer to transfer form.
Mat Sorensen: It’s called a trustee to trustee. That’s the form is called transfer request. And we have cash only. Let’s say you’re moving cash over or if you’re coming from an existing Self-directed, Self-directed IRA provider and you need assets you can do inkind assets and cash.
Mark Kohler: And so we’ll submit it to whoever you’re wherever your IRA is. We’re going to do the heavy lifting. We’re going to send the form to them and say, the client authorizes this, you’re going to have to sign it, people, because you’ve got to authorize us to do it. But then we’re going to send it off there
Mat Sorensen: And sign off on it too we have to what’s called a letter of acceptance with it. So we have to sign off on it too now we’re a financial institution, so we’re legit. They’re going to send us the money. Right. And we can do this like you have to be an actual custodian for IRAs so and we’re doing, you know, 30, 50, 30-40 of these a day, like we’re doing transfers of funds. So this is the most common way to do it. We have a whole transfer team that does it. It’s called the transfer request form work with us. We will actually then send it off to Schwab or Acorns or wherever it is, your current IRAs. OK. Now. Let me say, if you submit it, if you fill out a transfer form and you submit it to, let’s say Schwabe, it’s going to get rejected. It’s got to come from us because we have to sign what’s called a letter of acceptance.
Mark Kohler: All right, I’m also going to throw this out to you folks that step two is calling directed IRA to open the account where it’s going to go. So we’re back to the first track. You’re setting up your receiver to receive the money. So you’re throwing them the ball. You’ve got the account numbers on that same call. You would say, OK, now that we have the account set up, will you help me with this transfer question.
Mat Sorensen: That says you’re going to get a follow-up e-mail from us with the transfer form. We’re asking you that information on the front end setting up your account so you can ask. We’re going to we’re going to initiate the things and request the things we need to get the money.
Mark Kohler: Ok, and I’m going to say this, too, because this was Mark Kohler’s problem with Mat was joking about earlier on is I got a little anxious. I wanted the Roth IRA to do the conversion thing because I needed to do the backdoor Roth IRA process. And I didn’t involve the team members at directed IRA earlier enough. And so I put the money in the wrong account because I was trying to I was actually trying to be low maintenance by just doing it. And I actually made myself high maintenance and so. If you’re going again, this is step five in our first track is if you’re going to do the Roth conversion backdoor thing, let directed IRA know that’s the long term plan here. But that would happen once the money’s there, at directed IRA. So remember, don’t try to get anxious and do it too early. Do the Roth conversion once the money’s here,
Mat Sorensen: It in the Roth conversion like the back door Roth is different because that’s new contribution. Let’s say you’re doing a Roth conversion where you’ve got a traditional IRA already out there. We’re going to convert that. Those dollars into your traditional account are received by traditional account, convert over dropping into your Roth. You actually have two accounts with us. You happy to do that? But we have an all inclusive one account app package to pull off for you and then we’ll help get the transfer. And it’s going to come in your traditional.
Mark Kohler: To make sure that the money is the money is there. And step five, I’m off to the races I’ve invested. We actually save a step.
Mat Sorensen: Now, let me say on that transfers, where is the the direct rollover from a 401k, whether it’s an old employer or somewhere you worked out, those ones do take a week or two to get there. And it’s just us. Like I said, we’re just waiting for them to frickin throw the ball and receive. The transfers, though, usually happen within three to five business days. So if you’re at TD Ameritrade now, there are some places and I will say acorns is one that takes a long time. Yeah. Also LPL Financial, there’s a few places out there that seem to take a couple weeks to just know that you may have you have frankly, if you have a financial advisor, it usually takes a long time because they have to approve it and they’re not. There’s there’s an extra step there. Or if you’re using kind of an online or a fintech company right now, they may be who have cool apps and stuff, but they’re actual backend processing of things is a little antiquated. So so you might have a little delay on those.
Mark Kohler: And there’s so many details to get in here. So I’m going to hold off on convoluting this. But I have a side note. This was a question I literally got yesterday. This was a client that was holding bitcoin. And they said, oh, I want to fund my Roth IRA. And I said, well, if you already have Bitcoin in your personal name, we can get that. It’s your Roth. And he goes, Oh, so I can just move the Bitcoin wallet to wallet. I go, no, no, no, no, no. So here’s my point that I think is good for somebody to know if you’re going to self-direct whatever your IRA is invested in now is going to have to be liquidated because you’ve got to get down to cash. So that could be a step in here, right? You’re going to liquidate all my crap. It could even be cryptocurrency liquidate it. And then I’m going to transfer it over in the form of cash.
Mat Sorensen: Exactly. Yep. Good point. So you will have to log into your account or whatever. Sell everything down to cash before the transfer request for the will of request happen because you want them to send over cash to your Self-directed IRA or crypto IRA at directed. Or whatever account.
Mark Kohler: Yeah, now some people go, oh, I’m going to be taxed on it, no, if you’re in an IRA or a 401k, when you liquidate, you’re not going to be taxed. You’re just moving at the cash. And if you love that stuff, when you get back over to a directed IRA, you can get the brokerage option and say, I want to buy some of that back at the same price I sold for yesterday. All right. So you can reposition yourself on some of the items that you want. You’ve got to keep Lululemon get over here, Self-direct the rest.
Mat Sorensen: Yeah, but here’s another thing is with IRAs, you can always do partial transfers if you’re, like, not, you know, I got half a million over here, but I want to buy a rental for five hundred thousand or I want to send 20 grand to do Crypto. You can just peel off a piece of it. You don’t have to transfer the whole thing. You can still have your IRA at TD Ameritrade or wherever you’re out. You can have your direct self-directed IRA over it direct in your Krypto area directly. Now the old employer 401Ks are the ones that are a little clunky though sometimes, and an old employer 401k or it’s an all or nothing thing. They’re like, you have to fill out the whole thing or you have to leave it all here. We’re not letting you send out a piece of it.
Mark Kohler: You know what? That’s good anyway, right? Get rid of that thing.
Mat Sorensen: You can spend it all over here if you want to move some of it to a TD Ameritrade account or something else or a fidelity on a brokerage account different from what we have, cool we can do a trustee to trustee transfer over to that IRA.
Mark Kohler: On day three.
Mat Sorensen: Yeah. And get them out over here. You want to self-direct so that a little side note on that thousand that can sometimes cause confusion with people so you can just get the whole thing out, we can move it around from here if you want to send to other places.
Mark Kohler: And let me bring closure to my comment just a moment ago. If I may, and I’m sorry I opened that Pandora’s box because. The client yesterday did not have the Bitcoin already in an IRA. They just held it personally. But since I brought it up, let me just highlight this. He would liquidate the Bitcoin. He had to cash in his personal name and then do a contribution of that cash up to the dollar amount that he could contribute right now for 2020 and for 2021. He was a young guy. So that’s six grand for last year, six grand for this year. And he had less than twelve thousand in Bitcoin as a bitcoins value. Yessiree. So he said if you want to get this in your Roth, rip off the Band-Aid, convert cash. Now he’s going to have a capital gain personally because once you convert cash with Bitcoin, you got to pay the tax on any appreciation. And then but I said rip the Band-Aid off, pay some tax on the appreciation. You’re not you’re in a lower income bracket right now. And if you’re expecting Bitcoin to do what some people think it’s going to do, this is, again, the time to get it in the Roth and never pay tax again. It was like, oh, my gosh. So he would open a crypto Roth IRA to receive that cash of people with rental property. Go buy what? My rental property in my IRA? No, you’re going to have to sell the rental property and go buy a new rental property in your IRA. You can’t just take a hard asset. It contributed to a Roth IRA or a traditional IRA. I’ve got to get it down to cash to do that or those fair points. Mat. I just want to know some people may have gone. Oh yeah, yeah. Mark brought up this other track, but that’s a way that’s good.
Mat Sorensen: That’s I think that’s called closing the loop. I think you close the loop on that.
Mark Kohler: Well, thank you. That’s your first compliment you gave me today. You know, I meant a lot, but yeah, it’s been really I got
Mat Sorensen: A lot more don’t your worry. I got to you know, I don’t want to get a big head
Mark Kohler: Mat doesn’t want me to get a big head with me. That’s what he’s doing. He’s doing it
Mat Sorensen: Out and does you know,
Mark Kohler: Don’t do me any other favors. Mat just appreciate you worry about me, but
Mat Sorensen: Ok, let’s hit just a couple other notes, make a couple there. No, there’s more. Yeah. If it was hey, it’s the same thing. Trustee to Trustee transfer. Yes. They trustee to trustee transfer. Inherited IRA trustee to trustee transfer. OK, so whatever your account you already have we just want to do a trustee to trustee transfer. All you’re doing is you’re changing. Who’s the custodian you want from Morgan Stanley to Merrill Lynch, Charles Schwab to, you know, ETrade, whatever the same. You’re just changing the provider of that. Now, again, like Mark noted, we want to get to cash first. So you want to go into cash and then the cash will get transferred over to your account of similar type at directed IRA, whether it’s the Self-directed HSA or Crypto HSA or SELF-DIRECTED SEP IRA or crypto SEP IRA. That’s the skinny on them.
Mark Kohler: I’m going to. I created a track for those of you on YouTube were able to see because Track four is not going to have the Roth conversion option, because if you’re doing a trustee to trustee transfer with an HSA or a Coverdale, the educational IRA, there’s not this option to convert it to Roth. You’re just going to go straight into that new type of account. So that won’t even be a faster protocol. No, but I’m going to insert in there up between step two and three a liquidation point that if you’re going to do this. Oftentimes you’re going to have to give a sell order to someone to just say sell everything, put it in cash, which would be a tax neutral process. OK, well, I think we’ve got it. So as John Candy would say, maybe say vacation, sorry, folks Parks closed or told to get the podcast. Podcast is now closed. We’re done. We got you to Walley World. You’re there. But guess what? The park is open. Yeah. There for you to play. Have a have a good old time Mat.
Mat Sorensen: Can I. I’ll just get my favorite John Candy quote. He’s actually not the one saying it. He’s on and the person receiving this.
Mark Kohler: Ok, ok. I guess the movie.
Mat Sorensen: Ok, all right. I’ve got to get to
Mark Kohler: The great outdoors but after. Oh you’re giving me a hint. Oh this is great outdoors.
Mat Sorensen: It is great.
Mark Kohler: I knew it right there. So you gave it away. I was going to say the planes, trains and automobiles. OK, great outdoors. What was the one where he babysat for it was.
Mat Sorensen: Oh yeah. If you don’t tell mom the babysitter’s dad or something like that or. No, no, it was Uncle Buck.
Mark Kohler: Uncle Buck. Yeah. But I loved Uncle Buck when he given that teenage girl a hard time. Oh man. Those are some sweet lines. Caulkins First main role.
Mat Sorensen: Ok, so the line.
Mark Kohler: Ok, great outdoors, great
Mat Sorensen: Outdoors, Dan Aykroyd to lose the cool, you know, the cool slick uncle. Yeah, it says in Santa John Candy’s kids, if you want to go on a pontoon boat with your dad or you want to go in, suck my wake with Uncle Roman my way because it’s suck my wake.
Mark Kohler: All right. You know what’s funny? I’m not kidding. Last night, my wife and I were flipping around like Encore and Showtime are all just trying to find something to watch last night. And we ended up with what about Bob, which is classic so good, but great outdoors was on and it was the water skiing scene. Oh, they said they get on the speed boat with Dan Aykroyd and John Kampeas behind him with the. And so that’s so weird that you would quote that, because that’s what I saw that last night, was that it was just on for about 30 seconds. I was like, John Candy, this guy is so good. I go shout out, OK, well, everybody take us out. Mr. Sorensen, the brand of the show,
Mat Sorensen: Thanks for hanging in there. A little tip here, a little plug, I should say. Not a tip. The self-directedIRA summit. You’re not listening. You like Self-direct and stuff. You should come to the SELF-DIRECT summit. Yes. Go to SDIRASummit.com. It’s April 23rd and 24th. Two full days, Mark and I.
Mark Kohler: Next week. Next week. Yeah. Mat Sorensen is coming up to Idaho. Yeah. Dude I could literally show you Whitney Verify there is snow on the ground. It snowed this morning. It did. I did start. He’s still open. Don’t think so. We did. Those that don’t know Grand Targhee is one of the best kept secrets for skiers in the country. A lot of people feel that way is over the hill from Jackson Hole. Half the price. Great. We’re going to find out what he’s looking right now. Grand Targhee, dude if they’re open, you should come a day early.
Mat Sorensen: Yeah, yeah.
Mark Kohler: It closes. What date of April? Closed the eleventh. Last weekend we lost almost closing date.
Mat Sorensen: Well, anyways, SDIRASummit.com, everyone. It’s only $199. You’ll get the materials it’s recorded. You can watch it over and over again.
Mark Kohler: So one hundred ninety nine.
Mat Sorensen: I know. I’m just I want to make it accessible for everyone.
Mark Kohler: I thought it was more than that. Oh I know that’s a good deal. OK. $199 Mat will be here in the studio. We’re going to, we’re going to change the background from Main Street America to I don’t know and I will give you guys all a little. A little it’s not a spoiler alert, a little teaser teaser. I’m going to have a livestock purchase in my HSA before the summit. I’d say it’s a homage, homage to Yellowstone. And Kevin Costner, I wish I could get Kevin Costner to come on. Yeah, he’s like he looks so good. I don’t know, he looks 10 years younger in Yellowstone. I mean, he just looks great. But in the summit, I’m going to bring my cowboy hat, OK? And we’re going to talk about livestock in an HSA, which people are like what? You can buy cows in an HSA and everybody goes, you can only use the money for health care. I’m like, oh, my gosh, you’re investing your HSA before you pull it out for health care. Oh. Drives me nuts, so people, that is the inside track to the summit, some Kevin Costner, Mark Kohler, the Dutton Kohler Ranch.
Mat Sorensen: Casey, I got to get on that.
Mark Kohler: Caseys good looking, right? RIP Oh, yeah, he’s a stud. So you got to win. You’re going to have to watch at least the first three or four episodes.
Mat Sorensen: Ok, all right. I will I will see what I can do.
Mark Kohler: I can I can maybe line up some horseback riding while you’re here.
Mat Sorensen: I mean, I think we’re going to be working, unfortunately, I mean,
Mark Kohler: Gosh buzz kill Sorensen
Mat Sorensen: I know,
Mark Kohler: Karen, is that from Saturday Night Live?
Mat Sorensen: Everyone.
Mark Kohler: I’m not going to let Mat off. I’m having a hard time getting Everybody to, like, finish the damn show. All right, everybody, we’ll see you next week.