# 37 - Build Your Million-Dollar IRA Power Team: Experts You NEED for Self-Directed Success

[00:00:00] The information contained herein is intended to help the viewer successfully navigate common IRS and Department of Labor requirements to help achieve successful results from their IRA. The information is not intended to replace information from your legal counsel or income tax professional. IRA Club does not offer or sell any investment. All investments have risk. This is the Investor's Row Podcast, powered by the IRA Club. Alternative investing reimagined. Whether you're a seasoned investor or just getting started,

[00:00:27] we're here to empower you to take control of your financial future and unlock the power of your self-directed retirement accounts. Let's get started. Hello, everyone, and welcome back to the Investors Row Podcast. My name is Kasia Baldus, and here today with me is Mandy Drysdale. We're going to talk about your power investment team and why you need to have these people available to really take your self-directed IRA to the next level.

[00:00:52] So thank you so much for being here, Mandy. I'm so glad that you are here and we can chat about this great topic and hopefully our listeners can go back with a little bit of insight on who they should have on their power team. Exciting. This is actually a great topic, so I'm so glad to be here. Well, the first person that I want to start with is going to be the CPA. So oftentimes we talk to our CPA once a year when it's time to do our taxes, and a lot of us might not think about having a CPA on our team when it comes to self-directing.

[00:01:22] Oftentimes our CPAs will help us with contributions to our solo 401ks and IRAs, but our CPA should also be knowledgeable about the self-directed space. So sometimes we hear back from CPAs when we're talking to new clients, and maybe, Mandy, I don't know if you've had this, but the CPA might not really fully understand the ins and outs of a self-directed IRA.

[00:01:47] They can say things like, this is not allowed, or my client is contributing to their 401k at work. They cannot contribute to their IRA. So a lot of CPAs are not well-versed in the self-directed space. I don't know if, Mandy, if you've had any of your clients tell you some of these things. Yes. Yep. Yep. And they always want to double check and say, is this right? Does this work? And those kinds of things.

[00:02:13] But it's important to find somebody that you can actually rely on and knows what they're talking about and is familiar with this space for sure. Absolutely. Yeah. So some of the questions you might want to ask is, number one, just be straightforward. Have you worked with clients that use self-directed IRA accounts or self-directed solo 401ks? If they are a little bit hesitant or they're maybe not giving you a clear answer, that could be just a little red flag that you might not want to work with that CPA.

[00:02:41] The other thing you might want to ask them is, have you dealt with UBIT and different taxes that could come up if you are investing in certain syndications and things like that. So using the term self-directed, alternative investments, UBIT, prohibited transactions, just asking them those three questions. Do you work with clients? Have you worked with clients in the past?

[00:03:04] I think could be a good gauge is, do I want this to be my CPA if I have self-directed alternative investments? You know, Kasia, what I find is that CPAs are the numbers guys and they're not super proactive. That's the piece that I find so interesting. And so a lot of times they'll be like, you know, they're just sitting there thinking exactly.

[00:03:26] They'll answer the question you exactly ask rather than being more thought-provoking and thinking outside the box on how to help clients. So I think some things that come up a lot as well are the Roth conversions, like asking. I think that CPAs should just volunteer that information and they don't. So I think a client needs to be proactive and say, is this a good year to do some Roth conversions? What would this look like in my taxes?

[00:03:53] How can I best go about doing this? And I always tell my clients too, I said, be pushy. Ask those questions because a lot of times your CPA will be great in terms of figuring out your numbers and what you're going to have to pay in taxes, but they aren't necessarily trying to help you get to the spot that you need to. So along with all those other questions that you mentioned, Kasia, which I also say to my clients full-time, like you guys got to talk to them about the self-directed, the UBIT taxes, those things.

[00:04:22] They also need to be proactive with those Roth conversions because like we know, Roth is liquid gold. We all need it as much and as fast as we can, but we want to make sure we're doing it strategically so it doesn't hit us so hard between the eyeballs. Yeah, that's a great point. So kind of piggybacking off of that is going to be just making sure that your CPA is also, it could be your tax advisor.

[00:04:47] Like you said, we typically will do taxes face-to-face with a person and hopefully that sets them apart from doing your taxes on TurboTax because you can just plug those numbers in, right? And so hopefully you're paying a little bit extra to have someone there, like you mentioned, guiding you and looking at your financial wellness and looking at the long-term picture.

[00:05:12] Like you said, does it make sense to do a Roth conversion this year, next year, in 10 years, or maybe never? But hopefully that person can, like you mentioned, Mandy, just look at the big picture, look at your goals. And of course, the numbers are the most important, but also hopefully they're listening to you and really taking a bigger look at your financial situation. And hopefully your tax advisor is also really sort of utilizing all of the benefits of the self-directed IRA

[00:05:42] and helping you and guiding you in making certain decisions based on the tax code, right? Hopefully they're well-versed in the tax code. And you might know a couple of things, the differences between a Roth and a traditional, but I hope that your CPA and tax advisor is just really well-versed on the ins and outs and all of the benefits of these great accounts. And you know, that's so funny because I think a lot of our clients think that the CPA

[00:06:08] and the tax advisor need to be the same person and they don't necessarily. Having that extra person on your power team saying, wait a minute, I have a CPA that's going to run my numbers, but having somebody to look for those strategic opportunities as we move forward is so important. So, you know, and I think sometimes they can be the same person, but a lot of times you need the tax advisor separate from the CPA and that can be so important. 110%, yes. CPA typically will work.

[00:06:38] In that year, right? The year that we're doing our taxes and then the tax advisor will look long-term. So, yeah, we need both. We need the tax year we're filing and then hopefully our future. The next person is the attorney. So, this one's fun. Oftentimes, clients will ask us legal questions and ask for legal advice. The two that come to mind is if our client is setting up a checkbook IRA,

[00:07:07] which we can do here at IRA Club. And the other one is going to be if they're doing private lending. So, if you have a self-directed IRA account and you'd like to lend money out of that account as a private loan, as an IOU. So, oftentimes our clients will ask us, well, what should the paperwork say? What kind of agreement should I draft up? And the answer is you need to work with a local attorney.

[00:07:35] So, if you're making a loan, find an attorney that is going to be living in that county. If you're purchasing real estate, same thing. Making sure that you're working with a real estate attorney. Because if worst case scenario happens and something unfortunate does happen, you want to make sure that you have that attorney there. And we want to have everything set up correctly from the very beginning, just in case something were to happen in the future.

[00:08:05] Absolutely. Absolutely. And I think it's really important. And you mentioned it earlier. Like, have they had any encounters with prohibited transactions? Have they dealt with anything in this world? Have they done these kinds of loans before? Have they looked into those kinds of pieces before? And that can be huge just to see if they have any experience. Because there are ones out there that have. So, if you do a little bit of interviewing, the first person that comes along doesn't have to be the one that you work with, right?

[00:08:33] You get to have the choice on who's in your power team. And so, doing those questioning and asking them, hey, what have you done? What is your experience? Can be so helpful in getting those power people put in place. Yeah. And hopefully it's someone that you don't ever have to talk to, aside from just setting things up correctly in the first place. So, hopefully they'll help you draft your documents, and your investment goes smoothly, your IRA gets paid back.

[00:09:01] And hopefully it's a one and done. But then if for some reason, worst case scenario, if things were to go sort of south with the investment, you have that person to go back to and say, hey, do you remember how five years ago we set this up? Well, now I need your help again. But then you're not scrambling to try to do things when it might be a little bit too late. Right. Absolutely. The next person is going to be us. It's going to be your administrator. So, your self-directed IRA administrator,

[00:09:30] or your custodian, if some of you are using custodians. So, IRA Club, we're an admin, right? We're here to set up your account. Besides just setting up the account, Mandy, what else, you know, what do we provide for our clients and our listeners? I think the number one thing you need is somebody that you can rely on and that you can call and ask questions. That's my favorite part about us, and one of the reasons I chose to work at this company,

[00:10:00] because we are not a call center. So, when you call, you're going to get a human, and I always joke, a human that you can actually understand, that's going to be able to answer those questions. And I always tell my clients it's very front-loaded, right? This isn't a hard process. This isn't, you know, super intricate and crazy, but it's really front-loaded. You're going to have a lot of questions at the beginning. You're going to need some support as you get the investment established and all the pieces get moved over, right? We're going to open the account.

[00:10:30] We're going to move the funds over, and then we're going to take those funds and invest them. And that's kind of like a good two to three weeks where you're going to need somebody in your back pocket that you can call and say, hey, does this look right? Or what do I need to do now? Where are we at? And that's really my favorite part about this team is because not only are you going to work with my team on the onboarding to get established, you're going to have a client care representative that's there for you that you can call and be like, hey, Devin, what can I, you know, where am I at? What do I need right now?

[00:10:59] And she's going to be able to look and talk to our team. The other thing I really love about the IRA Club is that we're not this huge corporate office. I mean, we're still small enough that like we can look across the room or, you know, jump on teams and be like, hey, I'm working with so-and-so. And they're like, oh yeah, I talked to her last week. We just were familiar with our clients and we know what's happening in their individual situations. And we can support them through this, the first part of the process. Yeah, we do.

[00:11:26] I think we do a good job of putting ourselves in our client's shoe, knowing that this is new for a lot of people. Only three to 4% of Americans self-direct. And so we know that you might have questions and we're ready for it, right? We make ourselves available, whether that's in person or on the phone or like you mentioned through, you know, through email or virtual calls. And same thing with our team. We're here together, right? So we can sort of talk about where the client is in the process.

[00:11:56] And we've been doing this since 2008. So it's been a long time and we have a lot of employees here that have been that long. So I think that's really, it's really great that our clients have a place to call and hopefully a few people that they know by name and then they can ask for if needed. One thing that I do want to just make sure our listeners know is the difference between IRA Club and Fidelity, Vanguard, Schwab,

[00:12:26] the classic brokerage firm. Because I remember a few years ago, I got an email from one of the big companies and it said, your IRA could be self-directed. And I had to do a double take. I was like, oh, really? It's a self-directed law? But that terminology, self-directed does not mean alternative assets. And I'm sure, Mandy, when you talk to people at events, on the phone, do they sometimes say,

[00:12:54] well, I think my account is self-directed. Do you get that at all? Absolutely. I get that all the time. Well, I have a self-directed Schwab account. That's the one I hear it from the most. And I love that because Schwab's being sneaky. You know that Schwab's just being sneaky about that because the word self-direct is technically a marketing term and it's not a official IRS label to any of the accounts that we have. It's just a marketing term. And what we,

[00:13:24] so I usually say, yeah, if your Schwab self-directed account means you get to pick your stocks, bonds, and mutual funds, it doesn't mean you get to pick any alternatives. I said, if you call Schwab and I said, here's the test, call Schwab and say, hey, I want to buy this house on 123 Green Street. What do you think they're going to say? And Schwab is for, I mean, 100 times over going to say, sorry, you can't do that. But let me show you a real estate ETF or let me show you something that we can get into. And I just have to sit back and be like,

[00:13:53] oh yeah, this is their way of trying to be sneaky to keep their clients from leaving or even being able to realize that this whole world is out there, right? That they can put real estate or private lending or crypto or gold and silver inside of a retirement account. And so we want to make sure we understand that the word self-directed is a marketing term and that the IRA club will allow you to invest in anything that is compliant by the IRS, right?

[00:14:22] Schwab and Fidelity and Vanguard, they're going to limit you still to just the stock market, but we're going to let you do anything that's compliant with the IRS. Absolutely. Yes. Right. So it's important to get that confirmation. And if you are with one of the big companies, the classic brokerage firms, unfortunately, we can save you a little bit of time. You are not going to be able to do alternative investments unless you're like their VIP, you know, billionaire client.

[00:14:51] Then they might try to help you out. But for just the average person, you would have to transfer your funds out and work with a company like IRA Club where we can make sure that investment is going to happen. And in a compliant way, in a tax advantaged way. So yeah, we can, you know, assist with that. So right. The administrator is needed in order to make that investment happen. I was going to say, I have to do a shout out to Carlos

[00:15:20] because, and his whole team, like that's the other powerful piece at the IRA Club is, and I joke that he's our walking encyclopedia. That man is so good at making sure he's up to date on all of the tax codes and all of the, sorry, not the tax codes. He's up on all the IRS compliance regulations. And so it's so amazing that we can rely on him to be able to recognize if it's a prohibited transaction or not. And he is diligent and he works hard. And so I always say,

[00:15:49] you've got, we're in good hands because we've got Carlos and his whole team looking out to make sure we're, we're staying on the straight and narrow and not doing anything that's prohibited transaction. Yeah. And the way that we stay on the straight and narrow is I'm very honored that IRA Club is part of Rita. And what we do is we are able to go to DC once or twice a year and we get to hear about all of the changes coming, the legislative changes and, you know,

[00:16:18] the various tax codes and different things that are happening. So we get to come back and share that with our team and train our team. And obviously we're, you know, receiving all of the updates and notifications, but being part of Rita is crucial. So if you are looking for a self-directed IRA administrator custodian, I think that's one of the questions to ask is, are you part of Rita? Because there are companies that have been around for 30 years and some companies have been around for two,

[00:16:48] right? And they might allow you to set up a self-directed IRA or a checkbook IRA. But again, how well-versed is the team? How knowledgeable are they? You know, if you don't have that power team set up yet, like we're talking about, are they going to be able to answer basic questions that you might have before you even consider going into the self-directed space? One thing that we offer is a free investment review, right? So if you are a client of ours

[00:17:17] and you're thinking about doing an investment, call up Carlos, call up the team, send us a few documents and they can do a quick, you know, glance at it and let you know this is a prohibited transaction, this is not. So we allow that because we know this is a big decision for our clients and so we want to make sure we get some eyes on it beforehand if you'd like us to. The other person is going to be the financial advisor. So maybe Mandy, I'll let you take over that

[00:17:47] and tell us a little bit about your background and what is the difference again between your CPA, attorney and a financial advisor. Yeah. Yeah. So I was a former financial advisor. I joke, I do joke that I'm a recovering financial advisor because I think a lot of times financial advisors, they're very important and you need to be able to recognize and I think this is a great place to say that you're going to get advice

[00:18:16] and you're going to get a power team and you're going to get a people in your corner but ultimately those decisions need to be yours, right? You're going to hear maybe from one advisor and then you're going to hear from maybe another advisor and they might have conflicting information for you and it doesn't mean that it's wrong. It just is that they're advising you to the best of their ability and ultimately you get to make those decisions and it's important to recognize that because here's the misconception

[00:18:46] when it comes to financial advisors is that they are hired even an independent one is limited to what they can give advice for and so when I was a financial advisor the company that I worked for I could only sell in that realm so I could say this is the best investment from what I have to pick from, right? and yes, I was you know, I took my ethics course and I was doing with the best of my ability for each client

[00:19:14] but I wasn't looking outside of what that umbrella or that bubble was to say, you know what? Putting a little real estate inside your retirement account could actually benefit you. I was just limited to that. I think that's a misconception that needs to be clarified because there's no way one person, any financial advisor could have even an understanding of every investment possibility out there and so being able to get

[00:19:43] one, understand that they're limited to what they know, right? They only understand what's inside their bubble and it's up to you. Ultimately, that's your retirement money. That's your, you know, your nest egg and it needs to be super analytical and thought out and good decisions to make so going to a financial advisor and having them in your back pocket to ask advice is amazing but also recognizing that the financial advisors do not even know this world exists.

[00:20:13] That's the biggest thing that I hear clients talk about is they'll say, my financial advisor said self-directing is risky and it's not risky. We need to understand that the self-directed IRA is just an IRA which is a federal product. There's no risk in that. The IRA that you open here and the IRA that you would open maybe at Fidelity is the exact same federal product is just what you choose to invest in and so those financial advisors are trying to do their best by you

[00:20:42] but if they don't understand that this world even exists, a lot of times they're going to steer you away. So I think, you know, asking a financial advisor, you know, have they had any experience in the self-directed realm? Do they understand that it even exists? Do they know that an IRA can invest in real estate and other things? Is a super important question because on the flip side, in fact, my cousin is a financial advisor and because he and I have started talking, he's like, you know what,

[00:21:11] I can now advise them that they should maybe look at some other alternative investments to get their portfolio diversified and balanced and not so heavy in one area. And so I think the financial advisors are out there. Again, it's just, do they even know this world exists and how much experience have they had with it? Yeah, very well, very well said. And I think another thing is hopefully your financial advisor is helping you, again, balance that portfolio and diversify it and based on your age, right?

[00:21:41] As someone who's working, a financial advisor that's working with someone in their late 20s, that conversation hopefully looks different than if they work with someone in their late 50s and 60s. So diversification, catering to, again, your goals, your goals for retirement and like you said, they, hopefully they're not steering you in the wrong path, but are they looking at the big picture and all the different roads you could go to

[00:22:10] that would lead towards your desired retirement? Yeah. And that's so true too because your risk tolerance and your portfolio changes as you age, right? What we're looking for in our 20s and then when we have kids and then when we're getting too close to retirement and then when we're in retirement, like are we working with a capable individual or a firm that can adjust as we grow because we're not the same person we were in our 20s. Thank goodness, right?

[00:22:40] Like thank goodness I'm not in my 20s, but at the same time I need somebody who's going to help me progress through my life and get what I need taken care of, taken care of. So yeah, for sure. Well said. Okay, we got two more seats at our investment table. So the second to last person that you might want to consider is an estate planner. And I think this we can keep pretty short. Dennis and I did a podcast not too long ago that talked about

[00:23:09] the importance of setting up your beneficiaries and checking your beneficiaries, right? Because like you mentioned, we change, things change, situations change. So we might want to go back and look at our accounts and see who we listed as the beneficiary. But the estate planner, and oftentimes, you know, we see this too late. And the last thing you want to do is when you're dealing with a loved one's death is all of the administrative work and changes.

[00:23:38] So really working with an estate planner that can help you see what the future would look like for your beneficiaries, right? If I were to pass away and if I leave this property that is in my IRA, what's going to happen, right? Who's going to get this property? So I don't think it needs to be a very long conversation, but just making sure that your estate planner is helping you determine the way to set things up, right?

[00:24:07] Like what do we do with a trust and things like that. So, again, another person that you might want to have on your team. Absolutely. And it's really about peace of mind, right? I mean, you want to just be able to know that when something happens, your loved ones are taken care of and that they're, you know, at the right stage for sure. I mean, and you think about it when your kids are little, they're going to need something different than when they're teenagers, than when they're adults and being able

[00:24:36] to kind of support them. And, you know, I had to think about that when my babies were little. I needed daycare and diapers, right? And when the kids are now, my kids are, well, gosh, they're in their 20s and then in college, they're going to need more. They're not going to need that support so they can take, maybe take cash, but I want that cash to continue to grow. Like if I passed away and handed my son a pile of cash, I think he might buy cars and I don't want him to buy cars, you know?

[00:25:05] So thinking that through, thinking about the trust and being able to set them up for success as well is, it really is about peace of mind and being able to fall asleep at night and be comfortable and happy with your, with what you've got in your portfolio. And last but not least is going to be your real estate team. So that could be a real estate agent, if you have a property, property management company, your contractors, everyone that's going to be working on the properties.

[00:25:34] So one thing that our clients and listeners might not realize is that there are just a few prohibited transactions when it comes to the self-directed IRA. So number one, you cannot do any business with yourself. So no self-dealing. If I were to purchase a property within my IRA, I cannot live in that property, my spouse, my son, my parents, and grandchildren. The other thing is you cannot invest in life insurance, an S-corp, and collectibles. So wine, vintage art,

[00:26:04] things like that. But anything else you could do with the IRA and you could be a part of the process. So if you are looking at real estate, for example, you could drive to the property, you can go inside and look at it, you can pick the wall colors, you could hire everyone that's going to be working on that house, but you cannot do any physical work on that property. So with your retirement funds, the investment has to be

[00:26:33] at arm's length, which I think is a good thing, right? Because if you are going to be making investments for your future, having it be hands-off and not active, I think that's a good thing, right? Because you're not going to be using that money right away, hopefully. So hiring those individuals that are going to take care of the property that hopefully the real estate agent is going to find you a property

[00:27:02] with a good ROI, right? So having those real estate professionals is key. And you deal with a lot of clients that purchase real estate. I don't know, Mandy, if you have any other words of wisdom when selecting these folks. Yeah, and I think you said that so well. And I always like to add it's like the difference between sweat equity and administrative equity, right? Like I can't pick up a hammer. That joke is you can't even

[00:27:31] change a light bulb, you know? That's the funny part about it. And that's that sweat equity. So just like you said, Kasha, like you can pick the wall colors, but you can't pick up the paintbrush and paint it. And so finding a good, reliable real estate agent, yes, to pick the property for sure. And then you even said it, so well. The beginning was the property management company that's going to actually be on site collecting the rent, those kinds of things. And that's exactly what you said. So nice. Like I want to step back.

[00:28:01] I want this to be passive. I want to be able to, just like I would watch the stock market, I want to watch this house, but I don't want to be actively doing anything in there. I want that money to just kind of keep coming in. And so again, like we said at the beginning, this is front loaded, right? We have to pick the property, we need to do our due diligence, we need to make sure we have good property management company involved, and then we want to sit back and let it be passive. And that's what this is intended for. So super important to make sure that

[00:28:30] you're able to do those kinds of things. Absolutely. Yeah, and just also just, you know, hopefully they're helping you generate that good ROI, right? These properties are investment properties, they're hands off. I might like a beige wall color, but if the gallon of white is a little bit cheaper, maybe let's go white, right? So just making sure everything is still up to code and obviously a nice, safe, warm place for people to reside in.

[00:28:59] But just remember you're not going to be living in that property because you can't. So just making sure that when you're doing the numbers, they come back with hopefully a nice double-digit increase on your investment. Hopefully. So yeah, I think that we could sum this up. I know that this might be a little bit overwhelming because there are a lot of people, right? We said the CPA, the tax advisor, the

[00:29:29] real estate folks, estate planning, financial advisor. But I think if really if you were to start somewhere, I think the CPA would be helpful, right? And hopefully they are well-versed in just different areas of self-directing, right? And if you are purchasing real estate within your IRA, that real estate team is also crucial, right? Because again, it is a prohibited transaction for you to do any sort of work on that property.

[00:29:59] So just I think those two are the most important. And obviously, if you're able to, getting that tax advice and getting that financial advice and planning your estate is also very important. It might be a lot of work at first, but then hopefully hands-off for a few years and your investment will continue to grow. So, you know, just I think doing basic research at first and asking those questions and really explaining

[00:30:28] to your team what it is that you're doing and what your goals are will hopefully allow them to take you to the next level with your retirement. Absolutely. So well said. And the other piece, too, is recognizing the constraints of each individual and being able to say that I, you know, I'm going to get tax advice here, but tax planning here. And I recognize that if I ask my financial advisor

[00:30:57] about tax advice, that financial advisor might have some for me, but is that your best person to get the advice from? Or if I go to my estate planner and ask if this is a good house, and I know I'm kind of being silly there, but recognizing that every expert is going to give you advice for their area and having a team of people so that I can say, hey, you know, to my administrator, is this a prohibited transaction? It's very different than is this house going to

[00:31:26] turn a good ROI? Am I going to make some money off of it? Or is this the, you know, should I set up a trust now or not? You know, I got my mom was just asking me, should I go to my I'm like, well, you know, I have experience because I work with people who have trust, but I'm not an estate planner. Let's get you connected with the correct person. And that's so important to recognize who's on your team, what their role is. And then, again, people really want someone to tell them what to do. And I get that

[00:31:56] and I recognize that you want to be able to take that advice. It's so important to take that advice, but ultimately the decision is yours, right? You have to make the decision on what's the best investment, what's the best CPA, whose advice should you take, because they're not all-knowing and it's not 100% guaranteed, right? You need to do your research and ultimately take that responsibility. So just a few words of advice, but it's been so fun to be here, Kasia Baldus. I love this

[00:32:26] option. We will have you back very soon. Yeah, this is so fun. Mandy's very well-versed and she speaks to thousands of clients and she travels all over the country, so just getting her insight is great. So speaking of the power team, she's your first go-to to have all your questions answered and set up an account if you don't really have one. Well, thank you again. We will have you back very soon. I'm excited to do more podcasts with you.

[00:32:55] And for those of you that are listening, thank you for joining us. And if you would like more information and just if you wanted to connect with us, visit our website, iraclub.com slash podcasts, where you can find this podcast and our previous podcasts and lots of great information and just a way to connect with us. So I will see you on the next episode. Thanks so much.