Download Our Free Guide to Self Directed IRAs!

Welcome back to another episode of the IRA Cafe podcast! In this insightful solo episode, Kyle Moody, Business Development Manager at American IRA, takes center stage to share his expertise on the broad, and often underexplored, world of self-directed IRAs.

Kyle draws on his extensive experience working with investors to reveal how self-directed retirement accounts offer far more flexibility and opportunity than many realize. He discusses how most people discover self-directed IRAs through referrals or specific investment programs and often mistakenly believe they’re limited to just one asset class.

Kyle breaks down the major types of self-directed retirement accounts available, including traditional and Roth IRAs, HSAs, ESAs, and more, highlighting the various asset classes like real estate, private lending, private equity, and even cryptocurrency that can be included in a truly diversified portfolio.

You'll learn about the practical steps to open, fund, and use a self-directed IRA, alongside crucial IRS guidelines and restrictions to avoid pitfalls like self-dealing or sweat equity. Kyle also shines a light on creative strategies such as using an LLC for alternative assets that custodians can’t hold directly, and describes the powerful tax advantages of investing through retirement accounts. Drawing relatable parallels between investing and everyday discoveries, he encourages listeners to look beyond the obvious and explore the full range of possibilities available to them.

Key takeaways:

1. Self-directed IRAs offer the flexibility to invest in a diverse range of asset classes beyond traditional stocks, bonds, and mutual funds, including real estate, private lending, private equity, and cryptocurrency through specialized structures like LLCs.
2. Opening and funding a self-directed IRA can be done via rollovers, transfers, or contributions from various types of retirement accounts, and the structure allows for tax-deferred or tax-free growth depending on the account type.
3. Real estate and private lending are the two most popular investments among self-directed IRA holders, but many investors don’t realize these options are available to them until they start a conversation with an expert.
4. Strict IRS regulations require all investments to be arm’s-length meaning no personal use of properties or direct transactions with certain family members or entities you control and prohibit self-dealing and sweat equity in retirement account properties.
5. Creative options like partnering, non-recourse loans, or the use of LLCs for holding alternative assets increase the ways investors can leverage their retirement funds while maintaining compliance and maximizing tax benefits.

Whether you’re a seasoned investor or just beginning your journey into self-directed IRAs, this episode is packed with practical advice and encouragement to help you unlock new strategies, diversify your portfolio, and achieve your financial goals. Don’t miss Kyle’s expert guidance and discover how you can take full control of your retirement investing with American IRA!

Schedule a free consultation with our team today!

Today inside the IRA Cafe, I sit down with you to expand your knowledge on maybe the different retirement accounts that you didn't know that you could use in a self-directed format. Did you know that you can do multiple types of asset classes only when you thought that you were opening up a self-directed IRA to do one type of investment? It's a broad world out there, and I can't wait to tell you all about it today. Come on into the cafe. Well, hi there again, everyone, and welcome inside to the IRA Cafe for another small presentation on just some things that you might want to know when it comes to investing specifically with a self-directed IRA. I'm your host, Kyle Moody. I'm the Business Development Manager here at American IRA. And if you have already started your investing with a self-directed IRA with us, We thank you so much for your continued business and your continued support. We're glad to be an advocate and really an asset for you as you are moving along in your investing objectives.

For those of you out there who have heard a little bit about self-direction or who may have come to us for one reason or another and you want to learn more, and if you have yet to open up your account, well, let this be the day. And if you would like to get in touch with me either after this show or after you have come back to it just to get more information, you are always able to get ahold of me at area code 828-412-8123. And you can email me directly if that's easier for you so that you can kind of bullet point out some questions. It'd be my pleasure to read that and get back to you instantly. And that is [email protected]. That's [email protected]. So how about big picture? You can also visit us at www.americanira.com. And if you are able to watch, you see that on your screen there, and then you see me scrolling up.

And really, this is going to tell you all about the different account types that you can have that are self-directed. Also, the asset classes that you can invest in, some frequently asked questions. We have a lot of our older blogs out there, our newer blogs out there, old articles. We are known as the education leader when it comes to self-directed retirement accounts. We want you to have all of the best information from the company who pours everything it has into making sure that you have the best information that you can use. Now, whether you need to get together and speak with your CPA or an attorney or whatever, but Whatever it takes for you to build your team so that you can invest correctly with funds outside of regular stocks, bonds, and mutual funds. Okay? And that's really what self-direction is. It is the ability for you to invest in something that is not going to be stocks, bonds, or mutual funds related, rather more of a creative type investing into the non-traditional assets, if you will.

Now, as you've always seen, or most of the time seen, I'm usually bringing a guest on and interviewing them. And today, this is actually just going to be some follow-up information, remedial information, me bringing you some things to where— so this is what you've got. You've got me for today. And I started thinking about this. Really, what is something out there that I would like our clients to know? If you're not our client yet, what are some things that you need to know? And by that, I mean this. More times than not, you are going to come to American IRA because you were referred to us somehow. You knew that somebody was doing a type of investing with retirement dollars and you're like, hey, that actually sounds pretty cool. I'd like to get into that.

And they told you to give us a call over here at American IRA. Maybe you are working with a certain team or a type of school a type of program that you have bought into. And so they say, hey, you know, one of the things that you can do is that instead of investing directly with your bank dollars or your checkbook or what have you, that you can actually— did you know you can invest with your retirement account? And, you know, opens up new avenues for you. And you give me a call and we get you all set up on the account and you get that funded. Where I'm actually going with this is most people who are coming through like that think that that's the only thing they can do with their self-directed IRA when they are investing with us. You know, they come in, hey, I'm looking to get into this capital fundraise. Okay, great. Hey, I'm looking to invest in crypto in this certain program that I'm in.

directed me over to you. Okay, you know everything about that program. I'm educating you on how you're going to be able to open up an account and use your self-directed IRA to invest through that program. And what I've started seeing over time is that people might not realize really everything they can do out there with their self-directed IRA. And the reason I bring this up is because This is so simple for someone on my end to think about of, oh well, hey, this is the number one retirement vehicle, uh, or a retirement asset out there that someone uses their self-directed IRA for, and it's going to be real estate. The second most important, uh, thing, or the second most popular, if you will, asset class that someone is going to invest in with their self-directed retirement account is going to be private lending. Third is then going to be private equity investment, and then, you know, down the list and on, on and on. So where somebody might call me for crypto, or where somebody might call me for doing a capital raise investment, they might not actually know that the number one asset class that across the industry someone's going to use to invest with their self-directed retirement funds is in fact real estate.

And I can't tell you how many times over the past decade that people will say, and this is just in conversation, they might say, oh, well, wait a minute. I know a little bit about real estate. My spouse and I have done some real estate investing in the past. You mean to tell me I can actually do that with my IRA? You mean to tell me that I can actually use my Roth account to private lend money out to people? And the answer is 1,000% yes. So as I was kind of thinking about this morning, putting some notes together to share with you of what might be beneficial to you, is that I've been doing this for a long time. I have these phone conversations every single day, every single week, every single month. For years and years on end. I talk here with all of you.

I feel like you're allowing me in your car ride to and from, or in your kitchen while you're cooking at night, and you're listening to these certain things. So for a lot of you, you've heard my voice talk about a lot of things, bring guests on that really help you in your investment objectives, but maybe you didn't hear it all. or know everything that you can do. And so that's just what I wanted to do, introduce you to some things that have always been out there, uh, that if this is something that interests you, well, guess what? You can get started investing this way today. You can give me a call. Again, Kyle Moody, um, you know, Business Development Manager here at American IRA, 828-412-8123. or [email protected]. So let's go ahead and get started with your new account today.

And before then, let's just go ahead and take a few minutes to look, as I had mentioned, at some of the asset classes that are out there. For example, this is what I normally see. And by the way, I want to go ahead and apologize in advance if you can tell the difference in my voice. I think I'm coming down with something. Yeah, we're coming out of some about 13, 14 days in a row of in the Mid to high 90s. And last night, found myself in the 60s on a 2-hour-long drive back after watching my son perform at a halftime show of a football game. So late evening, but I think something's creeping in there. So if you see me sipping the tea, I do apologize.

I guess we all need to go ahead and get ready for that time of year, right? So someone comes to me and they're going to be doing crypto investing, which takes a certain arm's length that is needed on that. There's a lot of moving parts for that. But then just through conversations, someone can say, hey, if I'm not really doing crypto at the moment, or if this is doing well, is that all I can use my funds for? What are some other things out there that I can invest with when using a self-directed retirement account? I'll say, well, the 2 most popular things out there are real estate and private lending.

Wow.

Again, like I just mentioned, real estate estate? I can really do that? Absolutely. So I just wanted to give you just a couple of key points when we're talking about real estate. Opening up the retirement account is going to be the same no matter which asset class you're investing with or investing into, and no matter which retirement vehicle you're looking to make that investment with. All right, so for example, if you have A 401 from a previous employer. Okay, if you've got a traditional IRA with a Merrill Lynch, Merrill Edge, Morgan Stanleys of the world out there, Northwestern Mutual, Edward Jones, the list goes on and on. Those types of accounts you are absolutely able to either roll over from a 401 status or transfer over from another like-to-like IRA platform. Okay, um, traditionals, Roths, inherited IRAs, um, believe it or not, spousal IRAs. Does one spouse work, make enough money for both spouses to have the contributions that he or she may make on behalf of both people in the family? And those things have grown.

Coverdells, The ESAs for kids, the education savings account. Is it an HSA? Do you have a high deductible health plan that you're going to use that to qualify for an HSA? Every single one of these types of accounts you can use to invest the way I'm getting ready to tell you here. So you get those accounts open. Again, you think you're going to be doing it for one thing, but then you find out, hey, I can do this with real estate. Well, Kyle, What does that look like? It's simple. You're going to open up the account. You're going to get that account funded by either one of those ways we talked about, a rollover, a transfer. And then if you're still working and you've got earned tax wages, you can still put those funds into your IRA.

$7,500 if you're 49 and under this year, $8,600 for anyone 50 and older. Okay, so those are the 3 ways to get the money into the Well, now I want to be able to use this for a piece of real estate. What do I do? And what kind of real estate is this? Can I live in this property? If it's a vacation rental, can I rent it out for months or weeks on end and then use it for myself? Okay. The thing is, it's always arm's length. This real estate does not belong to you. It will never belong to you as long as it is inside the retirement account. The retirement account is what purchased this. Not you individually.

The retirement account is what holds title deed. That's who's on the HUD statement. Okay, you didn't even sign anything. Rather, it was your custodian that signed on behalf. What you did is direct us on where to send the money the day of closing to the attorney's office so that that property is acquired and now it is held by the trust account.

Okay.

By the custodian. And now it's going to be an investment income-producing property. All right. So this thing is going to be something that what a lot of people are going to do, they're going to get a buy-and-hold property and they're going to use it for rental purposes. Okay. When that rent comes in, instead of you pocketing the money every month, you can't do that because why? It doesn't belong to you. Rather, it belongs to the retirement account. This is another reason why a lot of our clients have chosen property management companies to manage that property.

They're going to take their 10%, let's say, and the net proceeds are going to come back to American IRA where we're going to deposit that into your account where that account is going to grow tax-deferred if it is a traditional account. It's going to grow tax-free if it's a Roth account. Now, granted, if you have that property for years on end and you're young enough, Well, you might as well call it tax-free year after year after year until, you know, if it is a traditional account, until which time you're going to take distributions. Point being is think about doing— if you have done real estate in the past and it's been with your own funds, even funds that you have in an LLC, you know at the end of the year you're still responsible for the taxes, right? Not with a QLAC. when this property is purchased with a self-directed IRA. Okay, because again, everything is remaining in the vacuum of a retirement account, and because of that, that's why there's no taxation. That becomes the instant beauty of the self-directed IRA. Well, Kyle, you know, I, I don't want to do real estate anymore, or it's never really been much of my thing, but You know, I think I could probably lend some money to some folks.

What is that like? Again, the account is established. The account is funded, okay? Now you have a retirement account that has dedicated retirement dollars in there for you to, again, make whatever investment you're looking to make. But let's just say, as an example for private lending, There's a neighbor down the street. They're looking to do really some, some, some upfitting of their property. They're going to update a kitchen, a couple of bathrooms. They might rip the deck off the back of the house. I mean, tell me if you've— if this makes sense, if you've seen these neighbors before. And what if they knew that instead of maybe digging into their own pockets, maybe instead of going to get the bank loan, or if they couldn't dig into their own pockets, But they also didn't want to take a HELOC or something like that, that if they knew that you had money that you would be willing to loan to them, and that could be secured or unsecured, we do either one.

Let's say you secure this up. It's going to be a note drawn up by an attorney. There's going to be the amount, the rate, the terms that all of you have a meeting of the minds on, of Once that money is sent to the attorney's office and that attorney hands those folks the check, now they have become the borrowers and your retirement account has become the bank. And they are going to pay in on the same terms as you all decided. Again, the money's not going to go into your hands. It's not going to go into your pockets. It's going to go into your retirement account because that is actually who the lender is to those borrowers, not you personally. Whatever profit comes back after that note is paid off, guess what? Every single bit of that profit is sitting in that retirement account.

You're not paying a dime in taxes on it. Okay? Again, the beauty of the self-directed IRA. So keep that in mind there. Now let's look at taking things— let's look if you were doing either one of those investments, but then you do find out you're like some of our other folks who have been referred over to us because they want to invest in cryptocurrency. It's getting a lot of press, right? Monies are growing and people seem to be doing quite well with it. Well, Gary, give you another level of investing to show you how the self-directed retirement account works. But sometimes there might be an asset class there that we can't hold directly, and crypto is one of them. There's a couple of asset classes out there that are going to require an added layer, an extra entity, if you will, to be able to make the investment that you want to make.

One is crypto and one is livestock. We can't hold the pigs and the horses and the cattle directly, just like we can't hold the crypto directly. All right, so what that's going to require is another arm's-length type of investment vehicle. It's all going to begin with the self-directed retirement account. Okay, but after that account is established, Now you're going to need to create what's called the IRA-owned LLC. Most people might see it online as the checkbook IRA. Well, what does that really mean and how does that work? How does the flow work? Do I need the LLC first? Do I need the IRA first? How does the money— if Kyle, if you're talking about adding another layer in, how does the money get from my bank account or from Schwab? into that LLC? Can I fund it directly? I'm going to go ahead and lay this out for you. If you are looking to invest in cryptocurrency with American IRA, it's very simple.

You're going to fill out the application just like you would with any of the retirement accounts that we have. Next, you're going to fund that retirement account through, remember, the rollover, the transfer, or your contributions, or really a smattering of all 3. Once those funds are in there, what you're going to do is you are then going to create an LLC. And you're in luck because we have an in-house sister company who can create this LLC for you. And why this LLC is so important that we put together is that, number one, it's all under one umbrella. All the communication is very tight. And we allow our clients to have these LLCs in the state of their choice and then park that, that new business banking account at the banking institution of their choice. Okay.

So maybe as you're doing your— you've sent the paperwork off or you've directed us to send the paperwork off for the transfer, we can go ahead and get that LLC started for you. So as the transfer is taking its Time getting the funds over to us, then at that time too, we're waiting on that LLC to be fully created. And now what you've got is you have that checkbook IRA. And the reason they call it that is because, again, you are not listed as the individual or the single member to that LLC. Rather, your retirement account is the single member. If you think about how you've been doing the investing with the retirement account, buying the real estate, doing the lending, it's the same type of thing, except in this case, the crypto is not going to be the asset that we're going to hold. Quite the contrary, from our perspective, the asset that we're actually holding is the LLC itself. The investment takes place when you direct us to move the money into that LLC.

Okay, so now the LLC is held as the asset by the custodian, New Vision Trust, which we all own together. And then once those funds are in that LLC, we're not privy to what you're doing, uh, investing from there. So again, it's where you want to make sure that whether you're in a program, a class, or whether you, you know, are tight with your tax professional, attorney, what have you, that you're always Making sure that any of the investments that you were making out or from that LLC would be the same type of thing that you would direct us to do in-house from our custodial admin staff. Okay. And so that's kind of how that would work. So I know that I've given you probably a quick breakdown of that, but just remember, it's like this. The LLC is the asset, not the crypto, not anything that you're putting in there. So always remember that everything starts with the retirement account, whether that's going to be the traditional, the Roth, if you're an employer, the SEP, the SIMPLE, if you are an entrepreneur and you've got a solo 401 you want to set up.

Okay. If it's a retirement account out there, we provide them and anyone can open those up with, with certain restrictions. And we can cover that in a separate call with me or an email into me. Okay, but everything begins with the account. You've got to get the account set up, and then you've got to get the account funded. Now, what you are going to do from there, whether you want to invest in real estate directly, whether you want to be a private money lender from your account, or whether you want to create the LLC, move the funds into that LLC, and do your investing from there, All of those avenues are going to allow you to, guess what, invest in something that you might not have known that you could invest in because you may have had tunnel vision coming in that you could only invest in a certain asset class. And that's really what this is about today, is to explain to you that you may have come to us to do crypto and you may have gone ahead and set up that LLC. and now you're doing the crypto.

But guess what? Also inside that LLC, you can put real estate. Also inside of that LLC, you can be a private money lender. You don't want— you just want to save the LLC to do the crypto with? Not a problem. Then you can also set up a multi— A multi-use and unlimited account with us to where the LLC is one of the assets, and then you've got your real estate or note or whatever else over here. Okay, things to consider when you're using these is that, no, like I said earlier, a piece of real estate that you might purchase as a vacation rental, you can't vacate there. Okay, no vacancy for the account owner. You can never even stay one night there. Further, you can't do any work on the property.

It's called sweat equity. So just keep in mind that there are certain gifts, if you will, that the IRS allows you to do with retirement dollars outside of the stock market. It's just that because it's this type of investing apparatus that the IRS has deemed that you are able to use to grow your passive wealth, it does come with certain parameters to it. You can't stay there. You can't work on the property. Oh, and by the way, it's not just you, your spouse, any entities that you control, anyone in your upline to infinity, anyone in your downline and their spouses. You can't loan to your children for them to be able to go out and buy their first home. Okay? You can't, um, you can't buy A vacant lot and then use your, uh, your primary company, uh, to, to grade the land and get it ready for, uh, subdeveloping.

Okay, everything is always going to be arm's length. So just remember this, you can use these accounts for investment purposes only on assets that are always going to be arm's length. Okay. No sweat equity, no self-dealing. Same thing with the LLC. It doesn't matter that it's arm's length there. Even the investments that you're making from the LLC must also be arm's length. As if that's not creative enough, there are some other creative ways, and I'm not going to take the time here to go through those, but this is where you're going to want to give me a call if for some reason you might not have all the funds In the account to be able to make 100% cash purchase or investment from the relevant account or from the relevant LLC.

You know, are there things out there called partnering? Are there things out there called partnering with disqualified and non-disqualified parties? Are there things out there called non-recourse loans that you can get to leverage? Absolutely. Different conversation here all along. I could go on and on about it all day, but it is one thing that if you say, this sounds really interesting and I want to know more, again, don't hesitate to call me. And it's Kyle Moody at American IRA, and my phone number is 828-412-8123, or email me at [email protected]. Be glad to cover all these questions with you and let you know how to unlock the true creativity of everything that you can do with a self-directed IRA with American IRA. And I can't tell you again, over the decade of, of working here and in, in my investing background, to be able to see the number of people who just didn't know All the, really the big things that you could do with this, the things that we would consider that might be the most obvious things. And recently, as I've heard this, that's why I really wanted to bring this to your attention. You know, I think we can all agree, when you are all around something, or when we're all around something day to day, we know how to talk about it.

We think that everybody else should know about it. How many times have you driven through— I live in a little village here in my hometown, but I just this past weekend was driving by something. I thought, oh, well, when did that pop up? When did it pop up? Right? Yeah, it popped up about 35 years ago. It's amazing that things that are right under our noses or that we drive by all the time, I don't even— it must be scientific. I don't know what it is. But there are businesses all around you that have been there for 25 years, and you may have just tripped across it this weekend, or you might just bump into it because you stopped at one store. You thought that was the only thing you ever needed at that strip mall. And then as you're walking out, you get back in your car and you're looking at the strip mall and you go, well, what's that next door there? And you never knew it.

Same thing of what I'm talking about right now with the self-directed IRA. Okay, folks, come in with one idea of how you want to invest, and now what you've done is you've diversified your portfolio from stocks, bonds, and mutual funds. Keep some of those over there, right? So now you've got the best of both worlds. And now while you have your basket over here that's doing investing, uh, in a certain way with your self-directed IRA, now you're diversifying diversifying from that to where you've just gone from crypto to real estate to private lending, and the list goes on and on. I'd like to tell you a whole lot more about all the different retirement vehicles out there. I'd like to tell you all about the different asset classes out there, and we can spend as much time as you need on a call. So again, if you are visiting the cafe here and sipping on something, whether it's a hot tea just to soothe the throat, whether it is coffee in the morning and you're listening to this to get your day started, or whether you are sipping on a glass of wine fixing dinner as you are winding down your day and getting ready to spend some time with your family. I hope that you got some great information from this.

And to always know, you can access us either at americanira.com Or if you want to see this and any of our live that have been rebroadcasts, our live webinars, all of that can be viewed on our YouTube channel, American IRA LLC. So take a look at us there. And if social media is your thing and you want— if you're scrolling through your feeds throughout the day and you want to see what's going on with American IRA, if you ever want to catch one of our shows from your Facebook feed there. Find us on Facebook. We are there, and like us wherever and whenever you are able to access information that can bolster your investing knowledge to help you reach your objectives. American IRA wants to be your partner in that, and we look forward to speaking with you in the future. Here to answer your calls. I'm never too busy for those calls or for your referrals.

So thanks again for spending some time with me here in the cafe, and we'll look for you again on our next show.

American IRA LLC, a North Carolina LLC, acts as a third-party administrator for New Vision Trust Company, a state-chartered South Dakota trust company. As a neutral self-directed IRA administrator, American IRA does not recommend or endorse any investments, individuals or entities, including financial representatives, promoters, or companies. American IRA and the IRA Cafe are not responsible for others' statements, representations, or agreements, nor do we evaluate the quality or profitability of any investment. American IRA does not endorse guests on the IRA Cafe podcast. Guest opinions are their own and do not necessarily reflect the views of American IRA, its subsidiaries, associates, or custodian. Participation in the podcast is voluntary and no compensation is provided. American IRA is not a fiduciary and cannot offer financial advice. Please consult your CPA or another professional before making financial decisions.