Retire Rich: Asset Building with Your 401(k)

So like you said, Joe, when you want to make an investment, you have to go through middleman, the custodian, because you don't have direct access to your funds in your IRA. You have to submit certain form, get it submitted to the custodian, wait for them to review it, approve it, and then they'll—

Transfer it.

you know, uh, release the funds for a certain investment. And like we said, in some cases when it's a time-sensitive investment and you, you want to make an offer, well, you last a few days, you may lose that investment, uh, opportunity. So what we do is, is, is, I guess it's a niche within a niche. And, and, um, it's not only self-directed account, but it's the one that gives you checkbook control. And there's 2 ways to do that, a self-directed checkbook IRA and a solo 401. But both of these options, depending what's best for you, if we have time, we can get into the differences. But both of them, essentially, you will end up with a checking account for your IRA or 401. You will control that either as a manager or as a trustee.

Okay.

of the 401, and you can make investment or execute transaction that is related to the investment as simple and as quickly as writing a check. That's what we empower our clients to do.

And I love it. I don't have anybody looking over my shoulder. I literally have all the money in the bank. It goes out to my investments. I flip properties. It goes all back into that checkbook. It's just, it's so easy to do that. It's just like, you know, I'm happy every day that I met you. Yeah.

So glad that it's working out. And, you know, you're just one of the thousands of our clients that we're receiving this kind of feedback that, wow, you know, the freedom and the control and the speed. Now, having said that, I think it's important to talk a little bit about the— you know, there is a saying, with freedom comes responsibility.

Mm-hmm.

So it's important for you to understand the rules. Yes, you're in control, but there are certain rules. And with it, it's a self-directed IRA. It's still an IRA or a 401. It's not your money, it's retirement funds. Think of it as it's your future you money. Okay, it's not your money right now, but it will be yours once you start taking distribution. But right now you just have a fiduciary responsibility over your retirement account to control that and invest it in a way that you want. But remember that fiduciary responsibility that you have. So You are to invest this and you can use those funds for expenses that are directly related to the investments of the retirement account. You can't use it in any other way. So it's not for you to, yeah, you have that checkbook control, but you can't just write the check and pay for a vacation to Hawaii.

Right, right. No, there's absolutely, there's rules. Yeah. And you're real good about letting— I know me, but everybody else, you know, about what the rules are and, and, you know, how to not get in trouble with the IRS. I remember the first year I actually filed the tax form because there's a certain threshold that you have more than, I think, you know, $250,000. $250,000.

There you go.

You have more than $250,000. Then you have to file a special form with the IRS, which I've been doing ever since. But it's literally 2 or 3 pages.

Yeah, it's 2 pages. Pretty straightforward.

2 pages. Most of it is what was the value of your account day 1, January? And then what was the value December 31st? Pretty much nothing else, right?

Any contributions you made. Any contributions you made during the year.

Okay. Yeah, but that's, that's the little accounting that you do tax-wise.

That's specifically for the 401, for, for a solo 401 client. So it's not the case for an IRA. That form is applicable only for the 401 clients.

Okay, so it's even easier for IRA?

Yeah, it's even easier for IRA. Less work.

Wow.

I heard something about Peter Thiel. He had like in his, in his Roth account, A billion dollars in there because he used some of it in the, in the '90s to invest, uh, like angel investing. And then he eventually had like a billion dollars in there, and then the government was like, wait a second, this can't be allowed. And it was just all tax-free apparently.

Yeah, that's amazing. They made the rules.

Exactly. Yeah, then you play within them. But yeah, it's, it's like you're talking about investing, using it for investing, and then think about how powerful that is for your retirement because you're getting some such great returns rather than letting it just sit in an account, like you said, maybe dictated by the stock market, which is kind of up and down. This is, you know, you're getting much bigger returns that you can eventually use later on.

When you're lending money out of your 401, IRA, whatever you have, what interest rate are you charging right now?

Well, I work with the broker, and so broker originates the loans. And now what I'm seeing is Depending on whether it's a first or a second. First, obviously a little bit less risk and a little bit less return, but in the neighborhood of 10 to 12%. And if it's a second, it's 12 to 15%.

Okay. Yeah, that's about average. Yeah.

And it's about average.

Yeah. But it's, I mean, it's good money if that's how you want to invest, you know, kind of passively. So yeah, that's good. That's excellent. Yeah.

It's great. And it's super easy. I know when I, when I signed up, um, Demetri's got an amazing team. They reach out to you, they get you onboarded real quick. And, you know, just like, it's like boom, where you're ready to go. Plus on the website, it's like you have so many videos. It's like every question is already answered there. So I don't know how long it took you to build all that up, that library of videos explaining everything, but it's, It's huge.

Yeah, you know, we have a knowledge base and, you know, the videos is, uh, uh, lately we've been producing more videos, but the knowledge base specifically, it came out just people or clients specifically would ask me questions and, uh, I answered that question, but then I said, well, you know, this is a good resource. Somebody else can learn from that. And we decided to build a knowledge base. So we use that question and answer as an entry into a knowledge base. And so it is now available for all of our clients to go and you can just simply type a keyword or key phrase and you'll get, you know, at least one, probably maybe multiple answers to your questions or articles related to your question that you can go and read somebody else asked that before. So we didn't want that to be wasted because I think it's very valuable information.

Absolutely.

Yeah, it's amazing. Is December one of your biggest months where everyone's freaking out?

Yeah, November and December.

That's what we did. Joe was like, you need to call Dmitry right now.

It's like, okay. November and December are 2, 2 biggest months. Actually, last December was our Biggest month ever.

Yeah.

In last 14 years I've been doing this. We had a little bit, you know, slower last maybe three years. I don't know. Maybe it's related to COVID or what. I don't know. But last December we've been really busy. But you know, maybe we also added a couple of new team members to our team and. So it could be part of that. But yeah.

That's great. Can you go over some ways maybe people in the real estate industry, like, like you mentioned lending, maybe a few other ways or examples of how you could use, you know, self-directed account?

So you can, you can buy physical real estate in your IRA or 401. Many of our clients do that. I do own a couple of rentals, one. And speaking of the Roth, I think you've been talking about the Roth and how it can be amazing. Just to give you a flavor of what it can do with, I guess, a real-life example, my own example, I purchased a property in my Roth just outside of Phoenix. About 10 years ago, I think I paid $110,000 for it with about $10,000 in fix-up. It was a light fixer, and it was rented at the time at $895. Well, today that property is worth about $400,000, and the rent is $2,000.

Yeah, yeah.

And it's inside of a RAD.

Yeah.

So it can be very, very powerful. But yeah, you can own rentals. I still have that. And then you can, well, I actually ended up with another rental, I guess involuntarily. I didn't ask for it, but it's a loan that I did. It was a loan. I actually lent money which ended up in default and then I ended up with a property.

Yeah.

It's out of state also in, Pennsylvania. It's a smaller property, but people sometimes concerned about the risk that comes with lending. So again, let me use an example, my own example here. I lent $38,000 at the time. It was in a first position at 9%. I was getting $350 a month. And it's been going fine for a couple of years. And then they started paying late and then, you know, a few months late. Eventually, the owner agreed to sign a deed in lieu of foreclosure. So I didn't have to foreclose. They just signed the deed over to my retirement account. I did it in my retirement account. And so I now own that rental because, again, at first I was just a lender. It's probably been about 5 or 6 years now. And that property is worth— remember, I lent $38,000. It's worth about $90,000. And it's producing $700 a month in rent. So it's paid for itself probably a couple of times now. And it's just a cash cow there. I actually prefer to be a lender rather than a landlord.

Yeah.

So I want to sell this probably this year. and just reinvest into another loan. But you can do that. And then also, I— some of our clients, they do invest in syndications. So like larger commercial deals where you invest and just become a limited partner in a larger deal. You can invest in private businesses. So if there is a startup, it's not a publicly traded And usually the funds are raised by maybe friends and family members. So if you have access to those opportunities, then you can actually invest with your retirement account. It can be very, very profitable. So that's actually— to do something like that inside of a Roth makes sense because your potential is just many, many times your original investment. And again, there is really no limit. I have just one example comes up. A client invested, purchased investment property in Belize, and they did that with the goal of actually converting that to their primary residence. So they, at the time they bought it, they were working, and then a few years later they actually retired. And what they did is, it's called an in-kind distribution, where you can take the asset that is inside of your retirement account and you can take distribution of that asset to yourself rather than taking the cash out. You can actually distribute the asset. So they converted that to their residence now. And, and but they used retirement funds to acquire residence in exotic place for themselves.

Yeah. And that property you were talking about, that was— that's in Newport Beach? No, no, the one before that that you said you foreclosed on, that was in Newport Beach?

No, no, I'm just kidding.

Like $90,000, it's a joke. It's a joke. You're talking about Roth And IRA, 401, what is the difference? Because there is a big difference between those 2. Can you tell us what that big difference is?

Sure. Yeah. So the traditional contributions, those are made pre-tax. And, you know, maybe it's a good time to actually segue into solo 401.

Okay.

And so let's back up a little bit and let me explain I'll explain what Solo 401 is.

Okay.

So Solo 401 is a retirement account designed specifically for those folks who are either self-employed or own a business without full-time employees. Okay. And that includes many of my clients, real estate agents. Okay. So if you're a real estate agent, you might be just a 1099 and filing Schedule C. That works. If you're incorporated or have an LLC, that also works. You own a business, no employees working for you, you qualify. But it has some tremendous benefits over an IRA. And the first one is the ability to make large contributions. And I'm talking about really large, 10 times larger than an IRA. So with an IRA, with new rules this year in 2024, actually the limit have gone up. So you can now contribute 7% Uh, if you're under 50, plus $1,000 additional in catch-up. With solo 401, you can contribute $69,000. So that's, that's your 10 times an IRA. So if you're self-employed and you're, um, if you're doing well, uh, then— and obviously, being self-employed, you have the capacity to do well, because if you're If you're on a paycheck or you're on salary, you're capped. There is, there is a limit. But if you're good at what you do, especially as a real estate agent, you have the ability to make a lot more. Well, and every person who reaches that level, the common problem they experience is the taxes. The more you make, the more you're going to pay to Uncle Sam. Well, Solo 401 is a great tax shelter because you can contribute $69,000. to this vehicle just for yourself. Now, if you have a spouse and you bring your spouse on board to help you in your business, you can potentially double that. I mean, you're talking about almost $140,000 of sheltering your income from taxes. I mean, that can be huge. Just, I mean, $140,000 dropping your taxable income by $140,000. You're going to be in significant smaller dollar amount, but you're also going to drop a tax bracket. So I mean, if you just run the numbers, you can easily save $40,000 untaxed alone just by maximizing your 401 with you and your spouse. So that's, that's huge.

Is there a— is there like an income limit that you have to make before you contribute this? No, that's the beauty. No, you're like, if you made $69,000 last year, you could literally put it all in a 401?

Okay, so no, there is a, there is a certain formula. Okay, so with solo 401, there is, there is 2 components. Uh, the first component is elective deferrals, because being a self-employed individual or business owner, you essentially wearing 2 hats. You're wearing the hat of an employee, right? Because you, as a real estate agent, you go, you meet with the client. So you put this hat of an employee, you, you go, you do the work, right? You, you show the listings to potential buyers or to help sellers sell the property. But then you're also doing all the other work in the background, and you're now putting on the hat of a business owner. So as an employee, you can contribute $23,000 into your solo 401, and that can be up to 100% of your compensation.

Okay.

So if you're a part-time real estate agent, And you made $30,000 part-time, $23,000 can go into a 401. Okay. And then on top of that, there is what's called the profit sharing. And the profit sharing is up to 25% of your net self-employment income. So if you made $100,000, you put $23,000 plus additional 25% of $100,000. So that's approximately almost like in, in 40s, high 40s, you can contribute. So it's a significant deduction. So the more you make, the more you can contribute. Uh, again, there is a, there is a kind of a sliding scale.

Okay.

A percentage. But within a solo 401, there is an ability to make Roth contributions. And, uh, for those of you who know what the Roth IRA is, again, it's a kind contributions that you make after tax. You pay the taxes, you contribute, and then qualified distributions will be tax-free. Okay. But with the Roth IRA, if your income is over a certain threshold, you're not eligible to contribute to a Roth IRA. But with the solo 401, there is no limit. You can be making $1 million and you can still contribute to a Roth 401. There is no restrictions. Got it.

Yeah. And I think that's the biggest important part is that the 401 or the IRA, that's money that you do pre-tax. And when you get to be 72, I think it's—

Well, you reach your normal retirement age, which is typically 60 for, for most people. After 60, you can start taking distributions without being penalized.

Okay.

But the distributions Distributions from a pre-tax account are taxable. So you take out a certain amount, that becomes your taxable income. You pay taxes on that.

Right.

Whereas if it's a Roth IRA or Roth 401, the qualified distributions again after— and qualified, let me qualify that. And that means you had the account open for 5 years and you reach 59 and a half. Okay, so if you meet those criteria, then you can take distributions from a Roth IRA or Roth 401 without being taxed. Tax-free.

Tax-free.

Yeah.

Yeah. And if you start early, you start in your 20s, you start doing that, you know, you could have millions of dollars easily.

Yes.

Yeah. Easy. Yeah. Like, it's pretty amazing. It really is.

It is amazing.

It's amazing.

I think people, you I mean, I was the same way. It's like there's a lot to take in, but once you start understanding the kind of the mechanics of it, and it's really mind-blowing, like how you can use this in your investment game. Absolutely.

Yeah.

Otherwise you're just giving it away.

Yeah. And the way I see it is that, you know, you can, you can certainly use this tool as a wealth-building tool. Yeah. You know, it's not overnight, but it's it's kind of a sure, slow way to build wealth and into and you can easily have a seven-figure retirement account. And actually, after you invited me to come and speak to you guys, I I had this idea. Well, I've got so many clients like you, Joe, that successfully use this and and kind of like idea of. uh, you know, building that knowledge base with the questions. You know, I wanna, I wanna start interviewing my clients who are successful.

Yeah.

I might start with you.

I'm here. I'm here. Yeah.

And, uh, ready to go. Because there is, you know, I just wanna use that as an inspiration for other people because, I mean, if you can do it, somebody else can do it. If I can do it, you can do it.

So anybody, anybody can do it. Yeah. Anybody could do it. Do we have any guests with questions?

No questions, but I have one.

Okay.

Can you have these accounts simultaneously, a 401, a Roth, like multiple retirement accounts?

You can have simultaneously multiple retirement accounts. Yeah. So again, with the solo 401, You can have the pre-tax account as well as Roth account. So it's one plan, but you can have different subaccounts within one plan.

Mm-hmm.

And you can also have an IRA in addition to that. If you have a traditional IRA and you have a solo 401, then typically the best course of action will be to take your traditional IRA money and roll it over to a solo 401. Bring it under one umbrella, so to speak, because it's going to be easier for you to kind of manage. I try to apply a KISS principle. You guys know what that is?

Yeah, keep it simple, stupid.

Yeah.

Yeah.

So I think it's originated from military somewhere, but I mean, it's applicable in a business, and I try to apply it in my life and in my business and my retirement account. Just You know everywhere. I think it's so powerful, and when it comes to retirement accounts, again, our lives are complicated as it is, right? Why not keep it simpler? And so if you have traditional IRA and also solo foreign, it will be easier or simpler to bring it under one umbrella so you can, you know, potentially invest it together. Just make it easier. Now if you have a Roth IRA. Roth IRA is the only account that cannot be rolled over to a solo 401. So Roth IRA has to stay Roth IRA. You can self-direct that also, but it has to remain Roth IRA.

You wouldn't want to do that anyway, because if you did that, then you'd be taxed on the money.

Well, no, if you have, if you have Roth 401, for example, yeah, You can roll that over to a Roth Solo 401. So it's—

Right, but you wouldn't want to put it into an account, a Solo 401 that is taxable.

Well, within Solo 401, you can have Roth sub-account.

Okay.

So you can have 2 buckets within Solo 401, the pre-tax account as well as Roth.

Okay. Yeah, but you want to keep those separate.

Yes, it will be 2 separate buckets. So it will— you, you won't be You know, taking post-tax money and bringing that into pre-tax. I'm not talking about that. So you'll keep the same type of money. It will remain to be Roth. But Roth IRA cannot go to a Solo 401. IRS doesn't allow that.

You bring up a subject now, and I see ads and all these things, roll your Solo 401 into a Roth. And I always thought, like, and please correct me if I'm wrong, if you do that, then you have to pay the taxes on the money you roll over into a Roth, correct? What would be the advantage of doing that?

It's called the conversion.

Okay.

Roth conversion. In fact, I had today, I had a, you know, extensive conversation with one of my clients, actually newer clients, and she was asking about that. She wanted to do Roth. Maybe she's heard some of this. She was talking about Mega backdoor Roth.

Yeah, that's the buzzword. That's the hype.

So, um, that's the clickbait.

That's the clickbait now.

That's a clickbait.

Here's the— here's the details for this. So she was like, you know, really into Roth and, and mega backdoor. And I start— um, I'm not a CPA. I want to make that disclaimer. This is not my area of expertise. I, I talked to a lot of CPAs I talk to business owners every single day, multiple times a day. So I understand this, but taxes is not my area of expertise, although I understand this. So I was talking to her, and without going into any details, but she's a high earner, multi-six-figure, okay? And she's single. Okay, and I'm, I'm thinking and kind of talking to her. Well, what you need is not right right now. You're, you're single. You don't have a lot of deductions. You need every possible deduction right now to minimize your tax liability because if you're making, you know, I think she said four to five hundred thousand dollars. You're paying a lot of taxes, a lot of taxes. So if I were you, and that's what I told her, this is not a tax advice, but if I were you, I would look for every. Possible way to reduce my tax liability now. Now, there might be a time in the future, and she actually said that that you know in the future she's planning to get married, have children. She might be taking a year or two off, and and not going to have that high income year. Well, guess what? You can do a Roth conversion at that time. But today I told her, I think you should contribute pre-tax. To get the, the tax deductions you need right now to bring your tax liability down. But with the solo 401, you have that Roth, uh, provision built in, which enables you to, to do the Roth conversion anytime. You can do it today, you can do it tomorrow, you can do it in December, or you can do it anytime over the next 20 years. You have that ability. And so there is no simple answer. And certainly there is no one-size-fits-all when it comes to Roth. Generally speaking, Joe, like you said, the younger you are, the more time you have to grow your Roth, the more sense it makes. But, you know, if you're older and if you're in a higher tax bracket and you only have a few years left, then you probably need the tax deductions.

I'm out. That's me. He just described me again. Here we go. Go ahead.

But not just you, Joe. And, you know, I'm partially you.

No, you're not. You're not even close.

Well, we got similarities, whether you know it or not.

Not age-wise.

Not age-wise, maybe. But, you know, some similarities where I was maximizing my Roth for a number of years. But then I got to a point where I needed every possible deduction. So, and with Solo 401, you have beauty. You can, you can one year you can maximize your Roth and then next year you can maximize the pretax.

Nice.

Wow.

A lot of flexibility there.

I know.

Yeah, that's good.

That's great. And then you can just roll them right into, you know, the investments. Now when you're buying a rental, that could be a long-term thing. So you're just, you just take money out of your account. Do you have to buy the rental all cash or can you go and get a loan on it? Yeah.

So when, when you buy a rental inside of a retirement account, you mean, right? So then technically it's not you who the buyer is, right? It's not you who the owner is. Your IRA or 401 is the owner and your retirement account is a separate legal entity from you. So you are not your IRA and your IRA is not you. So it's 2 separate entities. And your IRA can own a rental and you control it. You're in charge of it. But all the rental income, or if it's a rental, if it's some— something else, some other asset, the income from the investment going back to the retirement account, it's not your money. You can't touch that. And likewise, all of the related expenses Must be paid from the retirement account, such as if it's a rental property, property taxes, insurance, repairs, property management fees, and so on. Yeah, it is a long term, but again, if it fits your strategy, that's fine. You can certainly own a rental. You don't have to pay all cash, although you can, and I have clients who do that. They just pay cash and buy. And they own property free and clear in their retirement account. You can actually finance a purchase of a property inside of your retirement account. And but because you are considered—I didn't talk about this—and I was just reminded myself that in addition to those two not disallowed investments, which is life insurance and collectibles. Your retirement plan is prohibited from engaging in any transaction with disqualified person, and disqualified person is yourself, your spouse, your kids, grandkids, and their spouses, your parents and grandparents. Essentially, it's a vertical line. Okay, it can be extended family members, just not immediate family members. And a couple examples: if you're a real estate agent, You can't represent your 401 in a transaction if your, your 401 is buying a property, whether it's buying or selling. If you are buying a fixer, you personally cannot go and work on that property yourself. You have to outsource everything. You control it. And the easy way to understand that, that's how I like to explain, is the, the difference between a white-collar worker and a blue-collar worker, right? A blue-collar worker is someone who's actually working on the factory floor with their hands, that they're doing something. And a white-collar is someone, you know, white shirt and tie, and they're sitting at the desk, they're on the phone doing the paperwork, you know, on the computer. So you can do the white-collar type of work as far as managing your investments. You just cannot do hands-on work. So when it comes to rental property, You can buy it, you can pay the bills, you can deposit the rent checks, and so forth. But because you're disqualified person, you're not allowed to provide a guarantee for the loan to an IRA. So that's why if you decide to finance the property, you cannot use conventional financing. It has to be non-recourse loan. And non-recourse simply means that there is no personal guarantee. The property that you're buying is the only security for the loan. Okay, because conventional financing, you buy in a— let's say you buy in a residence, you go to the bank, and bank wants to see your ability to pay, how much money you're making, what's your credit history, because if you stop making payments, they're going to be after you. Well, that's not the case here. That's why it's actually easier to, to get an undercourse loan. But there is only a handful list of lenders that do this kind of financing, and we have them listed on our website. And it's, you know, just about the same process to get the loan, maybe even easier with some lenders than conventional, because again, they're not checking your, uh, your payment ability. They're looking at the property. Typically, uh, the down payment requirement is higher, about 30 to 40%. The rate might be a little bit higher, but still it's better than paying 100% because you're using other people's money. And yeah, you can finance it and own the property with leverage inside of your IRA or 401. Love it.

I want to be leveraged.

Okay.

I saw a video on Sense Financial. The, uh, said something possibly, and maybe I'm wrong, you can use it for a down payment on your primary, or you can use it to get your primary somehow, but then you have to pay it back within a certain amount of months.

Yeah, so that's what you're referring to is a participant loan. So if you have a solo 401, uh, just like some of you who have a 401 at your employer or had a 401 at your employer, There is a loan feature that you can actually take a loan from your 401. Solo 401 has the same feature, not available with an IRA, unfortunately.

Hmm.

You cannot borrow from an IRA, but you can take a loan from a 401. And loan can be taken for any reason, including purchase of a primary residence. So if you're taking a loan from a 401 to buy a residence, you— because generally it's a 5-year loan. You have to repay it within 5 years. If you're using it to buy a residence, it's, it's 15 years. You can stretch it to 15 years.

Learned something new.

So you can, you can take $50,000 out. Your spouse potentially can take $50,000 from her 401 account. Okay, so you've got $100,000 and you can use that as a down payment to buy a residence, and it's a 15-year repayment plan, and you paying interest back to your own 401. So you're actually helping your own account grow. Wow. So that's what you're referring to. Yes.

I know there's a new law that affects LLCs, C corps and stuff. Does it affect solo 401s, IRAs as far as reporting who owns them?

Yeah. So it doesn't affect the 401 or an IRA. directly, but it can affect indirectly. So it actually, uh, and, and we did send out, uh, announcement about this, uh, recently that, uh, most of our clients actually will be affected because for, for checkbook IRAs, there is an LLC that is built in inside of a retirement account, inside of an IRA that enables you to have that checkbook control. So if you have LLC or another entity inside of your retirement account, then yes, uh, you, you will have to report that.

Okay.

Uh, and then for many of our clients who— solo 401 clients who are business owners, they're incorporated, they have entity, whether it's LLC or corporation, then it will apply to that entity as well, that, uh, their business entity. So it's not, it's not directly to retirement accounts, but indirectly many of our clients are affected. Got it. Good question.

Okay. Yeah, I, I call it something, but I don't want to say what I call it.

It's okay, we'll move on.

Privacy is slowly eroding.

You mean the term for that? Joe has his own terms for everything. Oh, you called it something?

Yeah, I have. Yeah, I'm just kidding.

I don't know. The government term is beneficial Owner interest.

Yeah, I call it something else, but we won't go there. Reach out to me if you want to know what I call it. Okay. Yeah, reach out to me.

Yeah. Are you you forgot or you don't?

Oh no, I know. I just I just want to say that on the air. Okay, I'll I'll ask you. I'll get some hate mail. Does anybody actually mail anymore? I'll get some hate emails.

Yeah, you get trolled in the comments.

Yeah, we don't need that. That's okay. We have one video that's really doing good. We recorded a video last year on April Fool's Day, and it was an eviction that we did. And it's basically, you know, fake. And at the end, we put down there, you know, April Fool's. Oh, and I get like a lot of responses like, uh, you know, that was clickbait, or, or I knew it from the beginning this morning. I knew it from the beginning. I said, okay. Hey, thank you. It's like, it's an April Fool's joke, you know? Lighten up. Hello. Move on.

Just what else we have? Smile or laugh and move on.

Yeah, that's right.

Yeah.

We need to smile or laugh more.

Yeah. But I think that's a great idea of starting, you know, your own podcast and having your clients come on. And there's so many different ways you can use this that it's, especially if you're just starting out, I'm like, okay, what do I do? I can flip. I can do like what Joe does.

Alex set all this up. So if you need, an expert on what to do and how to do it, he's the guy.

We could do a simple version.

Yeah, he's the guy. He had me put this wallpaper up here.

We're still building it out too.

Lights and yeah, it's still building. It's a good set.

Cool.

Yeah, it's pretty fun. Yeah, but, um, yeah, so many creative ways to use this. Um, let's not give it to the other guy. Keep it for yourself. Yeah, your future self. Now, are you getting— do you have kids?

Yeah.

Okay. You have them all dialed in? They're already building theirs up? Or I know you can, you can get Roth for your child.

Yeah. For your kids. And I set up a Roth IRA for my daughter, you know, many years ago. And it's done well.

Amazing.

Yeah. If you, if you have kids and if you own a business, Get them to help you in your business, pay them, and then they can put that into a Roth IRA.

How young can they be?

I have clients who set up IRA for like a 2-year-old. If you're a real estate agent, use it in the marketing.

Yes.

Yeah, absolutely.

Take pictures, you know, the family.

What about in the womb? Has anyone done that?

Yeah, I don't know about that.

No, because someone's done that.

Well, they have to have— in the womb is a real person. Exactly.

Yeah, but you have to have, uh, but it's a security number.

Exactly. Yeah. So you, you can set up a Roth IRA for, okay, uh, unborn child.

Yeah, it just hasn't been done yet. No, I'm just kidding.

You know, you've come up with a great idea. Yeah, exactly. Who knows, somebody's gonna say yeah. Let's do it.

Yeah, exactly. Okay. That's interesting. Okay. And so, um, you building up their retirement and then get, I guess—

Saving you on taxes as well. Yeah. So if it's from your business and you take that as a tax deduction, it goes to them. If it's under a third, a certain amount, they don't pay taxes on that. Correct? No. Yeah.

Yeah. She paid zero taxes on, you know, all the contributions this year and it was a deduction for me. Yeah. And, uh, um, you know, it's, it's growing tax-free inside of a Roth. Definitely want to engage with your CPA, um, make sure that you're doing this correctly, but it certainly can be done.

Absolutely. What about for your parents? What about them? Like, if I wanted to contribute to my mom's retirement or something like that?

I don't think you can contribute to your mom's retirement, uh, you know, because You have to have earned income. I mean, your mom can contribute to her own retirement account if she has earned income, but, you know, she'd have to contribute.

Well, if you employed her, then you would pay her. Let's say you paid her 1099, and if she decided to put that into a 401 or a Roth, she could do that. And you could deduct that from your expenses. Okay, you can do it that way. Okay, right? Yeah, yeah. All right, do it that way.

I'm trying to get my earned income back to zero. Is that possible? Anything's possible.

Yes, that is possible. Yeah, anything's possible.

Okay, all right. I saw—

I don't want to get into politics, politics, but real quick, can't help himself. I saw an interview the other day The one where Trump was debating Hillary, and she was complaining that he hadn't paid taxes in 10 years. And he said, well, yeah, that's because I'm smart.

Right.

And he goes, like, all the people that give you money are just like me, and are smart, and are taking advantage of the laws that you wrote. Okay. And so yeah, of course I don't, because I'm smart. There you go. Yeah, if you're smart, you know, you can get to zero.

Okay, it may seem, you know, unfair on the surface. I even get, you know, a little bit of a kickback from my wife, uh, the other day when we were talking, and I was just, you know, uh, because I, um, I was able to reduce my tax liability almost to zero by investing in commercial real estate. And, uh, while my income was growing, and it's all legal. I mean, it's all, it's all in my tax return. I'm not hiding my income. It's there. Yeah, but I have deductions that bring my taxable income down. Absolutely. I didn't invent those deductions. Yeah. So, um, and, uh, you, you, the strategies are out there. You just need to apply them to your situation and Um, yeah, absolutely. That's my, um, actually I've done it not without my tax guy, and he says you don't want to pay a penny more to the IRS than, than you have to.

I love it.

I don't know who would, you know, I don't know who would want to pay a penny more. Let me ask you real quick, your, uh, Roth or whatever that you have set up for your, uh, children, your daughter, Obviously, she's not 18. So she can't, you know, sign the documents and all that stuff. So you have control over that account. Does that control go over to her when she's 18? Or there's— is there like, I have a living trust. And when my kids were small, if I had died, Mm-hmm. they would receive the money that I had, but at certain ages.

Yeah.

So like 25, 30, 35. Is there something like that set up or does— like she turns 18, she goes, thanks, Dad, I'm out of here. See you later for, you know.

I, yeah, I think she'll, she'll be in control after that, but I'm not sure what that answer is. I believe, yeah, I believe she will be in control, but She'll do— she'll follow my guidance.

Oh, absolutely. I have no doubt of that. But, you know, some kids don't follow their parents' guidance, you know? It's like, wow, okay. Yeah. Yeah. So, yeah, good for you.

Amazing. Okay. Well, how can everybody reach out to you if they want to get started?

They can find me on social media. If you're going to put my name out there, it's pretty unique. You can easily find me there. I'm on LinkedIn and Facebook and Instagram and BiggerPockets. And you can also go to our website, which is sensefinancial.com. And sense is like common sense. S-E-N-S-E. Oh yeah. Because we are It makes sense what we're talking about.

Oh yeah. I've spent hours on that site just like staying up clicking through all the stuff, the knowledge base and the videos. It's, it's good stuff. It is good.

Yeah. And, you know, I just want to say that everyone's situation is unique. And what I would like to offer to your listeners is that you can book one-on-one with me, a phone call, and it's complimentary. where normally I'd like to take the time to understand what your situation is and then maybe make some recommendation, answer your questions. But I always like to put myself in my client's shoes. If I ask questions, I want to understand, you know, what I will do.

Yeah. Oh, and another thing I love that you did, the live Q&A Zooms.

Yes, those are great.

Those are amazing because then I think I dropped like 4 questions into the last one and then you read it and then answer it, you know, which Were they good questions?

Probably not.

They were just straight noob. I could tell you.

Noob questions.

Yeah, he rolled his eyes a couple times and he's like, oh my God, one of these guys.

Well, guess what? You know, the questions are actually— I always encourage questions, especially, you know, on the live Q&A, because other people are learning from your questions, not just you. Yeah. You know, you might think about something and might think, oh, maybe it's a silly question or maybe it's, you know, simple, but Guess what? Somebody else might be even more shy than you are, and they don't ask questions, but they can learn from from your question.

Yeah, and and the ladies you have working there are amazing too. I've called them just like randomly, like yeah, I'm filling out this paper. What do I do in C six? She's like, just check yes. Okay, thanks.

You're the twelfth person that's called me today, but I'm okay with it.

Yeah, they're so good. They like.

It's, it's, it's cool.

So I'm—

Yeah, we're blessed with the team. We have a great team.

Yeah. Uh, so let's get all our retirement accounts super fat this year, y'all.

Yeah. Thank you. Thank you for showing up. Thank you for being here. Thank you for, uh, giving us all your wisdom and knowledge. It's, it's greatly appreciated.

You're welcome, Joe. It's been, it's been fun.

Thank you. Thank you.

I enjoyed it.

Excellent. All right, you guys, uh, please share this podcast with anyone who can benefit from this, which is everybody. So, um, young and old, uh, pass it along, and we'll see you guys next week. Joe, anything else?

You called me old again, but see you guys later.