Retirement Account Resolutions for 2026: New Contribution Limits, Key Deadlines, and Live Q&A

What's going on, everybody? Nate Herron, Aaron Halderman. Uh, great time to join us today. Um, but yeah, we're going to go over some—

it's—

this could be a quick one, quick informational, short, but really just to get you guys teed up and ready to start self-directing or making IRA contributions, basically investing tax-free from 2026. Okay, so let's just go high level real quick. The types of accounts that we have here at Directed IRA that you often see at other banks or custodians Audience, but these are the accounts that we have here that can be invested into alternative assets. Now, when you look at it, we break it down into 3 categories. And after this slide, we'll talk about the contribution changes, the contribution deadlines. But these are the 6 types of accounts that you can invest in alternatives completely tax-free. Your personal plans would be your traditional IRA and Roth IRA. Now, note I didn't say self-directed account because really they're just IRAs. A self-directed IRA— self-directed is just a marketing term. We just use it in our business to indicate that our clients have to tell us what the investment is. We don't have investments to sell you. But when that, when that happens, that gives you a bigger spectrum of investments that you can invest in. And we'll show you what you can invest in with these self-directed accounts here. But traditional IRAs and Roth IRAs can both be established here at Directed IRA. Those can both be self-directed. If you're self-employed, you have any 1099 income, any Schedule C income. Some of you viewers might have both. You might work 9-to-5 job, you've got some W-2 income and you work a side hustle, great. You have another option on the menu to make contributions to and invest completely tax-free, whether that's through a self-directed SEP IRA or the mighty powerful and very popular here, the solo 401(k). And that's again for small business owners. And then anybody who's got healthcare needs, healthcare expenses, if you have a high deductible health plan and you're looking for additional tax deductions and additional ways that you can invest a bucket of money completely tax-free, not to fund retirement, but to pay for your healthcare expenses for you, your spouse, and your dependents. What a great tool, the Self-Directed Health Savings Account. And similarly, if you have kids, particularly under the age of 18, if you haven't set these up yet, the Self-Directed Coverdell Education Savings Accounts, the one and only education-related account in the self-directed world that can be invested into alternatives. But your distributions almost work like a Roth IRA, but you can take them out anytime to pay for your children or grandchildren's education expenses, things like tuition, books, computers, room and board, a whole list of things. So when you look at these accounts, again, by definition, these are all tax-exempt trusts. You're just the fiduciary to the trust. You put money into these little trusts as contributions. We act as your custodian of the trust, and then you tell us what what they invest in. And when you have them with us, the investment options get, get very, very, uh, very, very wide.

So yeah, and if you haven't done that, we're going to go over some key deadlines here in a minute, but you still have time, especially for the HSA, to get that open. And let me say this, I know one of the challenges that we sometimes have, especially like from a self-directed account, is like, well, what do I invest in? And, you know, especially with some of these smaller balanced or low-dollar, um, accounts that you have these smaller contributions like the HSA like the ESA. And so, one of the things that we did a handful of years ago is we created a special account type that was a crypto HSA and a crypto ESA. And the reason we did that is because you could then invest that type of account with those funds into crypto of your choice. And we partnered with Gemini to do that. So, there's an example of something you could do. Otherwise, it's a little difficult to think if you're only contributing, you know, $5,000, $6,000, $7,000, these kind of let's call it anything below $20,000 that might fall below a minimum requirement for going into a small business or a private fund or private stocks of any kind. Other than that, you're just kind of in the market. So, that's one of the reasons we did those types of accounts and also, you know, precious metals as well. So, we have a few options.

Yeah, there's definitely some options and there's definitely a solution we offer that not a lot of other custodians offer through our law firm. KKOS, which is the Checkbook IRA LLC. I've had a lot of clients use this to their advantage. When you've got, let's say, a Roth IRA for yourself, you've got a Roth IRA for your spouse, you might have a, you know, SEP IRA for your business, and you've got these small HSAs and ESAs. Well, how do you invest them when the HSAs and ESAs are smaller than your IRAs? Well, we have the solution, which is you can set up a multi-member LLC that our law firm KKOS will set up. That Multi-member LLC can be owned by all your accounts. I've actually seen clients use this to their advantage and get a small $10,000, $15,000 HSA into a $100,000 investment syndication or multifamily syndication because they partnered the HSA with their Roth, with their wife's account, with their other accounts, and the LLC now has $100,000 of investment capital. So it does give you some more flexibility there. You can ask one of our IRA account executives for more particulars.

Nate, can you transfer in-kind assets over to an HSA from another IRA account?

From another IRA account?

Mm-hmm. Into an HSA.

Yes, you can. So there, oh, we're going to get into fun HSA facts. Don't get me on that. We'll be here for 3 hours. So yeah.

But this is good because we were talking about crypto here and somebody was like, well, I'd love to do a crypto HSA, but I have crypto like in my traditional IRA. Could I move that? Over and do something like that?

You can. Yeah, it's considered a contribution. You can do it one time in your life. It's an HSA— IRA to HSA transfer, but it's actually pretty— I guess we'll wait till we get to it. I have it on the slides. So let's jump into some particulars about each of these accounts and talk about contribution changes, contribution limits, and so forth. So when you look at the traditional IRA and Roth IRA, and by the way, if anybody wants a copy of this PowerPoint slide, just shoot me an email. Michelle, if you could type my email address in the chat there, we'll give you a copy of these slides. But I took the liberty of making some pros and cons of a traditional IRA and Roth IRA. But these are just your individual accounts. Anybody with earned income can make contributions to a traditional or a Roth. Most of you understand the difference. A traditional IRA, going in, you take the tax deduction. It just defers the tax on the investment growth to the future. But a lot of people like the Roth IRA. They say, you know, I'd rather pay the tax on the small amount going in and then take the distributions from the investment earnings completely completely tax-free. Either way you do it, money going in, all you need is earned income. And that's usually Schedule C income, 1099 income, or more popular, W-2 income. It does not allow for Social Security income or disability income to be the income to justify contribution. But any working active income will allow you to make a contribution. Now, the reason I'm making that point is there's no age restrictions on these. We even have minor Roth IRAs. If your children are working, maybe they're working for your business, maybe they work a small, you know, job in the summer. Their income, even if they're not taxed on it, their income can be used to make contributions to a Roth at any age. I always tell this story: I have a 9-year-old with a $75,000 Roth IRA. Can you believe that? Grandma set her Roth IRA up for her granddaughter at the age of 4. She put her on a cover of one of her books, paid her a modeling fee that year. Again, age doesn't matter, just you got to show the income. And then they invested those self-directed Roth IRAs into some land and yada, yada, yada. You get the point. But age is not a restriction here. It's just income.

One quick thing to note on the slides, we'll have that corrected, but we will get the slides and the recordings up after this. The date, the limits up there for 2026.

But 2020, these are 2025 contribution limits. So, so the 2025 going to April 15th, it's $7,500.

Oh, that's what he did.

Yep. Yep.

My bad.

Yeah. Because they always give us these ones first and it is a little confusing. They give us the increased contribution limits for 2025 earlier. So these are contribution limits for 2025, which is $7,500 if you're under the age of 50 and $8,100 if you're above the age of 50. So they did increase the catch-up contribution by $1,100 instead of $1,000. So, all right. Am I good on that?

2025 is still $7,000.

Okay. Okay. I apologize. That was my mistake. So these are 2026 contributions.

$7,000 and $1,000.

$7,000 and $1,000 contribute catch-up contribution for 2025. These are 2026.

That's what I thought you were doing. Yeah, that's the '26. So it is a typo.

Okay.

So it's $7,000, an extra $1,000 if it's over 50. We'll get that updated.

Okay.

Even Nate Hare sometimes makes mistakes. Okay, people.

At least I waited till the final webinar of the year. Yeah, good.

Yeah, good on you.

Yeah, yeah.

You're the one, one a year. That's your one a year.

I just got it out at the very end of the year. So just to repeat, so 2025 contributions, $7,000 if you're under 50, $8,000 if you're above 50. We'll get that changed. And it's for 2026. Now, the reason why that's important, 2026 contributions, is we're a few days away from 2026. So you can, even if you haven't made your 2025 contribution yet, those contribution deadlines go until our tax filing deadline, which is typically April 15th. But once we hit the new year, you can make 2026 contributions. The interesting thing about that is studies and audits have shown that people with larger IRA balances make their contributions early in the year. They don't wait until tax filing deadline to make their contribution. So if you're really trying to maximize the growth in these tax-free accounts, is you want to get your contribution in early. So between now and let's say April 15th the next year, you can make 2025 contributions and 2026.

Just make sure you do the proper year designation for that so you don't want to have to re-do it, right, so to speak. So make sure you mark it you know, for '25 or the year 2026.

This also helps you because I have this call a lot too, where people are just starting out and they say, you know, I've got this investment in mind, it's going to take $50,000 to make it, but I haven't really saved for retirement yet. Okay, well, this is the type of conversations you have with one of our account representatives is, well, they start kind of mapping it out for you. Well, can you make a 2025 contribution this year? Okay, let's say you're under 50. You could throw $7,000 in from now, but between now and April 15th. Well, once we hit January 1st, now you could throw another $7,500 in. So we're at $14,500. If you're married filing jointly, your spouse, even if a nonworking spouse, they can make the same contributions, $7,000 for 2025, $7,500 for 2026. So now we're at, let's see, $14,500 and $14,500, we're at $29,000. Nice. Now you got math.

Math. Yeah, you did that.

Now I got my head on straight. Okay, and then you can start looking at some of the other accounts too. So it's all about that key time between now and April 15th where we can make double your contributions, which is key.

Yeah, and for those of you that have questions that we're not able to hit, just be sure to pop over to our website at directedira.com, book a call with one of our account reps. They can answer those questions and get you an account set up and going. They'd be happy to do that. The only thing we don't do is give investment advice.

No investment Okay. All right. So Category 2, let's jump into the next category. Now, this is for anybody who has Schedule C income or 1099 income. These are the two employer plans that you can establish here. You could self-direct and you can make contributions to. So there's some changes here as well. So we've got the SEP IRA. For all intents and purposes, it's just like a traditional IRA. People make contributions. A lot of CPAs will push self-employed individuals to set up a SEP IRA, make a large contribution so they can take that large tax deduction. Um, it— I say it's like a traditional IRA because the contributions that you put into the SEP are typically tax deductible. But because as a— as an employer plan, you can make contributions well above the $7,000 limit of a— of an IRA. You can make contributions for 2025 up to $70,000 $100,000 in a SEP IRA. Now, it gets a little different when you have a solo 401(k) because you've got two people making contributions. But for the SEP, it's just the employer making the contribution. So the tax filing deadline for SEP IRAs is actually your tax filing deadline plus extensions, if applicable. So if applicable. So if you're filing an extension as a business owner, that contribution limit for your SEP could extend all the way out to September 15th or October 15th of next year. Still for 2025. Now, there is a calculation based on income, but that's the max that you can put in, $70,000. 2026, they've increased it by $2,000. So it's $72,000. Now, on the solo 401(k), it's a little bit different. Again, this is employer plan you can have as a small business owner. But for most of you who are familiar with 401(k)s, you usually have two parties that are making contributions. You have the employer making contributions And then you have the salary deferral of the employee making the contributions. Well, when you're self-employed, guess what? You're both people. So you can make both sets of contributions. So when you look at the employee contributions, contributions you've been making as an employee, those contributions where you're pretty much at the end of the line, those contributions as an employee have to be done through payroll and they have to be done by end of the year. So if you're looking to make contributions as the employee for 2025, those have to be done before the end of the year. The employer contributions which come after that, that can be done again all the way until your tax filing deadline plus extension. So we're just talking about 2025 contributions here. Okay. And the combination of those two contributions, your employee contributions before end of the year and your employer contribution, can't exceed $70,000 unless— and this is one of the things One of the things the Solo 401(k) has that the SEP doesn't, you have catch-up contributions with a Solo 401(k). There's no catch-up contributions with the SEP, but the catch-up contributions for the Solo 401(k) for 2025 are $7,500. And they even threw in a new super catch-up contribution for anybody ages between ages 60 and 63. It's $11,250 is the total catch-up contribution you can make.

Nate, let's clarify this one comment from Leah. Thanks, Leah. Looks like they have— have, uh, some friends in the chat. That's always fun to see when people are chatting live in here. So Leah is asking, um, on the solo K it says no income limit on Roth contributions. The question is, but you must have at least the amount of net income as the contribution, correct?

Correct.

Yeah, correct.

Yeah, you can't make a contribution over what your income is, over what your net income is. But one of the cool things with the solo 401(k) that's different than the Roth IRAs is We got to work around that income limit that they still have on Roth IRAs. Now, there's a way around it with the backdoor Roth, but in a solo 401(k), as of the employee contributions, they don't account for any income limits to make Roth contributions.

Yep. Awesome.

Okay, so now they did increase this, like I mentioned, in 2026, the income limits do go up for SEPs and solo 401(k)s to $72,000. They also increased the catch-up contribution to $8,000. $1,000 for 2026. Okay. All right, moving on. Now we do have some couple charts here as far as other deadlines when it comes to making contributions to a solo 401(k), particularly. We're not going to dive too deep into this. It's also in the article that Matt wrote. So if anybody wants a copy of this PowerPoint, just shoot me an email. I'll correct the, uh, the edits there here in a second. And here's some other things that we're going to go over here in a second, which leads us really into HSAs and ESAs. So HSAs and ESAs. If you have a high deductible health plan and you qualify for a health savings account, this might be the, might be the best item on the menu. There's a lot of tax advantages to this HSA. And I know a lot of people that use it get it, but some people just don't get privy to this information. But as long as you have a high deductible health plan and it's kind of fuzzy on the numbers, just call your health insurance provider, ask your health insurance provider, Is my insurance HSA compatible? That's the easiest way to find out if you're allowed to have this savings account that can be invested called an HSA. Here's benefit number 1 with the HSA. When you make contributions to an HSA, it's like a traditional IRA. You get a dollar-for-dollar tax deduction on every penny you put in as a contribution. So the 2025 contributions can still be made up until your tax filing deadline. Okay, so just like a traditional and a Roth, they have the same tax filing deadline. And the contribution limits for 2025, it's based on who's covered by your insurance. If it's just a single plan, like I have a single plan, it just covers me. The contribution limit for 2025 is $4,300. You don't need earned income to make this contribution, but it does give you a tax deduction off of your income. So $4,300 if you have an insurance plan that's just a single, single coverage. If you have family coverage, it covers you and a spouse, you and a child, you and somebody else.

That all qualifies.

Yep. That's a family plan. Family plan contributions to an HSA go all the way up to $8,550. This is the first plan that I contribute to every year because it's free money. You put the money in, you get the deduction. You could take it right back out to pay for medical expenses if you wanted. It's the same amount of money, but just putting it into the account. Gets you a tax write-off at the end of the year. Then it can be invested just like it can be invested into other alternatives and crypto, into precious metals, into real estate. But you could take the distributions of the earnings of the HSA out any time at any age, provided it comes out for a qualified medical expense. It comes out tax-free. So, it's tax-free going in, tax-free as you invest it, tax-free coming out. And one of the things that you mentioned is there is a one-time-in-your-life rule where you can actually make your contribution by just moving money from a traditional or a Roth. It just doesn't make sense for Roth. Yeah, you can move it from an IRA. Those contribution limits, you can just take it from your traditional and move it right into your HSA, provided you qualify to make a contribution. Now, why would that be beneficial? Take $8,000 from my traditional IRA and move it over to my HSA? Well, if you think about it, a lot of people's emergency bucket is that old rollover IRA they had from their old job. Yeah, right. Rolled into a traditional IRA. So their knee-jerk reaction when they've got a medical expense hit that might be unforeseen, they take that $8,000 out of the traditional IRA and they pay the taxes on the $8,000. And if they're under 50, they pay the 10% penalty. Well, if you haven't used this yet, You can just move $8,000 as a tax-free transfer from the traditional and move $8,000 or whatever the contribution limit is right over to your HSA. And as soon as you take the distribution out of your HSA, it's tax-free and penalty-free, provided it's being used for medical expense.

Yeah, let's clarify that real quick because there's a couple questions that have come in and we just want to bring some clarity to it. So, this is a little unique, right? So, you're going to take the HSA and you're going to self-direct it into an alternative investment. Historically, let's say if you just set up an HSA at Fidelity, you're investing in stocks, bonds, mutual funds, an ETF of some kind. But if you're self-directing, and let's say you did what Nate said, let's say you had a traditional IRA, an old 401(k) that was, you know, tax-deferred money. Let's say it was like $200,000, and you decided for whatever reason you were putting that in the HSA. It could be less, doesn't matter. But then you're going to go and use that HSA to go buy a rental property. You totally can do that. Okay. Now, those funds are going to stay in that HSA account now. Now, in order to get them out though, is the question like, well, how am I then taking a distribution or pulling the money out? What qualifies to that? Can I just take it as I see fit? So, it's like I got a rental property, the rental income's going back into my HSA account. The HSA is growing, all of a sudden I got $300,000, so it grew $100,000. When can— how can I get that money out? What's— what are the criteria? What's the qualification for that?

So we don't really audit what you take it out for. So, but there is, when you file your taxes, if you took a, let's say you took a $5,000 distribution from your HSA and you want it to be a qualified distribution, tax-free and penalty-free, you're going to have to keep the receipts on what you used that $5,000 to pay for.

As a medical expense.

As a medical expense. So what are the medical expenses that we see quite often? Copays, acupuncture, prescriptions, eyewear, glasses, any vision, any dental. And again, this is for expenses for you, your spouse, even if they're not covered on your insurance, and any dependents in the household.

So you can't just take it for whatever reason, right, to— or else it disqualifies the benefit of having that HSA, right? You'd be better off not, you know, doing that strategy or that type of investment, if that was your intent. It needs to be a qualified medical expense.

Yeah. And the point we were trying to make with the moving from traditional IRA to Roth or to HSA is you're moving it from an account that will forever be taxed, that would be penalized also at 50 or under 50, and you're just moving it to an account that potentially won't be taxed or penalized. Doesn't mean you have to take the distribution right away. That's not, that's not the point of that. You're just taking it from a taxable bucket and moving it to a tax-free bucket. Now, one of the things with the HSA that I like to teach is sometimes it makes sense to not take any money out of the HSA because here's how flexible the health savings account is. It's so flexible, and I'm saying flexible, I'm teasing with this name because a lot of people have confused the HSA with an FSA. FSAs are those other health savings accounts that if you don't use the money by the end of the year, they take it from you. It's funny how they trick you with the name. They try to title it and trick you. That's not flexible. The HSA is really, truly flexible. And what I mean by that is, let's say I've got an HSA and I've got the high deductible health plan between now and the next 10 years. I can make contributions to an HSA and take 10 years of tax deductions over those next 10 years. Now, if I did have medical expenses, I could take distributions from my HSA to pay for the medical expenses tax-free or penalty-free. But I can also use the rules to my advantage. The HSA will actually allow you as the plan owner to reimburse yourself for prior years' expenses you paid out of pocket. So let's see, if I want to maximize the growth in my HSA and grow my HSA exponentially, it would make more sense based on the rules that I just keep my HSA intact, keep adding contributions to it. Keep it invested and keep it growing. And meanwhile, if I do have medical expenses, I'll just pay it out of my pocket and save all the receipts. You can go as far as you want. So 10 years, I can save all the receipts, my medical receipts, pay them personally. And then at the end of the 10 years, let's say I want to reimburse myself $30,000. Yeah, provided I have $30,000 of receipts for those last 10 years, I can take a $30,000 tax-free, penalty-free distribution to pay myself back.

Yeah, things I paid for, like my 4 kids that all decided to get Invisalign this year. That cost $30,000, $28,000 to be exact.

I've had clients buy new Cadillacs with HSA distributions. I had a Cadillac Eldorado. Yeah, yeah, I know. No lie. I had a client tell me his wife was nagging him to take her and take her to Europe all her life, and he never took her to Europe. He took a tax-free, penalty-free distribution out of his HSA to pay himself back for prior years' expenses and use that distribution to take them to Europe, take her to Europe tax-free and penalty-free.

Let me hit, uh, let me hit 2 questions real quick to, to get this done, and then we'll continue. We have a few more slides and we'll just open the rest of the time up to Q&A. All right, so age 65 on the HSA, there is some, um, uh, things to consider on that. You can't, uh, be enrolled in Medicare yet, and, uh, you can't be collecting Social Security. And you have to continue to be enrolled in a high deductible health plan. So you can continue to contribute to an HSA beyond the age of 65. But those are the criteria that would prevent you from being able to contribute is if you're— once you enroll in Medicare, you have to stop. And then if you're collecting Social Security, those are both disqualifiers.

Right. But it doesn't make the HSA go away.

Correct. Yeah. You just can't make contributions anymore.

So you can't make further contributions.

So that's still active. Let me just kind of hit a general blanket question on proration for ages. So I got a number of questions on people for the catch-up, super catch-up provisions. The questions are, well, you know, if I turn, you know, 63 in a given year, now I'm 64 in a given year, like, are there any rules or prorations that have to be considered? You know, let's say in that tax year where you're not, you know, 60 and now you're turning 60 or whatever it is to hit that. Are there any proration or limitations onto the contribution limit?

That's a good question. I'm not sure on that because they just released it in 2025. But if I'm assuming if it works just like the catch-up, the REX, there's no proration.

Yeah. So, we need to look at some guidance on the super catch-up. But the rest of them, it does. There is no proration. If you turn that age, no matter when it is in that year, You can make that contribution.

Right. But it is a little different because there is a start age and a stop age. So we'll check into that. Okay. Any other questions that we want to hit before we touch on?

No.

Okay. Okay. Now, remember, HSA contributions for 2025, you do have to have already the high deductible health plan in place. So you can't set up a high deductible health plan today and make a 2025 contribution, unfortunately. That deadline just passed us. It was December 1st. But if you've got the HDHP, you already had it set up December 1st or prior, you can make a full 2025 contribution and you can see those contribution deadline amounts there. And then again, just like the IRAs, once we hit January, you can make a full contribution for 2026. You have to make sure that you've— you keep your high deductible health plan in place throughout the year, or else they'll prorate it back. Okay. Okay. Moving on to the ESA. So the ESA is again, one of the accounts that not a lot of people use. Again, like kind of Aaron mentioned, you can only put in so much each year. But these are wonderful accounts if you want to just get some money in. It works almost exactly like a Roth IRA, but you don't have to wait till 59 and a half to use the money for your child. So these are accounts, savings accounts that you can set up for each of your children. Okay. It's like, uh, each of your children and the contribution limits on these just really haven't changed over the last, I don't know, decade or so, but it's $2,000 per child per year. So again, you can make a contribution to your child's ESA provided they're under the age of 18. That's the age in which contribution— you can't make any more contributions to that child's ESA. So if they're under the age of 18, you can make a $2,000 contribution for 2025. All the way up until April 15th, or tax filing deadline. And then once we hit January 1st, you can make another $2,000 contribution. So again, this is that ripe time of year where if you're looking to maximize your contributions, you do it between now and April 15th, and that's per child. So if you've got 3 children, essentially that's almost, you know, that's $12,000 you can get in an ESA between, let's say, January 1st and April 15th. So it does give you a lot of investment capital. The contributions go in, there's no tax deduction. Okay. Unfortunately, it's just like a Roth, but they can be invested and the distributions can come out of the earnings in that account, whether whatever it's invested in, to pay for qualified out-of-pocket education expenses for that child. So that would be things like tuition, room and board, books, computers, tutoring. One of the, one of the coolest things I see in the tax code is your, your home internet. Your home internet is a qualified education expense under the tax code. As long as your kids do homework online, you can pay your home internet bill and all cabling with tax-free dollars out of the earnings of your child's Coverdell Education Savings Account. Now, again, you do have to get a little bit creative, but I have seen investors— and this is probably speaking more to the active real estate investors here— I've seen investors take, let's say, a $500 contribution for a child and use that account to be the buyer on a contract. And they wholesale the contract for a $40,000 wholesale fee. Or maybe they do a real estate option and assign the option. Again, it's all about how much money do I need for capital to tie a property up under contract? And then they just flip the contract or they assign the option to another investor for a fee. I've seen $500 ESAs go to $40 grand in literally 8 weeks.

Now, I know some of you may be wondering or asking yourself, like, well, frick, how do I do that or figure that out or do a deal like that? And the answer, it's like, you're either going to love it or hate it. You got to go out there and network. You know, you got to go out there and join your local real estate investment clubs and attend those. You got to meet other real estate professionals. Other networking groups, other private lending groups that are in your local market. If that's like you want to stay in your local market to do that and you're developing, you know, your network and this investment friend group, they can do these types of transactions with, you know, back and forth with each other to really, you know, supercharge those type of accounts. That's how you're doing it. There's no marketplace, there's no secret doodad that you're going to find to do it. We don't have that. We wouldn't know where to find that either. Those deals are through your building a network and structuring a deal. But it starts with, you know, getting the account set up, getting the funds in there, figuring out the types of investments that are even available out there. You can even be doing fix and flip. You can do private lending, you know, on someone's fix and flip that they're doing. You know, a lot of times people in different markets, they may only need $50,000 to do a deal and they're paying, you know, very generous return for that, you know, 4 to 6 month loan on that. So there's lots of stuff that you can do to turbocharge those accounts.

Yeah, I've seen a lot of private lenders use multiple accounts on one note. You know, you make a loan to a real estate flipper or something and you've got 8 different accounts on the promissory note.

And that's one of the things. Sorry, keep going.

Yeah. And those can be ESAs, HSAs. I did a note once with 14 different accounts and there were 2 ESAs listed as lenders on one note, one lien, right? Depending on the state that you're in, there's a lot of different creative ways. But like Aaron said, if you want to get into the more real estate strategy and lending strategies, maybe a good place to go— not endorsing anybody, but a good place to go— is always your local real estate investor association or the Alt Asset Summit. The Alt Asset Summit is a great place place to network and learn. So, but yeah, just get out there and network and learn from some other real estate professionals on how those investments—

look at the— you can do a little research. There's some books out there and some good YouTube videos, but you can type in fractionalized trust deeds. And as Nate mentioned, that is applicable in certain states. Not all states do that, where there's multiple lenders on a first trust deed. So you have a fractionalized interest in a first TD. You know, California is one of them. Shocker, I know. Hey, and I love California. I used to live there, so California at heart.

Yeah. So a couple other tidbits for the ESA. Again, you can make contributions for 2025 up until tax filing deadline, and once we hit 2026, you can max out the contribution on that. Um, there is some age restrictions. Like I mentioned, you can only make a contribution up until the child's 18th birthday, but the account doesn't go away once they hit 18. You just can't make any more contributions, but you can still have that account invested and use the distributions to pay for any of that child's education expenses until that child reaches age 30. Now, a lot of people say, well, what happens at age 30? Well, you have a decision that you can make as the responsible individual of the account. If there's still money left over in that ESA, you can either give it to the child as a distribution and they pay a small 10% penalty or tax on the distribution, or you can just transfer the beneficial ownership of that ESA to another child. And all it stipulates is that child just has to be under the age of 30. So let's say you've got a middle child or a second child that still has education.

Why is it always the middle child?

If you've got another child that's still in school, you just move that money into their— to your favorite child— into their ESA and just keep the ball rolling. Or maybe that your child has a child at that point, who knows? But there are some strategies on what to do with it. It's not like the money just disappears. You've got a couple different options. On what to do with it. If the child reaches 30 and you still got a bunch of money— I will tell you, I have a client that has 4 sons. His oldest son has a $300,000 ESA. Okay, now is that his favorite son? Probably, probably. No, but he was more aggressive in locating alternative investments, finding alternative investments for the oldest child, because he knows at the end of the day, if there's more money left over in that child's ESA, and he's done with school, he just moves it down to son number 2, to son number 3, and to son number 4. But he started at the top because he knows he can just trickle down that money. Yeah, at the end of the day, I have girls and boys.

My favorite are the girls. They get everything. The boys can go work for it.

Okay, couple other deadlines. This is non-contribution related, but this is very, very important. Roth conversion deadlines. We're pretty much at the end of our— your, uh, time to do a conversion for 2025. The way conversions work is if you want to take a traditional IRA or SEP IRA and pay taxes on some of it to convert it to a Roth, you want to take it from after-tax to pre-tax to after-tax. You got to pay the tax. But if you're intending to pay the tax in 2025, the conversion had to have been done in 2025. This trips up a lot of people. They go into 2026 thinking they can still make contributions and thinking conversions are a part of those contributions. You can't make a conversion, do a conversion for 2025 until December 31st, 2025. That's basically the last opportunity you can do a conversion.

So listen, I was even guilty of it this year. I may have tried to submit it yesterday for the company stuff and I don't think I'm going to get it in. So it happens to all of us.

So it has to be processed. In the year in which you just want to pay the taxes. So if you have done a conversion this year, you're paying the taxes on that conversion this coming April. But if you're not looking to rush and pay taxes, I mean, it might be a good thing for you to have waited because once we hit January 1st, let's say you do a conversion. I convert $100,000 from my traditional to my Roth IRA on January 1st. I don't pay the taxes on that $100,000 the day I do the conversion.

Right.

I don't even get a 1099. To show me that amount until next January 2027, which means if I do a conversion between January 1st and any time after that, I don't have to pay the taxes on the conversion until April 2027.

Okay, let me tell you why I procrastinated. There is no good reason. Okay, so, but here is a strategy that I think some of you will appreciate. And then if you are not already doing it, maybe you can implement it moving into next year. So, if you've established a checkbook IRA LLC, let's just say it's a single member. Let's say it's a Roth. Okay, so, it's your Roth that is a single member of your checkbook IRA LLC. What's cool about that is every year you can do the Roth conversion and then make a new capital contribution to that account. That's part— that's why I was trying to get it done because I wanted to move some more funds into my— that Roth and do some other lending out of it. So, that's one instance why that would be applicable and you could do that. So, it's another way to get more money into that checkbook IRA LLC structure that you've done. If you don't know what I'm talking about, book a call with one of our account executives. If you do know what I'm talking about and still have questions about it, book a call. We'd be happy to go over more of that. Another thing we did get some questions about, well, Can I invest in all sorts of different alternative assets, you know, with one self-directed IRA? The answer is yes. The second follow-up question to that was, well, can I still invest in traditional stocks and mutual funds? The answer is yes. However, if that's like, if you're like any kind of day trader, you're trading on a weekly basis, that's not really what a self-directed account is intended for. We do have some options that we can review with you,. But if you're just kind of buying and holding or maybe selling once a year or something, we can place those trades for you at a very, you know, low, for a very low fee. But we're not competing on a platform with like Schwab or Vanguard or Fidelity for you to trade all the time. That's not the intent of our accounts. But you can still have one account that does both. But the intent wouldn't be to, you know, for it to be daily trading. Yeah.

If you want to pull up the slide, Angel, just remember what I'm talking about. You can have as many IRAs as you want. You can have an IRA at Fidelity that holds your stocks and bonds and mutual funds and still have an IRA at Directed IRA. Now, that doesn't change your contribution limit for the year, but it does allow you to diversify amongst traditional investments and alternative investments. And that's probably what 95% of our clients clients do is they just keep a little bit of money in their Fidelity account and they move a little bit of money over here. And what you want to do is you just want to move enough money to us to fund and deploy the funds for your alternative investment. You don't need to move your entire retirement account here and have a bunch of cash sitting. Just leave that at Fidelity and you just move money back and forth. Takes 3 to 5 business days at most places with an IRA to IRA transfer.

Now we do have two separate things, right? There's new contributions and then there's rollover. Funds, you know, to, to, from an old employer plan to get in there. But one of the things that I even do is I have an HSA at Fidelity, but I also have a crypto HSA as well. But the, any new contributions that I'm making cannot exceed the, the total limit. So, you know, I may do, let's say, $3,000 in my Fidelity HSA and maybe $4,000 over my crypto HSA to get that total of $7,000 The reason I do that is for obvious reasons. I just, it's a little bit of diversification. It's easy to have that. And you know, part of it investing in stocks and mutual funds there. And then I have my other alternative asset, you know, that I'm doing with my crypto HSA.

Yeah. And same thing goes for, you can have multiple HSAs. Oops. You can have multiple HSAs and ESAs too. Now, why would you want to have multiple of those accounts? Uh, I, for one, I have multiple HSAs because I just have a small balance account with Bank of America because I have a debit card. That's really the only thing I use the HSA, my HSA.

It just makes it easy to pay the expenses.

If I'm at CVS and I'm buying some prescriptions, I can just pull that card and swipe it. Now, directed IRA doesn't give you a debit card to swipe, but we, we offer the other benefit, which is we'll hold alternative assets that you can't hold at Bank of America. So most of my HSA funds are in a self-directed HSA that I partner with my Roth and do some private lending with. So again, You can have as many Roths as you want, as many Traditionals as you want, as many HSAs and ESAs, and just move money back and forth depending on where your investment needs are at that time. Awesome. What else do we got? So, let's see. So, we talked about that and yeah, questions. And I guess we can just circle back to this.

For those of you showed up late, save the dates for that. We got our Self-Directed IRA Summit, all things self-directing. We're going to do that virtually this year. We'll have some discounts. I think we're even considering doing it free for clients. So April 17th, and we'll do it virtual out of the home studio office, probably here. And then we have our Alt Asset Summit in Southern California in Costa Mesa, October 22nd, 23rd. All things alternative. So we bring in several different speakers that have expertise and, you know, that do good diligence, you know, on the investments they're doing. We have panels. And they're just talking kind of, you know, paint-by-the-numbers A to Z on like how they're finding these investments, managing them, using qualified, non-qualified accounts. So have a, you know, good exhibitor hall, lots of networking and fun activities. And that is in-person only. So doing that October 22nd, 23rd. There is still time to open accounts. You know what? Let's hit on the solo 401(k) plan establishment. Versus contributions, because those are two different things. Let's talk about when you can set up the plan versus the contributions to clarify that. I had lots of questions come in.

Yeah. Yeah. So, you could still set up the plan. The thing with the solo 401(k), though, is it's who's making the contribution? Is it the employee or is it the employer? And again, you're both people in most cases. Employee contributions have to be done and satisfied before end of year. So you got to make the contribution before the end of the year. And usually it just comes out of your payroll. You work with your payroll company, they take contributions out, salary deferral, and dump them into an IRA. But those cannot exceed December 31st. You cannot go into the new tax year and make a contribution for 2025. Employee contributions have to be satisfied before December 31st of this year. Now, the employer contributions, those can go out into your tax filing deadline plus extension. So it gets a little confusing, but you can still set up a 401(k). We had clients, we had people calling today to set up their solo 401(k)s just to get it established and to get— just to get it set up. So you can make those calls right now, set up a call and set up your solo 401(k). That way you're not rushing next year., to do it.

Uh, Bill, uh, this for Bill, you put it in a chat about some properties, 10 properties, uh, that you bought all with second position liens on them. I'm tracking what you're saying. My recommendation would be to contact one of our attorneys over at KKOS Lawyers. So if you'll just go over to kkoslawyers.com and select for an attorney consult, they just bill by the hour.

If you—

it'd be beneficial if you had an account with us or the intent of doing that, and we can facilitate a lot of the, uh, back and forth between the two firms as it's a sister company of ours. So same ownership and directed is over at KKOS Lawyers. So if you'll go to over there, they can help with this because this is a legal, uh, question that has some tax implications. So you can pop over there and get the help that you need from And Michelle just put that in the, um, the chat there for everyone on how you can schedule a call with one of the client coordinators, get the information that you're asking, and then have an attorney consult. And of course, we'd love to— if you don't already have the business, we'd love the opportunity to earn your business by having your accounts over here. Okay, let's see, uh, what else do we have? Just do a few more questions and we'll wrap it up.

A few more questions. And if you want to just pull up the slide real quick, Angel, again, if you guys need to set up your your accounts before end of the year, uh, you can either book a call with Michelle. She's on right now. She could probably— she's probably already shared her book-a-call link. Yeah, or just go to directedira.com if you want to do it through the website. You can. Takes literally 5 minutes. But I always say it's more helpful to have somebody on the phone and walk you through it. So either way you want to do it, you still got time.

Okay, so let's see here. We hit most of these. Uh, any experience dealing with buying tax liens in an account? I mean, I don't know, Mark, personally. I haven't personally bought them, but we have clients that buy tax lien, tax deeds, and tax lien certificates. You can absolutely do that with a self-directed IRA. Most of our clients that do that do it in a checkbook IRA LLC structure because those tend to move pretty quick. Those are at auctions. You're bidding on them. You don't typically want the hassle of— we'll do it. But then, you know, there's a timing process for us to facilitate that transaction.

If it's being— Some redeem, some don't.

Yeah, if it's being held directly with your IRA. So, if you're wanting to do that, recommendation would be to set up a checkbook IRA LLC or a solo 401(k) and get a trustee-managed checking account. You can absolutely do that. And we facilitate all that. We have a preferred banking partner that we use as well. The other thing, let's see, that I got was, Oh, converting a solo 401(k) to a Roth, uh, solo 401(k). Can you do that? How do I do that?

You can. So depending on who you set up the solo 401(k) with, I know when we— you set up a solo 401(k) with us, there's usually a welcome packet that has some forms in there. Uh, you're basically doing what's called an in-plan conversion. There's, there's going to be a form attached. The deadlines are all still the same. But basically what you're doing is you're just taking your pre-tax dollars in your 401(k) and you're converting them to Roth. Awesome.

Okay, so a couple of questions on— I need more information on the checkbook IRA LLC or solo 401(k) structure. Please just book a call with one of our experienced account reps. They can go over that structure in detail. But at a high level, on the checkbook IRA LLC, Just think of it as any LLC, for instance, that you may already have. You have a member of it and you have a manager of it typically. Okay. In this structure, it's, it's manager-managed, not member-managed. I'm going to explain why here in a minute. So the member is going to be your IRA, preferably the Roth IRA. So the Roth IRA is the single member of the LLC. You have a name of the LLC because it's a business, which then qualifies you to go get a business checking account. Okay? Wherever those funds are, whether you're converting them or it's an old 401(k) that's a Roth or you're going to— it's a traditional and you're going to convert it, it doesn't really matter. We can help with that structure and how you want to. But as long as we then get the money over into that Roth IRA and it's settled here with us, we send it over to your business checking account and that gives you access to now make investments at at your will. Yeah, on behalf of your IRA. And the manager of it, what gives you the ability to manage that for administrative functions, not doing work, like you're not actually doing physical labor, but you're doing administrative work. You can be the manager as an individual. You're the manager of it. And that is the structure of the Checkbook IRA LLC. And what's cool about that is now you're not dealing with us to make the investments. You, you have the signing authorization on behalf of the LLC. What we do want is we want an annual fair market valuation where you're going to list out the investments that you made and what their value is. And we have different criteria on how it's valued. If it's real estate, it can be a, you know, as simple as pulling like an estimate from Zillow. If it's some transaction where you sold something, we'll need a professional typically third-party valuation. And so, we have a few different things criteria-wise for that, but that's a great structure. Subsequently, you can also do a solo 401(k) and you can set up a business checking account. It's a trustee-managed checking account. And it's the same thing applies. Now, you're making investments on behalf of the plan and you're overseeing that as doing administrative functions.

Yeah. Now what you're not allowed to do is take distributions from the LLC. So you just got to make sure if you want to take a distribution that's intended to be a distribution from your IRA, the money just has to come from the LLC back to us, your friendly custodian. We have to process the distribution. So it's just a, it's a nice, easy vehicle that allows you to bypass us to make investments and collect income, especially on investments that have a lot of moving parts. But it's not a magic washing machine that allows you to take money out to yourself. Personally, that has to still route through us. Yeah.

And then if you have, um, we don't— there's a question on setting up company 401(k) plans, small business 401(k) plans. We will custody those 401(k) accounts if you already have that plan set up, but we're not facilitating or managing the, that, that plan setup. But if that 401(k) plan does allow for you to self-direct investments, you can set up a custodial 401(k) account with us and self-direct that if your plan. Now, if your plan doesn't permit that, that's a whole other thing. We don't do that at Directed Trust Company or Directed IRA. There's other companies, really you got to find a third-party administrator It's work.

It's not easy.

And expensive. And it can be pricey. So, but yeah, there's ways to do it. So, if it does allow it, great. If it doesn't, okay. Let's see. What if it's a fund or syndication in real estate that your self-directed IRA is invested in? How is that valued? Okay, great question, Tina. We typically just get that valuation directly from the fund sponsor themselves. They issue that back to us. There's nothing really that you're able to do because that money has been invested with that particular fund. It's, you know, now their responsibility to send that over to us. Yeah, and you can ask them for it. If they don't send it to us, you absolutely should ask them for it.

We want— it can also be included on the K-1 that we usually get. So yeah, you just want to make sure we get it, but you're not going to be the one that's going to be preparing it. It's going to come from the investment sponsor themselves. Yeah.

Okay, well, we're right at the top of the hour. We appreciate everyone for joining us for the, I guess, the finale. I don't know if it was a grand finale, but it was a finale. Nate fudged some numbers royally. So I don't know if we can be a grand finale.

I'll fix it before I send it out if anybody wants it.

But we really appreciate everyone, appreciate all the great questions. We're excited for the new year. Want to wish everybody a fun, safe New Year. If we weren't able to get to your questions, you need some assistance with us, please pop over to our website, book a call with one of our account representatives. We'd love the opportunity to earn your business, answer any of your self-directed account types. Nate, do you have any final words of wisdom to offer everyone before we bid them adieu for '25?

No. Happy holidays. Be safe out there, guys. Enjoy your New Year and we'll see you into the next year. Hopefully you guys stick with us and learn more about self-directed IRAs. Thanks, everyone.