Hi, I'm Jasmine Trocchia, and I'm here with episode 1 of the IRA Cafe. And today, I'm joined with my friend and colleague, Kyle Moody, our business development manager here at American IRA. Hello, Kyle. Welcome. I'm so glad you're here.

Hi, Jasmine. Always a pleasure.

Yeah. It's fantastic. I like talking to you. So today we're gonna talk about what I think is a really, really great start to our podcast series and what we think and what American Ira thinks that every well informed client should know. What we would ideally like someone who's investigating self directed IRAs, what we think they should know before they even come to American IRA, before they even go to the website, before they call on the phone and talk to Kyle or one of our other client service specialists that, what you need to know before you even get here. So Kyle, I'm gonna throw it to you first of all. What are some of the things that you wish a client would know coming to you before they even talk to you on the phone?

Yeah. It's a great question. And after almost 8 years on the phone, hundreds of calls a week, you know, thousands, throughout the years. I I've actually been able to put together a list, and it actually doesn't take that long to put it together and depends on how long you wanna discuss them. I would say that probably the number one thing, that someone wants to know is that a self directed IRA is not for everyone. So it really depends on what your investment objectives are, whether you're comfortable in the stock market, whether you wanna make the leap, do the, if you wanna diversify your portfolio to get into self direction. And then once you get into self direction, do you already know what it is you're looking to invest in?

No. Wait. Hold on. Let me stop you there for really quick because I think that's gotta be in salesperson 101, the classes you take to do business development. Did you just say the self directed IRAs are not for everyone? So Yeah. Who were they for?

So, you know, it really is one of these things where it's kind of a breakdown. So if someone just says, you know, hey, all I'm looking to do is, I I wanna take some funds, and I wanna be able to put those, into certain, index funds or anything that might point to the public investment, well, more than likely, our clients are coming from those types of, more traditional type houses. So our clients are looking for, the ability to use their retirement funds to invest in real estate. There's multifaceted, points to real estate. So it could be a piece of, rental property. It could be just a vacant land that, you know, they wanna use their account to build a house on. It could be someone who wants to lend their money out. So, you know, if you are someone who says, you know, I I don't know if I really wanna be boots on the ground going and looking for property, walking through this thing to make sure that, you know, it's exactly what I want, my retirement account, to have for tenants or I don't know if I wanna get into working with borrowers and gold might not really be my thing.

If if all of those types of things, you know, don't really make you want to jump at saying, hey, that's the investment type that I wanna diversify my portfolio to get in. Then, you know, like I said, it's not for everyone.

Yeah. So two things come to mind right away. First of all, so, Kyle, I used to work at a company x y z. I, one of their perks they offered was I contribute to a retirement plan, they contribute to a retirement plan, but I don't work there anymore. I have, oh, about $20,000 in that retirement account. What can I do with it?

Okay. So that's a good question as well. And that actually kind of flows into really knowing what you have. People will call me sometimes and, the first thing, you know, to well, maybe not the first thing to know, but one of the first things that I will cover is to let folks know, look, we're not fiduciaries. We're not money managers. So therefore, I'm not perm I'm not going to because I'm not permitted to give you any tax, legal, or especially financial advice, suggestions, or opinions on anything. So just like this informational, podcast here in any call I'm on, it really is kind of an educational series and really providing you the information so that then you can move forward to make the decision on, what you're gonna be doing. With all that being said, if you, are bringing a a 401 k from a previous employer, Some questions that right out of the gate that I have about that 401k, number 1, are you truly separated from that place of business? If you're already working somewhere else, is it the 401k from the previous employer? Because you may find if you are currently employed and those are the funds you want to use, more likely than not, the administrator is not gonna let those funds go.

Okay. So here's my next question. When I worked at x y z company, I basically gave out of my paycheck. Right? So I said I want x amount of money out of my paycheck to go to the retirement fund that was part of the perks of working there. I didn't have to make any decisions about what that was invested in or how it was making me money and I just realized it wasn't just sitting in a bank. It was doing something. It was being invested somewhere to make me money. If I bring my money to American IRA, I have to be involved in the decision process of how it's invested?

Well, it's it that's probably the best question you've asked so far and it goes back Thanks. To 2 things I've already mentioned, and it actually goes back to, the subtitle of our company, American IRA Self Directed IRAs and 401 k's. Okay? So also when I mentioned that we are not money managers, we are not advisers. Therefore, I'm not gonna be pushing the product. I'm not gonna be paying attention to your money to tell you what you should be doing with it. Funds that come into self directed IRA accounts are generally gonna be sitting in a noninterest bearing trust account. So your money is not going to be growing unless you're working it. Now a little side off from that is to say if the market is ever getting a little wonky and you see it just, you know, up and down, we will get phone calls.

Oh my gosh. You know, what is the look what the market lost today. Well, just think about it. Your account may not be growing if you're not working it, in a self directed account, but it's not losing anything either at that point. So that's the other side, to look at it. You know, those are more in in it also goes back, to one of the very first things that I said that if it's not for everyone, this is not a set it and forget it. Okay? It's it's not the eighties rotisserie commercial. You know, this is gonna be something where you were going to have to find the product that you want to invest in.

You're gonna be directing us where to send those funds that you, want to invest in. It's not just to handing us your money and telling us what, to do with it. Self direction doesn't work that way.

Right. So here is my 3rd question. Next question. What is the difference between a traditional and a Roth? How do I know what kind of funds I just gave them money out of my paycheck? I I'm not really sure what kind of funds it is to tell you what kind of account I need.

Well, your paperwork is gonna show you that more than likely. You're gonna see something that's gonna say just IRA. It may it may not say traditional, but if they're gonna be Roth funds, then more times than not, you'll see where it says Roth. The biggest difference, on the 2 is that, traditional funds went into, those contri those contribution traditional contributions. You put those into an account before the taxes were ever paid. If they're Roth, contribution funds, it means that the taxes were paid before they went into the account. Now that's on the front end. Okay? What that looks like on the back end or it may be in the middle part of it is if you're doing an investment, a self directed investment with traditional or Roth funds, you may not find taxation on either one of those, as they are say income producing throughout the year.

Right? Because everything stays in the within the vacuum of the retirement account. Where you're really gonna notice the difference is on, the future distribution. Okay? So when it comes time to take a distribution out of a traditional account, well, at that time, that's when you're gonna be responsible for the taxation of the amount that you're taking that year in the form of the income that you took that year. Whereas any of the funds that you're taking out from the Roth, be that the principal and then, of course, any profit that you're taking out, is not gonna be, taxed ever because the taxation, was taken care of when you put the money into the account.

Oh, that makes sense. So let's pretend I become an American IRA client and I wanna make an investment in real estate. Do I have to take a distribution of those funds to make that investment? How does that process work?

Right. And the answer is no. When your funds are on the inside of the retirement account, and, of course, that is your objective to use the account to purchase the real estate, you wanna remember that you personally are not who is going to own this real estate. Rather, it's the retirement account that owns the real estate. Right? I mean, that's the whole point of setting up the account. It's the beauty of the self directed IRA is that you can find the property, you can have the retirement account purchase the property, you can have the retirement account handle any of the upfitting and maintenance and pay for the property management company. And then, on the on the backside of that, any profit rent, if you will, that comes back into the retirement account, it all comes back in and that's how the account is gonna grow because everything stays within the vacuum of that retirement account. You didn't touch the funds when it came in from your outside custodian.

You didn't touch the funds when you directed us where to send that for the purchase of the piece of real estate, and you're not touching those, rent rental income funds as they're coming back into the, to the retirement account where we deposit that in. The fact that you don't touch anything in any direction is what keeps it from being a taxable event to you.

So we've just talked about some very basic starter. I would call that self directed 101 stuff. So, what else have you heard or been asked very often or something you wish that a well informed client would know that we haven't touched on yet?

I think when you start, you know, getting geared up for the asset classes that you want to invest in, whether or not that is gonna be buying a piece of real estate. If if real estate is not your thing because it's just not your thing, you never wanna get into real estate, you you said, hey. You know, I might lend money to folks who wanna get into real estate. Okay. Well, great. Then you can let your retirement account be the bank, and you can be a hard money lender out of the retirement account. Or you may just say, hey. I'm, I don't wanna really do either one of those things.

But a little bit like lending, I might want to invest in a private company. So take those three things. Those are generally the top three things that someone's gonna invest in. I would say, again, you will always hear me come back to it's self directed. And because of that, we, as the company, know, no one in our company at any level of staff is gonna be doing any of the due diligence on, is this house in a good neighborhood? Is it a good buy? Does it have good, rental income? Who or what, if anything, is this, private company that you're gonna be investing in? Who are the who are the borrowers, that that you're directing us to send your, retirement accounts, funds to? You know? Are are they good on the payback, for example? We're not gonna know any of that at all. All we are, being the record keepers of the account, is to send the funds where you legally and lawfully, ask us to do so. So all that culminated to say, you need to do your own due diligence to know what is it about this house? Is it a good or a bad buy? You know, why are they selling? As this borrower, do they pay on time? You know, are there you know, have you, spoken to other lenders in the past who have lent them money? Would they do it again? You know, is this company that you want to invest in, is it a legitimate company? Because, you know, once you direct us to send the funds for any of those investments, you know, other than us bringing the the funds back in in the form of of profit. That's really, our only lane that we're allowed to be in.

So I I know we say all the time that we cannot give advice. We're not fiduciaries, you know. We're not the ones to say, hey, you can put your money here, there, everywhere, or invest in this, invest in that. It's up to the client because it's totally self directed. So but I would say and I think you would agree with me Kyle that, the one piece of advice that we can give is to have an army behind you. Have a CPA or an advisor or an attorney or all 3. Have a mentor who is already making these kinds of investments, who can give you advice because you're gonna need help along the way. You really this is self directed, but generally speaking, you can't do this alone.

That's correct. I mean, it's always good to have I mean, you know, even if you're a person who doesn't even know what a retirement account is, but if you're a homeowner, chances are if anybody, is ever looking for a plumber or an electrician or just a great handyman, chances are you've got those answers. And if you don't and you're the one who's in need of something, you can reach out and say, hey. Who's got a somebody somewhere always has a professional who it's in their realm to assist with something, answer questions, take a look at something if you have a question about it. Right? Same thing. When it comes to your retirement account, I'm gonna tackle a couple of things here really quick. You know me, Jasmine. I just don't give yes or no answers.

If somebody asks me a question, they better, you know, fasten their seat belt or or have a few minutes or or a cookie and a snack. And that's this. I always tell folks, make sure that you keep your investments as clean and streamlined as possible. Okay? These are you you wanna get into the stock market, you know, you know, play with some stocks. I mean, what do they say? Yeah. Never risk more than you're willing to lose, and that's what you always kinda hear about the stock market. Well, a little bit

on the

same lines of using a self directed account. You know, keep something easy because it it can be. Okay? If you wanna get creative, then make sure that you are gonna have the people, really in the wings there that can explain to you what contracts look like. And, I mean, I'm not talking about our contracts because we really don't have any other than the, agreements and things like that, you know, the applications and, the paperwork that you will use to move forward with your investment. But if there's an attorney that, that that that you trust, well, and that's great that you trust them, but make sure it's an attorney who also understands the nuances and, inner workings of a self directed retirement account. Make sure that if your CPA, is going to be, you know, right there, to take your call if you need them, make sure that they understand, the nuances of self direction. All too often when, I'm speaking to folks, they'll say, well, I might need to get another CPA because they don't really know anything about, self direction. And then it it that does give pause to a potential client, because, you know, they may ask, well, why does my CPA, my tax professional, not know about self direction? And I I just tell them, hey, by the way, not all of them do.

There are so many tax professionals out there that they also know what their niche is. They also know what lane they just wanna stay in, whether it's gonna be your CPA for end of the year taxation. But if you have, you know, true forensic, you know, CPAs or or folks, there are a lot of them out there who understand the ins and outs and the up ups and downs of, self directed retirement accounts. And it's and it's good to maybe have a second tax professional, who can, answer those questions for you. It all goes back to what I said at the beginning about, keeping it clean, having your professionals because these are even though the asset doesn't truly belong to you and it belongs to your retirement account, you worked very hard for the dollars over the years that were used to, secure that asset. And, you wanna make sure that you are doing it clean all the time, that you're doing it the right way. And if there's ever any questions about is this, a good investment or, can I do it this way? That's where your professionals are gonna come in, to be able to help you, guide guide you through those questions.

Now I know you don't answer anything quickly, but I would like to talk a little bit about how you get started. So let's pretend I'm bringing my retirement account funds from x y z company over to American IRA, and I wanna get started. What does that process look like? What do I need to bring to the table?

Okay. So, really, after, a conversation, with me or any of our sales staff, the next thing that we're gonna do is we have, actually, we're really proud to talk about our, our brand new, application process. That's a link. You click on that, and then the next thing you know, you pretty much have your brand new portal that you're gonna build that's gonna allow you to have all the autonomy, that you want, with the technology and everything, how how everything is is pushed by these days. It's gonna be a simple application. You'll work your way through them. And then, after we get the, after we get the all your paperwork processed, the next stage of that is then getting, the account funded. So whether it's gonna be a transfer from a like to like account like an IRA or a Roth or whether it's gonna be a rollover, from an old 401 k or either really quick, we get out there.

Okay. Well, what about 403 b's? What about 45 sevens? If it's a 4 plan, a 4 57, a 4 zero three b, a 401 k, or a TSP, then, yes, you can, bring all of those in. So you got the account now established, then it's getting it funded. And then the next stage is for you to be able to move forward with any of your paperwork, to get your, investment set up.

I think really probably like in it mostly to setting up a bank account. Like when you go into a bank and you're you have to set up the account and, you know, give them your information and then you have to bring money into the account and then you can make transactions within that account. So it's it's basically the same premise, you know, as if you think of it that way. If you've set up a bank account, you could set up a self directed IRA account. I wanna ask you a question, and this is about you, not necessarily what you do. How did you come to be at American IRA? You said 8 years ago you've been here 8 years?

Mhmm. It's going on it?

Yeah. What did you what did you do before, and how did you get here? Yeah.

So my real estate

Love story.

Has taken me a a lot of different places. We don't have time for all of those places, but, one of the last things that I did, was in my years in real estate. And in my years in real estate, both in, some commercial and residential sales with a a large company, I ended up, managing and running a a midsize, mid to large size property management company in Asheville where our current CEO, Jim Hitt, was one of my clients. And at the same time that that Jim was one of, our clients, there were properties that, I started noticing, in there that they didn't have your run of the mill, you know, human being landlord name. There would be it would be attributed to a retirement account. And so as I started learning more about that, and then lo and behold, Jim stopped by the office one day, and we got to talking about it. And a few years later, that relationship grew. And, he asked me just to stop by the office one day and one thing led to another.

And and almost 8 years later, here I am.

Wow. There you go. That's how you do it. Make the connections. Yeah. But, the names of the real estate is it was in the vesting name, I presume, of the IRA accounts. Right? That was your it wasn't like Correct. Bob and Sue.

It was like, New Vision Trust Company for the benefit of, you know, Bob and Sue.

Absolutely.

Yeah.

Mhmm.

Alright. Cool. Cool. So to wrap up and to end, is there anything else you would desperately want a a a somebody looking into self directed IRAs, maybe exploring American IRA, anything you want them to know. This is your last chance, Kyle. Last chance.

Yeah. I think it actually, transcends, not just from the from the investor themselves. I think that, you know, one of the things that I have at least noticed, in this past year is that it also all of this has, can have influence on referral sources as well. If you are a company that does capital raises and you're looking for investors to set up a self directed retirement account so that you can use their funds to they promote your project. If you are a developer, that is looking for funds for your next subdivision, whatever your main focus is, if you are wanting to send clients our way, number 1, we greatly appreciate that. But, kind of how we ask the clients to to qualify themselves, you know, it's a good idea for the referral source to qualify them as well. It's it's okay to ask them, hey. You know, what type of retirement accounts do you have? Are you gonna be able to diversify out of a a a an old 401 k? Do you have, you know, IRAs that you want to diversify out of? You know, is is our holding something that's going to you know, is that something that you want to do? You don't wanna get all the way to the point of then scheduling with us to find out that it's gonna be a nonstarter on something.

So, whether it's the referral source doing their due diligence on the investor they wanna send or whether it's the investor doing the due diligence on the company that they're gonna invest in or the asset that they're gonna invest in. I would say, you know, knowing what account you want to use, knowing how those accounts work, and then knowing, the, where you're gonna be sending your funds is all very, very important information, that you need to, have yourself ready for before opening up your account. Absolutely. Say one last thing. This is this is something that and, there are folks who have heard me say this to give this tip a lot in different, regional investor meetings and so on and so forth. But I will always always say this. If you know that this is something that you want to use, okay, that and it may not be tomorrow, it may not be next week, but if you know that within the next 30 to 45 to 60 days, there's gonna be a capital raise call. That, a property that you may really want is going to, whether it's gonna be an off market deal or if it's gonna, you know, hit the market.

I always say if you know that you are going to use a self directed retirement account, it's not a sales tactic for me to say, hey, you know, Tuesday, Tuesday, Tuesday, open up that account right now. It's not that. It's I know the timing that is involved with getting the account opened, the 7 day rider rescission period per the IRS that it's gonna take before you can do anything, or that has to pass before you can make the investment, which is usually gonna be a moot point because it can take 2 to 3 weeks for your outbound custodian to get us the funds. And then the next thing that you know from the time of the phone call that I'm on the first time with somebody, it can, be upwards of 30 days before anything happens. Well, if you call me after you've already gone under contract on something and you're closing next week and they need, the money in about 4 days. Yeah. That's not gonna happen. It's not the end of the world and you can definitely back out of it, but you're probably gonna frustrate a lot of folks when they've gotta rewrite all the paperwork.

They've gotta get money back to you because it was probably your personal money that you put into the form of an EMD or a due diligence, and then everything has to be generated from the, retirement account. All the paperwork has to be redone. So, again, if you know that it's something that that you want to do, go ahead and just get the account open, knock that part out, and even partially, fund it, you know, enough to cover your, you know, a minimum cash balance in the account and enough to cover at least an earnest money and then they let the the rest of it roll in during the escrow period.

And, this has been absolutely fantastic.

It's always a pleasure and I'm glad to be part of the, inaugural, IRA Cafe podcast. Thank you so much for asking me.

Thanks so much for listening. Make sure you like, subscribe wherever you listen to podcasts, and we'll join you at the next episode of the Ira Cafe.