Unlock Retirement Wealth: 7 Powerful Self-Directed IRA Strategies

John Harcar (00:01.865)
All right. Hey guys, welcome back to our show. I’m your host, John Harcar, and I’m here today with Adam Bergman. And what we’re going to talk about with Adam, you know, besides his journey in business and in real estate, we’re going to talk about using your self-directed IRA to buy investment properties for investment purposes. know, guys, remember here at Investor Fuel, we help real estate investors, service providers. I mean, really all real estate entrepreneurs, two to five X their business.

And we do that by providing the tools and resources to grow the business they wanted to grow, which in turn helps them live the life that they want to live. So Adam, man, welcome to our show.

Adam (00:40.172)
Thanks so much for having me, John. Super excited.

John Harcar (00:43.883)
Yeah, me as well. And I’m looking forward to kind of diving into the self-directed IRA, like you and I mentioned before, or what we talked about earlier. It’s kind of something that a lot of people don’t know about. But before we get into the weeds of all that, why don’t you tell our audience a little bit about you, kind of your background and your experience of business, real estate, and what brought you to today?

Adam (01:05.31)
Okay, well thanks. So yeah, was a tax lawyer in New York City. I worked at some of largest law firms in the world. have a master’s in tax law. Did a lot of boring, you know, corporate partnership taxation. And lo and behold, I was an eighth year associate and I was asked to research for a client of the firm, whether he was able to use his IRA to invest in his hedge fund. And I was immediately struck by the fact that you can do it. I was totally blown away that I’m a lawyer.

pretty sophisticated guy, tax lawyer, masters in tax law, and I had no idea that you can use your retirement money to invest in alternative assets like hedge funds or real estate or gold. So it caught me down the path of exploring this industry, the self-directed IRA industry that I did not know existed. And lo and behold, it turns out you can do a lot of amazing things. And at that point, this was 2008.

the market was still relatively small compared to the overall IRA market. So I really thought there was something here. I was able to use my tax background and my passion on educating people about how to use the tax code in the most opportune tax beneficial way possible. So I left my law firm job. It took me about a year to start IRA financial and fast forward 15 years or so, we have 25,000 accounts over four and a half billion in assets and

We’ve helped people unlock their retirement money and invest tax efficiently in assets they don’t trust like real estate.

John Harcar (02:37.153)
What do you find that most people are utilizing their IRAs for? And why don’t you think many people know about the real estate investment potential?

Adam (02:46.937)
Yeah.

So right. let me just give some historical context that question, because it’s a really good question. So IRAs were created in 1974 by ERISA. And when IRAs were created, there was no distinguishing between an IRA that invested in traditional assets like stocks and an IRA that invested in alts like real estate. The tax code doesn’t distinguish. In fact, the word self-directed IRA is not even in the tax code. There’s only three things you cannot do in an IRA and that’s found under section 408 and 4975 of the Internal Revenue Code. And here they are. Can’t buy life insurance.

in an IRA, you could in a 401k. Number two, you cannot buy collectibles like art. And thirdly, in the broadest category under Internal Revenue Code, Section 4975, is you’re not allowed to do anything with your IRA that directly or indirectly personally benefits you.

your lineal descendants, your parents, your children, your spouse, daughter-in-law, son-in-law, or any entities controlled by such persons, 50 % or more. So for example, you can’t buy a house and live in it. You can’t rent a house to your kids. You can’t take your IRA, go to Disney with your family. can’t buy a car with your IRA, so on and so forth. Otherwise you can do it, right? You can flip real estate to a third party. You can lend money to a brother, sister, aunt, uncle, cousin. You can invest in your friend’s business. You can invest in private equity, real estate fund, venture capital fund, gold, cryptos, credit funds, hard money loans.

You name it, other than those three categories, you can do it. So it’s quite broad. there’s around 65 million IRAs out there, around $17 trillion in retirement money is tied into IRAs. So for most Americans, and rightfully so, it’s their biggest source of savings. Why? Because you get a tax deduction for putting money in an IRA, which is great. That’s the first benefit. And the second benefit is your money grows without tax in the IRA. That’s known as deferral or compounded returns. So you get dual benefits by saving in an IRA. And that’s why most people

Adam (04:37.556)
save in an IRA or 401k. So it’s a really exciting tool especially for real estate investors to invest their retirement money into real estate into assets that they believe will 2x, 3x, 4x or just return a steady flow of income in a tax-free way.

John Harcar (04:56.735)
OK, so let’s break this all down in the most simple in the most simplest way for some reason. just so people have, you know, our beginning, maybe to people like what is an IRA? Why do people start an IRA?

Adam (05:09.134)
Okay. So an IRA is an individual retirement account. Anyone with income could start an IRA. In fact, the most popular way of funding an IRA is either through contribution. In 2025, you can put away 7,000 if you’re under 50, 8,000 if you’re over 50. There’s two types of IRAs, individual retirement accounts. There’s a pre-tax IRA, which I just mentioned, and there’s something called a Roth IRA, which was created in 1997. It’s just an after-tax IRA. So unlike a traditional IRA, you do not get a tax deduction for putting the money in.

But so long as you’re 59 and half and the Roths been open five years, everything you pull out is tax free. So for example, I’m a big Rother. I wrote a book in God We Trust and Roth We Prosper. All my retirement money is in Roth. Why? Because the idea is once you hit 59 and a half, you can pull out whatever you want to live off, tax free. So it’s a huge, huge benefit. You don’t get the immediate tax deduction, but you get the tax free growth.

John Harcar (05:59.179)
Right, definitely.

Adam (06:05.006)
The other way of funding an IRA is through a rollover, through a 401k. So you leave your job, you have a bundle of money from your employer 401k or former employer 401k, and then you can roll those funds tax-free into an IRA and then you get to self-direct them into almost any asset you want.

John Harcar (06:25.569)
Why wouldn’t people just, or maybe let me rephrase that, like why, what’s more the benefit of a Roth IRA or an IRA or anything, a 401k, what people are traditionally taught now changing as times grow, but put your money in the bank. Put it in a savings account.

Adam (06:41.198)
Yeah, well, there’s something called taxation, right? So here’s a simple example, right? We’ll take two examples. So I lend you $100,000 and you pay me personally back $10,000 a year. The interest on the loan is ordinary income. I pay…

Tax on that anywhere from zero to 37%. If I did that in IRA, I’d pay zero tax. That $10,000 would go back to me tax free. So you do that over five, 10, 15, 20 years, you’re going to be able to double or triple the amount you save. Same with Bitcoin. Let’s say you bought Bitcoin at a thousand. Now it’s at 105,000. You sold it and you did it personally. You pay capital gains tax, probably 15 to 23.8 % depending on your net income. If you did it in IRA, zero tax.

Okay, so it is the most tax-efficient way to save. This is how smart people save, because you take advantage of the power of deferral and compound returns. Albert Einstein said, compounding returns is the eighth wonder of the world. That’s how smart people get rich.

John Harcar (07:44.343)
Why is it not being taught? mean, why is it? mean, maybe there’s not as much education on it.

Adam (07:48.014)
Ha

Adam (07:51.85)
It’s a shame. That’s my passion. It’s an absolute shame. my example is really a test case because listen, I went to school till I was 25 years old, right? I went to university. I have a law degree. I have a master’s in tax law. I probably took…

15 tax courses in law school and through my master’s program and I didn’t take one course on retirement accounts, not one course on the power of compound and returns, zero. It’s utter shame. I took all kinds of, you know…

history classes, art history, music classes, all kinds of nonsense. That was interesting, but didn’t really help me in my life. And if I just really understood the power of compounded returns, I probably would have been able to maximize my savings to even a greater extent to the degree I did currently.

John Harcar (08:40.895)
Okay. So what does your business look like now? Let’s talk a little bit about that.

Adam (08:46.862)
Yeah, so I’ve been blessed. have a great business with great people. I’ve been blessed because I get to do what I love. And I think that’s one of the reasons we’re successful. I built my business from one client, whereas me and my wife’s, to now over 100 employees. We have over 25,000 accounts, over four and a half billion in assets. We have great business because we have a great product and the product sells itself. I think we’re really good and we have the best expertise.

what we do and I know this stuff probably better than anyone in the country but it’s really the products themselves because the IRA and the retirement world is such a powerful saving and investment tool.

John Harcar (09:29.663)
Okay. And I just had my question. you own any real estate? Do you have any rentals? Do you do anything in the real estate business?

Adam (09:41.934)
Absolutely. In my IRA. I do everything in my IRA. I do what I preach. I bought Bitcoin since 2014. So it’s funny. The two best performing assets I own, three. One is Bitcoin. One is investment in a private business. And the third is real estate. All three things my financial advisors told me not to do. Don’t do it, Adam. It’s risky. Don’t do it in your IRA. shouldn’t buy real estate.

John Harcar (10:03.285)
Why would they, why did they tell you not to do that?

Adam (10:07.276)
I think they want me to buy stocks. want me to, you know, they want to make money on the assets they hold. So they told me Bitcoin is too risky. I shouldn’t invest in my friend’s business. It just didn’t make a lot of sense. And then real estate. Why would you want to own that in an IRA? That doesn’t make a whole lot of tax sense. And they were wrong on all three cases. So my best performing assets have been real estate, Bitcoin and a private investment.

John Harcar (10:31.553)
Got it. Are you seeing any trends in any of these assets or any of these investments, you know, coming down the pipeline?

Adam (10:38.126)
next

Yeah. So, you know, for me, John, the, I love investing in IRA is because you have to have a long-term horizon, right? The beauty of the IRA in the retirement world is you don’t want to be a short thinker, right? Because it’s, it’s for your retirement. It’s for 10, 20, 30 years down the road. So I think that lets you act and think more realistic, more sensible. So when I look at an investment, it’s not like, can I flip it in a month and double my money? It’s like, okay, where will it be in five, seven, 10 years? So yeah, I’ve bought in real estate. I have.

number of properties in my IRA. And I don’t worry about things that happen in the market because I like the asset. I know where it is. I can touch it. I get cashflow. It’s appreciated. I can sleep at night. I’ve diversified. So for me, it’s more about where the asset is going to be in 7, 10, 15 years and less about where it’s going to be next month.

John Harcar (11:30.705)
Awesome. if folks have that are listening, have, you know, they have an IRA and they they’re thinking about directing it somewhere, like what questions they need to ask themselves. So like, are some main things they need to think about prior to making the decision on where they’re directing those funds?

Adam (11:46.37)
Yeah, so I think whether you use an IRA or to invest in real estate or invest in stocks or whether it’s personal money, you always want to know what you’re investing in, right? And why I love the self-directed world is because some people don’t understand Wall Street. They just don’t understand stocks. They don’t like it. They don’t feel comfortable with it. It doesn’t make sense. And there’s a larger group of people that just enjoy real estate. They enjoy investing in things they understand, whether it’s gold or Bitcoin or private.

companies. So the self-directed world and Congress, to their credit, when IRAs were created in 1974, they’ve given people the right to do this. If they did not want Americans to invest in alts with the IRA, they would have shut the door down and said, hey, you only can buy traditional investments like they did with 529 plans, college education savings plans. But with an IRA, you’re allowed to do alts. And there’s a good reason, because you can diversify. So it’s important, I think, to look at what you believe in, what you

want to do. You can create your own freedom, can create your own luck. There’s nothing more American than doing a self-directed IRA.

John Harcar (12:54.273)
Are there any rules that they should live by when starting to do something like this or thinking about it or like any, you

I don’t know, just like any, any like,

Adam (13:04.354)
Yeah, I think you want to walk.

Adam (13:09.366)
Yeah, I mean, you definitely want to work with a company like IRA Financial. First of all, you need a custody IRA somewhere. So if you want to buy real estate with your IRA, Schwab, Fidelity, Vanguard, they’re not going let you do that because they don’t, they don’t let you do alts. Why? They don’t make money. It’s not because there’s something illegal about it. They don’t make money when you take your money out of Vanguard and out of the stock market to buy real estate in your hometown. They don’t make money so they stop you from doing it. The self-required industry allows you to do it. So you want to work with a company like IRA Financial that has the expertise to do it.

Number two, the prohibited transaction rules I mentioned previously. Those are the core rules you have to understand. So if you’re doing an investment, you got to make sure it’s not a collectible, not life insurance and not prohibited. You don’t worry. You work with a company like IRA Financial. We work with you and make sure what you’re doing is not prohibited. So we guide you. We help structure everything. We help move the money. We help with all the IRS reporting. You literally have to do nothing. All you need to do is just decide what you want to invest in. Tell us where to grab the money.

and we’ll send it and we’ll do all the reporting.

John Harcar (14:12.791)
Okay, and then what are the mistakes that you see people making when they’re doing this maybe on their own or with other companies?

Adam (14:19.586)
So the mistakes are depending on the investment. if it’s real estate, a lot of the mistakes I’ve seen is on the structuring. So they find a company online and there’s a lot of great ones and there’s companies that aren’t so great. And they just set up the retirement account quickly. They don’t ask questions. And then it turns out the investor is stuck in a deal and there’s potential tax pitfalls, something called UBIT, unrelated business income tax, which could be removed or

least reduced through different

manners and if they use the right company who was able to examine the fact pattern prior to the investment, they would have easily been able to restructure investment to minimize tax. So I think that’s the main one is some companies just want your business and they’re just going to open the account and not ask any questions. And if you go to IRA Financial and some other really good companies, we’ll work with you to make sure we understand what you’re doing and then get you in the right structure so you can maximize your tax benefits.

John Harcar (15:22.933)
In all your time in business and obviously you had a lot of schooling and you obviously had to have some good mindset. I like to talk about mindset a little bit with folks is just to see are there certain things, books, people, podcasts, things that help you in your mindset as you grow through your business.

Adam (15:41.742)
Well, that’s a great question. Yeah, I read a lot. And what I try to do, whether it’s online, the Wall Street Journal,

anything or if I’m just walking through a mall or through a street, I always think about what I’m seeing, how could that impact my business? Right? So for example, I was reading an article about a new AI startup that’s helping the plumbing industry. I don’t know anything about plumbing, but I read the article and said, okay, what are they doing in this specific field that could potentially help my business? So that’s what I’m always doing. I’m always trying to think about, hey, this is really cool. It could be something on a menu in a restaurant, but like how

could I employ that in my business to help my customer? So I think it’s always looking, always growing, never staying static, and always thinking about the customer. What does the customer want and how could I make it easier for the customer?

John Harcar (16:34.443)
What’s your current read?

Adam (16:37.484)
so I just finished reading the Walter Isaacson biography on Elon Musk, which I recommended. He wrote one on Steve Jobs, which I really liked. So I just finished this recently. And whatever you think about Elon Musk, you can respect the fact that he will do anything to solve problems. what I love about Elon Musk the most is he will sleep on the factory floor and he’s always looking to make things easier, simpler, and he just hates, you know, just…

rules that just exist in a vacuum that don’t really have much purpose. So I took a lot of that and I told my team, okay, let’s look at our processes and maybe there’s 10 steps. How do we knock it down to three steps? There’s always ways to simplify these processes. So that’s what I really got out of the book. And, whatever you think about him, I think you can take that away from this biography that he’s a master at just looking at things and trying to make things easier.

John Harcar (17:33.771)
Love it. I love it. What do you feel your keys to success have been?

Adam (17:40.38)
So I’ll give you a few. mean, luck, I’ll be honest, like being in the right place, right time, hard work. mean, a lot of hard working people. So the best advice I ever got. So I was a lawyer by my fifth years of tax law in New York. I liked being a lawyer, but I didn’t feel like it was my calling. It was honestly like just golden handcuffs. The money was good. I was single in New York City. I was able to spend money, go out. It was fun. But I didn’t feel like I to do it for rest of my life. So I actually had a friend

John Harcar (18:06.517)
Hey, there you go.

Adam (18:12.728)
a good friend of mine whose dad was a very successful software developer and I would talk to him and he said, I kept saying I really want to start a business but I have no idea what I want to do. And he said, okay, you should try to find a business that you could use your tax background.

said, why? goes, if you just want to start a business, let’s say it’s a furniture business, you’re not going to know anything about furniture. It’s going to take you years to catch up to your competitors. It’s going to be very hard to succeed. But if you start a business that there’s some tax flavor to it, you’re going to write immediately, be on top of your competitors for the most part, at least be equal, probably on top. And you’re going to have an easier time to succeed. And that was the best advice I found. when I kind of stumbled on self-directed IRAs, right away, when I started my business, none of my competitors were

tax lawyers. So right away, I had an advantage. I understood this stuff. I was able to structure things they didn’t know. They’d have to go hire consultants and lawyers to help them where I was able to do everything myself. So that was the best advice I ever got is try to find a business that touches on your skill set and your experience. And I think business is so hard, but that’s just one advantage that could help you succeed. And it worked for me.

John Harcar (19:26.039)
Definitely definitely help get a foot up. That’s for sure. I mean, you know, you already know a lot of that stuff. So you wrote a couple books. How many books total? I think you said nine.

Adam (19:37.794)
Yeah, nine. I’m on my tenth.

John Harcar (19:40.343)
Awesome. are these main the books mainly about? Is it about self-directed IRA? What are they about?

Adam (19:48.278)
Yeah, so this is my last one. It’s called Mastering the Self-Directed IRA.

And yeah, they’re all about IRAs, using retirement money, whether it’s through a solo 401k, a self-required IRA. I wrote one how to use retirement money to start a business. One about the Roth. One about how we all can be seven figures at 70 tax-free, how we all can literally be tax-free millionaires. And there’s three easy steps in the book. But it’s really circled around the retirement system and really how rigged it’s in our favor. Like people don’t realize Congress

is literally giving us a pathway to tax free millions and it’s the only area where the Democrats and Republicans agree. If you look at all major retirement legislation, generally it’s almost 99 % unanimous in favor of it.

whether it’s on the Ways and Means Committee, Senate Finance Committee, the Dems, Republicans, this is the one area they agree on, because it works, right? It’s based off mathematics, compounded returns, and it helps everyone. It’s not a zero-sum game. We all can have millions of dollars in our IRA tax free if you just kind of start early. Here are the three rules I give it to you. Don’t have to read my books. Start early.

Be consistent, make contributions every year, the best of your ability. And three, be patient, trust the process. You’re gonna have six to seven figures tax free, it’s guaranteed.

John Harcar (21:08.023)
If there’s folks listening that want to reach out to you, talk to you a little bit about using their IRA or just anything we talked about today, how do they get in touch with you?

Adam (21:16.738)
Yeah, the best way, think there’s two ways. One, IRAFinancial.com, tons of great resources. You can call us, email us, chat us. We have a great team of tax professionals, free consultations. You can just call and ask questions and our team will happily answer them. There’s no fees. then the second, our YouTube channel at IRA Financial, there’s tons of thousands of videos, some long, some short, and on different topics, whether it’s real estate, cryptos, private equity, or just understanding the basic IRA rules.

great stuff and you can watch it at your leisure.

John Harcar (21:50.583)
Cool. Well, we’ll put all your contact information that you sent me in your end down in the show notes. Adam, I appreciate you coming by and spending some time with us. Thank you for all the great info. Folks there at home, if you’re listening, I hope you took some good notes. And if you have any questions, please reach out to Adam. Adam, thank you again. Guys, hope you enjoyed the show. Cheers.

Adam (22:12.27)
Thanks a lot. Cheers.