Self Directed Investing

Mike Hambright (00:33)
Hey everyone, welcome back to the show. Today I’m here with my good friend Michael Liello from Specialized Trust Company. We’re gonna talk about self-directed investing. It’s something that I do. If you’re not doing it, you should be doing it. Especially if you’re a real estate investor, there’s a lot of ways to use your accounts. Honestly, it’s great for any entrepreneur, because there’s some amazing things you can do to build wealth for yourself. We’re gonna talk about some of the pros and cons, some of a little bit about what it is and how to kind of get the most out of your accounts today. So.

Specialized trust company has been a sponsor of Investor Fuel for I think seven and a half years coming up on eight years here. Good friends of ours and lots of great information to share. So excited to share that with you today. So Mikey, what’s going on, buddy?

Mikey Liello (01:05)
Seven and half, yeah.

Hey Mike, thanks for having me today. I’m actually on the road again, we’re gonna have to speak again another group of people just teaching people about self-direction. So, ⁓ but yeah, so my name is Michael Liello from Specialized Trust Company. And so what we do is we educate and set people up with their self-directed retirement accounts.

Mike Hambright (01:24)
Yeah. ⁓

Yeah, that’s great. what is a just for some folks listening to this, they’ll know everything already. But just for those that don’t, what is a self-directed account? What is that?

Mikey Liello (01:44)
So a self-directed retirement account in a nutshell is essentially taking your handcuffs, taking the handcuffs off of a traditional type retirement account. So what people mostly are used to when it comes down to their retirement accounts is that they have financial advisors ⁓ or their 401Ks basically set up. ⁓

and it’s invested in stocks, bonds, mutual funds. That’s the only thing that they know that they can do. It’s only thing they’re allowed to do, but that’s not necessarily what the intention of the account actually is. So to go back into like our little Bibles, IRC 4975, right? So that basically is the tax code that tells us what we can and cannot do with the retirement accounts.

Okay, so basically what it says is that IRA owners can invest in alternative assets or excuse me, alternative investments, i.e. real estate, but IRA custodians do not have to offer it as an investment option. So basically what that says is if you call Fidelity and say, want to purchase 123 Main Street, they’re gonna say no. It’s not exactly like they’re lying to you. They’re just basically they don’t want you to do that. So then that’s basically what it’s gonna be.

Mike Hambright (02:57)
They can’t

help you with it. And a large reason why they can’t help you with it is because they chose not to help you with it because they don’t know how to charge you fees for that. Yeah. So self-directing is just taking control over your own retirement account. And you can invest in almost anything, but certainly real estate. You can lend it out. You could.

Mikey Liello (02:59)
Exactly right.

pretty much that’s the ⁓ the running rumor

Mike Hambright (03:18)
you could, there’s a lot of interesting things that you can do. can even, you can buy businesses with it, right? Like even private businesses or invest in companies. And so one of the things, so for entrepreneurs, a lot of entrepreneurs, especially on the real estate side are familiar, very familiar with self-directing. I want to get into kind of all the different kinds of accounts and stuff here in a bit. But for those of you that are listening that maybe aren’t an entrepreneur or are,

⁓ One of the best ways to fund this is you can roll over your account from if you had a W-2 job before. Typically your employer is not going to allow you to take money out of their employee or employer funded account and roll it over into a self-directed account. But when you leave, you usually have a period of time where you have to roll it over somewhere. And so that’s one other way to fund these accounts, right?

Mikey Liello (03:48)
Correct.

Yeah, so that’s one of the most common ways of actually funding. ⁓ if you have old IRAs or called transfers, if it’s an old 401k from previous job, that’s going to be what’s called a rollover. Now, the key thing is with those types of moves is that it is not a taxable event. So, that’s really important to actually kind of to realize it’s not the you’re going to take a tax hit or you’re going to get an early withdrawal type of situation.

It’s basically moving from house to house. And this is gonna be true with not just your old 401ks, but if you were in the military or you work for the state and you had like a TSP or a 403B, those types of accounts, those ones are basically, they’re all in that qualified retirement plan genre. So they can also be moved. So a lot of you out there who actually were ex-military and you’re looking to actually use, you know,

Mike Hambright (04:39)
Yeah.

Mmm.

Mikey Liello (05:06)
you need capital for some investments. I mean, that’s a huge thing that not a lot of people know is that those qualified plans are not just strictly ⁓ 401ks. It’s kind of all across the board.

Mike Hambright (05:15)
I

think it’s interesting because once you become, once I became an entrepreneur, I got into real estate, I just felt like, and by the way, I used to be in finance. My wife was an investment banker on Wall Street. We both did a lot of stuff with traditional investments. And I think we were just dismayed with like,

man, we could make more money if we take more control over our financial destiny. And then what you learn as an entrepreneur, there are ways to put, especially if have a solo K, which we get into that today, you have ways to plow way more money and have a company match from your own company into this than what the traditional ways are. So you can really sock away a lot of money ⁓ that’s either tax-deferred or tax, what do you say, tax-deferred or tax-free ultimately.

Mikey Liello (06:04)
Tax- yeah,

can call it tax-free or the Roth. I mean, we’ll go into that in a little bit, but because the Roth is very important. And the IRS really, I mean, when it comes down to what you cannot invest in, it’s pretty simple. It’s antiques, collectibles, life insurance policies, S corporations, and alcohol. Those are the only things that they say that you cannot invest in. So essentially outside that, the world’s your oyster.

Mike Hambright (06:08)
Yeah.

Yeah. So when I invest in alcohol, I have to expense it. that right? can’t be an actual investment. So Mike, we’re going to talk about three different ways to use your account today. So why don’t we kind of dive into that?

Mikey Liello (06:32)
Pretty much, yeah. Sorry about that. Especially for the ranch.

Yeah.

Yeah, so let’s kind talk a little bit first ⁓ on the difference in between the accounts. So, kind of going into … you said what you cannot invest in.

⁓ The other thing to really kind of nail down is to identify who you cannot invest in. That’s a big thing when it comes down to self-direction, especially for real estate investors, because all entrepreneurs like to get, we want to be creative, right? So deal structure is always gonna be something that we want to dive into. So when it comes down to who you cannot invest in, just think of it like this. It’s just up and down the family tree. So I cannot invest in myself, in my spouse,

Mike Hambright (07:04)
Yeah.

Mikey Liello (07:23)
in my kids and my grandkids and my parents and my grandparents. Side to side on the family tree is fine though. Brothers, sisters, aunts, uncles, cousins, completely allowed. Now the key word in that we’ll get to in just a second is gonna be investing in them. So essentially there’s gonna be three different ways that you can invest the account. Number one is gonna be outright.

So pretty simple. Let’s say I have a hundred grand in my IRA. I want to purchase 123 Main Street. It’s a hundred thousand. There you go. It’s purchased in the name of the account. So like, let’s say for example, on the documentation, it’s going to say specialized trust company for the benefit of your IRA account. Okay. That’s what keeps everything tax-free on the returns. Cause that’s one thing that actually I forgot to always say that in the beginning. The real reason why you’re using your account is because it grows

tax free. So it’s the same rules as like the stocks, bonds, mutual funds, but not really everybody knows about it because it’s not that great a return usually. But when you’re talking about real estate, it’s pretty important to actually know that all those returns will come back into the account tax free. So that’s an outright purchase. Now the second one is leveraging. Leveraging is basically it’s you can absolutely borrow in the name of your retirement accounts.

Mike Hambright (08:18)
Right.

Mikey Liello (08:46)
but you have to make sure it’s a non-recourse loan. So you cannot personally back that loan. That’s very important, but it’s also a huge tool, especially if you’re looking to basically inject your retirement accounts with steroids. Well, basically leverage is a great way that you can diversify and utilize that account. Now, okay.

Mike Hambright (09:07)
Yeah, a non-recourse loan.

Just clarify that for people that aren’t familiar. So basically, your retirement account, this is one of the benefits of real estate over other traditional investments, especially inside of your retirement account, is your retirement account can borrow money.

and leverage it. instead of, know, if you had $100,000 in your account, you’re buying a hundred thousand dollar house. It can borrow money. Now, if you if you have a non recourse lender that’s willing to lend, if you put 20 % down, you could take that same $100,000 and buy essentially a $500,000.

Mikey Liello (09:37)
Mm-hmm.

Mike Hambright (09:37)
investment or you know we’re using this very academic rounded numbers but it could also be five hundred thousand dollar houses as well right so just kind of share with people what a what non-recourse means because they’re not I mean any sort of private lender you could find you know you could convince it it wouldn’t be hard to convince a private lender that you want recourse and there’s also obviously commercial grade recourse loans as well non-recourse loans

Mikey Liello (09:45)
Correct.

Yeah, so non-recourse loans, essentially what it is is that you’re not actually borrowing the funds, the money, right? So it’s actually your account. So therefore, you cannot personally have recourse on that loan itself. you could have a, correct, that’s exactly right. So now when it comes down to the availability, let’s kind of talk in a little bit more, you know.

Mike Hambright (10:17)
You can’t personally guarantee it.

Mikey Liello (10:28)
which to say Steve down the street has, he has a W-2 job. He’s not going anywhere from that, but he loves like your, you know, he talks to you about your investments all the time. He wishes he can take part in it. Well, he could actually move, let’s say he has old retirement accounts. He could move them into a self-directed account and then you just need to secure a promissory note. You guys agree on terms and then he can actually lend directly to you from his retirement account.

he’ll get a tax free return, which is gonna be a whole lot better than what he’s actually probably getting right now. And you get to utilize the capital. So it’s kind of, it’s a win-win on both sides. ⁓ A lot of the time when it comes to those loans. And really when it comes down to for the actual lender, they actually have a tangible asset that they actually are investing in now. They know exactly what they’re doing. They actually have control.

Mike Hambright (11:24)
Mm-hmm.

Mikey Liello (11:27)
And a lot of the time, especially, those kind of private money networks grow pretty substantially and kind of stay that way for a while because if they’re getting, let’s say, a double digit return and just by basically doing nothing, they’re actually really doing nothing. And of course, when that next project comes up, they’re gonna be probably more than willing to actually kind of jump on that. So.

Private money when it comes to that, of course, yeah, there’s different lenders out there, but anybody who has like an old retirement account that can move over to a self-directed account can be a lender.

Mike Hambright (12:04)
Yeah, that’s great. And if you think about like, and I’m sure you guys are seeing this, a lot of baby boomers are retiring, retiring from W2 type jobs. They have a bunch of money in retirement, not only big balances, but they might be looking for other ways to diversify so they can move it into a self-directed account and essentially invest in you. Like they could become your lender.

Mikey Liello (12:26)
Yeah, and that’s good point too because we do have a lot of people that are in that type of situation and they have their legacy goals. They don’t want to dry up the well. So being able to have something that can be reliable and something that’s gonna be enough for them to basically live on, but they still want to be able to hand stuff down to their children and things along that line. there’s a lot of opportunity when it comes down to private money.

Mike Hambright (12:52)
Yeah, so we talked about kind of outright investing. So people can go buy a house. They could also lend the money like you could be if you have money in your self-directed account, you could lend it to other people and essentially be a lender. You can’t lend it to your kids or your grandparents, kind of like what you said, but you could lend it to other people. So there’s a lot of folks that I know that have become hard money lenders. I know a lot of hard money lenders in the country, ⁓ but any individual could be essentially become a lender using their retirement account. ⁓

Mikey Liello (13:03)
Correct.

Yep.

Mike Hambright (13:20)
And then we got into leveraging so your account can borrow money. Whether you’re investing directly, we also said, hey, you could leverage. You could get a non-recourse loan and buy real estate. You could also use other people’s money and leverage it to become a lender. I mean, that’s how lenders work is if you think of like a traditional bank.

Mikey Liello (13:40)
Sure.

Mike Hambright (13:41)
you’re putting money in, which by the way is essentially a loan to the bank, right? You put money in the bank and you’re earning less than 1 % generally. And then they re-lend it out at 6%, 7%, 8 % and they’re making a spread. I mean, that’s how lending works. So you can do the same thing. You could borrow money from people and have a bigger pool to re-lend. And of course you mark it up and make a spread on it. let’s talk, anything else we need to cover on the leveraging side?

Mikey Liello (13:45)
Yeah.

On the leveraging

side, no, think we’re good on that side. ⁓ But no, it’s, mean, the opportunity when it comes down to self-direction, especially when it comes to people who think that they couldn’t take part, you know, they couldn’t play in the pool because they just were told by whoever, whether it be their parents or grandparents or whatever it might be, is that, you know, this is basically, you have your job, you have your 401k, and you should be happy with that. When…

really you have a lot more control and a lot more opportunity to accomplish what you want and what you need to.

Mike Hambright (14:39)
Yeah. The other interesting thing about the self-directed stuff is, do you know how much money is sitting in, I guess, overall retirement accounts? Let’s just say, just nationwide instead of worldwide,

Mikey Liello (14:53)
⁓

so nationwide, I believe, ⁓ man, I’m going to have to fact check this. it’s in the trillions. It’s trillions of dollars that are in retirement accounts. yeah, it’s, it’s gone up.

Mike Hambright (15:00)
Yeah, I think several years ago I’d heard like 12 trillion or something like that. So you can hear your number. And the interesting

thing for people listening to this that you have people in your circle, friends and family. Of course, it can’t be your direct descendants and stuff, but that.

They don’t think they have a lot of money, but they never also include their retirement account. So they’re yeah, don’t really have any. I’ve got money in my retirement account, but I can’t touch that. It’s like, well, actually you can. If they only knew that they could roll it over and become a lender to you, they might be interested in that, right?

Mikey Liello (15:19)
Mm-hmm.

Well, and that’s the thing too, you have a lot of people who are kind of, ⁓ if they’re not aware, it’s almost like self-directed accounts, it’s like, they’re retirement accounts, excuse me, it’s like monopoly money. It’s there, but it’s not really worth the same. And of course it is. ⁓ You know, if you had…

Mike Hambright (15:48)
Yeah, they don’t, yeah, right, right. Along with that, the good

thing is if you find people like that that are interested in lending to you.

It’s generally more patient money because they almost like it’s theirs, of course, but they’re like not really thinking about it right now because they’re not going to retire for say 10, 15 years or more maybe. so it’s not like they’re like, yeah, I got a little money burning a hole in my pocket, but I need it back in four months. I can’t touch it. I mean, I say touch it. They can’t withdraw it without penalties until they turn of the right age. But they want to keep it invested and busy,

Mikey Liello (16:07)
Yeah.

Well, that’s the thing, when it comes to overall goals, self-directed accounts, and this is kind of the way that I always start all my conversations, is basically, what are you trying to accomplish? ⁓ Because self-directed accounts, when you really take a look at them, they are financial tools. With traditional type retirement accounts, you have no control over that. It’s basically gonna be invested however, whoever holds it, that’s what they’re gonna do. When it comes to self-directed accounts,

it’s the best way that I know of to essentially lower your taxes today and then also be able to create tax-free passive income for the future. And that’s something we’ll go into in a second with the accounts. ⁓ But also you have so much creativity that you can actually structure these deals with ⁓ that it’s not going into the gray areas. It’s just basically this is what we know we can do. And that brings up the third way it is going to be partnered.

So going back when I was kinda talking about who you cannot invest in, the key word in that is invest in them. Now, when it comes to a lot of individuals, they don’t just have one singular goal. So let’s just say a family of four and they have two kids that are ⁓ in private school, ⁓ they have a high-ductile health plan, they’re investors, there’s…

Couple of different things that they’re actually using real estate as a stepping stone to get to right they need to pay for the education They need to pay for health care. They need to keep the roof over their heads. They want to lower their taxes so Partnering is essentially a way that you can accomplish multiple different goals at the same time for the same investment so For example, you’re kind of going we can kind of go into like the accounts a little bit

but you have a lot of entrepreneurs that, you they set up their solo 401k, which, you know, solo 401k in my opinion, if you do not have W2 employees, it’s gonna be one of the best tools that you can have. It also is gonna be one of the best tax saving type of accounts as well, because it’s gonna give you a huge chunk that you can contribute to lower your tax liability every year. But, so, for example, we have, let’s say this couple, they have their 401k.

that they both participate in and they contribute to. And then they actually set up, because they have legacy goals, because you can absolutely set up Roth IRAs for your kids. If you’re an entrepreneur and you’re not paying for your, paying your kids, this probably might be something to look into. And also you can basically set up an account, it’s called a CESA. So it’s a Coverdale Education Savings Account that covers all of qualified education costs up until the children are 29 years old.

⁓ And then little do not a lot of people know this but you could absolutely self-direct a health savings account as well. So With that in mind you can actually have so this family of four so they have their solo case set up They have their Roth IRAs for their legacy for their kids and then they have their education accounts It’s going to cover all of that and they have their HSA all of those accounts can be members of one LLC

and then that LLC can invest. So, partnering is huge when it comes down to the figuring out exactly what you’re trying to accomplish overall and then putting those tools in place. So, that way you don’t have to earn more and then get taxed to pay for those certain financial goals.

Mike Hambright (19:57)
Right.

What you just explained there, as you know, my wife and I, we did this with some of our accounts. I’ll come back to that. There’s other ways to partner though, that aren’t the accounts all becoming owners of an LLC, right? Like you could have two friends that also have an account set and they can partner on deals, right? I know what, you know, you got to track all this stuff so that it’s all papered up right, but.

Mikey Liello (20:13)
Absolutely.

Mike Hambright (20:18)
⁓ If you have friends, if you’re listening to this and you have friends or, you know, I guess family members that aren’t your direct descendants, you can partner together on deals. Talk about that a little bit.

Mikey Liello (20:28)
Yeah, so essentially when it comes to the only people that really, when it comes to like the up and down the family tree thing, that’s really the important thing. ⁓ But really anybody else outside of that is pretty much the world’s your oyster. mean, we have clients who, know, they’re two brothers actually come to mind that basically, you know, every other deal, because they actually are kind of planning it out, we’ve worked with them and we do this for a lot of individuals is that, you know,

making sure that they’re aware of everything that is possible with the accounts because there’s not a whole lot of education out there. So we really focus on education. ⁓ But one of their things that they’re having, it’s a champagne problem, but when they are basically making too much and so they’re getting killed on taxes. Yeah, I call that a champagne problem.

Mike Hambright (21:14)
Is that what you call a champagne problem? You make too

much money? I’d never heard of that before, but yeah.

Mikey Liello (21:19)
Well, I mean, when you have to give it away, when you have to actually write that check to the government, that’s when it becomes a problem. ⁓ But there’s a solution to that, right? So not only do you have, and we can talk a little bit about the Solokey right now, ⁓ you have tax-deferred contributions are basically the, it’s your way to lower your tax liability dollar for dollar, right?

Mike Hambright (21:25)
Okay.

Mikey Liello (21:44)
So the Solokey, for example, allows you to put in $46,500 this year for 2025. It’ll probably go up next year. So, but that’s a tax-deferred contribution. So it’s a way that you can keep as much money in your pocket as possible. On the other side, too, you have employee contribution, which can be Roth or tax-free. And that’s $23,500 under the age of 50. It’s gonna be $31,000 over the age of 50,000. That could go directly to your Roth account.

For those out there who think they make too much to actually contribute to a Roth or they’re not eligible, or you’re really just trying to earn that tax-free forever money, then Solo K is definitely gonna be your best friend.

Mike Hambright (22:22)
Yeah, so that’s pushing $80,000 a year. And if your spouse is involved in the business for them too. So that you can put away some elements tax free, some tax deferred with your contribution in the company match. So just to say it another way, an entrepreneur couple with a business that’s doing well can put $160,000 a year into these accounts, which is amazing.

Mikey Liello (22:25)
Mm-hmm.

Correct.

Yeah.

And so, and I’ll go into a little bit more detail.

And that’s the thing is that when you actually are looking at as a whole

Again, everything has ⁓ a purpose. IRAs have their own purpose, 401Ks do. Going back to that brother example, just to kind of finish that one, is that with their problem is the fact of essentially they figured out that they are going to be basically doing their deals in their separate businesses, just like normal, but the ones when they do their, you know, they go to the CPA and like, so how much do I actually want to actually have coming into the household? Because they’re never going to, no entrepreneur is

give up a deal, that’s not happening. But they still want to actually take down those deals. So what they do is they actually can partner their 401ks together on deals and then that will earn tax free and it doesn’t add to their tax liability. So they’re actually, you know, incidentally securing their future while not giving up deals and lowering their taxes for today. And then that’s, yeah.

Mike Hambright (23:44)
Yeah, that’s great.

If you’re listening to this and you think this sounds really cool, but you’ve missed some stuff and you’re like, there’s a couple of missing pieces. At the end, we’ll ask Michael how you can reach out to these guys and learn more. Because this is the key, is having a resource that can hold your hand through it and walk you through the setup, really. And then once you understand the rules, it’s really not that hard. so one of the things that Michael talked about a few minutes ago is something that

we did in my family because we have a bunch of accounts. have IRAs and 401Ks, self-directed. We have a health savings account. And it just was kind of complicated to have. They’re really treated as separate entities. And so instead of having all these separate entities that we’re ⁓ investments in, we basically started an LLC that my wife and I are managers of.

Mikey Liello (24:27)
Mm-hmm.

Mike Hambright (24:40)
but we don’t own our retirement accounts own them. And so the I guess the members of the LLC are five of our retirement accounts. So we were able to kind of take you know some of them at the health savings account naturally as a smaller balance than anything else because your contribution limits are smaller than your other accounts at least for us. And so we were able to kind of take five accounts and say hey they’re the owners of this LLC. They fund it with the money that we have in these accounts and that gives us checkbook access. So now

Mikey Liello (24:49)
Mm-hmm.

Mike Hambright (25:09)
We invested in a large multifamily deal and I think we sent a wire, sent a wire, have a checkbook or whatever. We could lend to people and not necessarily have to go through the custodian every time because we kind of have checkbook control. And so that gave us the ability to do all sorts of stuff and combine the balances of an account to have a bigger lump sum, if you will, to do things with. Yeah, yeah.

Mikey Liello (25:25)
Mm-hmm.

Yeah, exactly.

kind of, and that’s the thing that a lot of, and because it all comes back to being just not very well known subject, right? So being able to kind of, when you first get confronted with self-direction, it kind of seems like you said, it seems overwhelming. And it’s kind of like, well, a lot of times it’s actually almost…

It’s almost like frustrating and kind of creates a little bit of anger because, you know, a lot of people say, well, that can’t be a thing. I would have known about that. ⁓ Or it’s restricted to just like the linear outright type of investments, right? But there’s so much more creativity, you know, going back to just making sure that every single deal has an intention.

Mike Hambright (26:06)
Mm-hmm.

Mikey Liello (26:15)
And so when you’re combining basically the accounts with that as tools to help secure that your financial goals, ⁓ it changes the game because you really are. It’s the hack to avoid tax.

Mike Hambright (26:27)
And the cool thing and the reason that people say that if this was a thing I would have known about it it’s like well who would have told you unless it’s like you know you’re obviously at an event speaking now I mean it’s this is not the there’s a lot of money in self-directed accounts but it’s it’s a small amount of the overall retirement accounts and that’s because

Mikey Liello (26:34)
Yeah.

Mike Hambright (26:45)
⁓ the big investment banks of the world want you to buy their products because that’s what they charge fees on. so ⁓ obviously this tends to be probably the most well-known in real estate circles just because real estate tends to be one of the bigger investment vehicles, even though it doesn’t have to be, but that just tends to be what a lot of people use them for, at least in my circles.

Mikey Liello (26:52)
yeah.

yeah, that’s actually,

I’m glad you asked that or said that because I did actually have somebody bring that up. like, so ⁓ is it just real estate that I can invest in? No, absolutely not. You can do.

⁓ whole lot when it comes to it. Like you said, you can purchase businesses, you can private lend, you can buy raw land, you can even develop, you know, on those land if it’s owned by your retirement account. Again, make sure to keep in mind, don’t build your own personal house on that land. ⁓ Yes.

Mike Hambright (27:34)
Right. Yeah, you can’t personally benefit. That’s one thing that we haven’t really talked

about much about much yet is you can’t personally benefit. So you can’t like flip a house and keep a fee for yourself personally and your retirement accounts. Like everything has to go into your retirement accounts and you can’t commingle those things at all. And so we won’t get into those details on this show, but that’s why that’s why it’s important to work with somebody that kind of knows the rules so they can keep you safe.

Mikey Liello (27:48)
Correct.

Yeah.

Yeah, exactly. And just real quick on that one too. So also ⁓ don’t do the work yourself if you’re gonna be ⁓ investing into like a fix and flip. Do not do the work yourself. Have somebody else do it. Because they do not want you to actually, so it’s called self-dealing is essentially what it’s called. ⁓ But you don’t wanna go down that road. There’s a lot of different creative ways that the IRS is okay with in order to accomplish the same goals. So that’s kind of what we focus on. ⁓

as a company and basically, you know, myself and Amanda Holbrook as individuals, ⁓ to make sure that whatever we’re actually setting up is going to be the right thing for what you’re trying to get done. like going into like the SoloK, for example, ⁓ the SoloK, so you cannot borrow from any IRA account, right? But the SoloK is the exception when it comes down to if you need some private capital, so just like household income,

Mike Hambright (28:42)
Yeah.

Mikey Liello (29:00)
or you just need it for investment purpose or anything like that, the SoloK is also your answer. So let’s say that you had 100,000 in old retirement accounts and you move those and you roll those over into a self-directed Solo 401k. Well, the Solo 401k is basically kind of set up like this. So you basically have your company as a sponsor for your 401k.

And then you have the two participants, which you and your spouse. You guys both will have a traditional and a Roth account.

So, it’s basically your two employees working for the same company, participating in the same 401k plan. So, it’s just like if you worked at Microsoft or something like that. ⁓ So, you have your higher contribution for the tax-deferred side, which is great for tax savings. You have your bigger contribution for Roth, as well. But, not only can you invest out of that 401k into anything, basically, as you would like to, within those small restrictions, ⁓ but you can also borrow

up to $50,000 as an unrestricted cash loan. So essentially in that situation,

you actually can borrow 50,000 or up to 50%, whichever comes first. So if you have 80,000, you can only borrow 40. But in that situation, it’s not gonna follow the same rules, right? So you can turn around and just put it straight back into the company if you like to. It’s unrestricted. And then essentially, you’re just gonna pay yourself back with interest. So instead of actually essentially going to the bank and then just paying that interest, now you pay yourself back

Mike Hambright (30:28)
Yep. Yeah, yeah.

Mikey Liello (30:41)
that interest and then you had to five-year loan. So it’s 50k and just cash that you can actually access. So yes, usually you cannot borrow from your retirement account except for the 401k.

Mike Hambright (30:45)
Hmm.

Yep,

yep. Well, we could talk about this all day. ⁓ Guys, I use Specialized Trust Company. The owners are good friends of mine, too. We’ve become friends over the years. Michael’s an amazing resource. If you have questions or you want to learn about this, where can they go, Michael, to come learn more about you guys?

Mikey Liello (31:11)
Yeah, so you can actually go to SpecializedTrustCompany.com. I can put up my contact page real quick if you’d like. Would that be helpful?

Mike Hambright (31:20)
Can you

just share, is it a link or?

Mikey Liello (31:22)
Yeah, so basically I can actually, I have a QR code ⁓ up here if you’d like, I can share that.

Mike Hambright (31:29)
You can try to share it. don’t know if that’ll work or not. We’re

just winging it on this show apparently. But see if you can share that. if you guys talk to ⁓ Michael directly, I’d recommend talking to Michael directly because you just got to know him here if you don’t know him already. But are you able to share it? Try it. But if you do, ⁓ definitely let him know where you came from. He’ll take good care of you. Let him know you came from the Investor Fuel show. For Investor Fuel Mastermind members, if you’re listening to this, you should already have Michael’s contact info.

Mikey Liello (31:45)
we’ll see here.

Yeah, absolutely.

doesn’t look like it’s gonna go. So you can actually email me at mliello.irastc.com. ⁓

And then I’ll actually get you, I’ll make sure that you, I send over the link for my calendar to Mike, so that way if anybody is interested, you guys can just get access to it there. ⁓ But, yeah.

Mike Hambright (32:18)
Yeah, share that with me now, Michael, when we

get off here and we’ll get it in the show notes. So if you’re listening to this, you should see in the show notes. We’ll add some of the links for how to get a hold of Michael directly. So awesome, man. Well, hey, thanks for joining us today.

Mikey Liello (32:29)
Yeah.

Yeah, I appreciate it. Thank you so much.

Mike Hambright (32:34)
Yeah, guys, thanks for joining us today. mean, at the end of the day, if you’re an entrepreneur, one of the somebody said something a long time ago, but not as long as I’ve been an entrepreneur that really resonated with me. And that is that we spend so much time trying to grow the business and it’s usually the top line. And, you know, the quote was the comment was something around if you spent even a fraction of the amount of time ⁓ saving more of what you already made on the bottom line, you’d be way better off than, know, probably putting as much effort into growing the top line. You want to grow it all. But the point is,

is like, you know, we work hard to make money as a business and it’s not as easy as what anybody thinks, we all know that. And you should do everything you can to kind of build up wealth and try to protect yourself from as many taxes as we do pay. If you’re an entrepreneur, you know that you hate it when somebody says anything about paying your fair share because we pay a lot of taxes or we certainly have the…

We’re in the sights, right, for paying a lot of taxes. So you should do everything you can, including a lot of stuff that we talked about today about how to kind of minimize that tax bill because you’re probably paying your fair share no matter what anybody else says and then some. So appreciate you guys. I hope you got some good value from today’s show. We’ll see you on the next one. Take care.