Insider Secrets Podcast Season 2, Episode 9

 Guest: Kaaren Hall

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Guest Bio:

Kaaren Hall

Kaaren Hall, CEO uDirect IRA Services, LLC and  OCREIA

Despite being in the midst of a recession and mortgage market collapse, Kaaren Hall founded and made a resounding success of uDirect IRA Services. She discovered a strategic way to put her 20+ years in mortgage banking, real estate, and property management to use. The solution was an untapped market for both her skills and for investors – self-directed IRAs. Through uDirect IRA, she has guided tens of thousands of Americans through the process of diversifying their investments using self-directed IRAs with $1B+ Under Management. Learn more about Hall and her thriving company at


Key Takeaways

Alternative investments exclude collectibles like art and cars, as well as assets that involve personal use or benefit.

Self-directed IRAs allow individuals to invest in various assets, such as rental properties, without directly benefiting from them or performing any related work.

Short-term rentals, including Airbnb, can be included in an IRA investment, but the tax implications can be complex depending on whether the income is considered passive or active.

Different types of IRAs include traditional, Roth, SEP, simple, solo 401k, and health savings accounts (HSA).

Tax considerations such as UBIT and UDFI may apply to IRA investments and could result in taxes owed, but deductions can help offset the tax liability.

It’s important to have a cushion in your self-directed IRA to cover expenses and potential capital calls.

Self-directed IRA providers like uDirectIRA make the investment process easy with dedicated transaction coordinators.

Standout Quotes

“The self-directed space is all about alternative assets, private equity, which you’re so familiar with, and which is a path to getting into assets like multifamily.” – Kaaren

“Whenever I’m out telling my story or talking about multifamily, I always show that slide, that disclaimer that says, ‘Hey, Go talk to your professional.” – Mike

“People are looking for alternative assets outside of the market. Tangible assets, they can touch assets that are outside of the control of Wall Street. It’s becoming very, very popular.” – Kaaren

“You wanna have a little bit of everything. So the one piece of advice I would give is definitely take a serious look at your retirement savings picture and are you on track?” – Kaaren

“You can’t just pay for those things personally. What if your IRA owned house needs a new roof.” – Kaaren

“Think and Grow Rich by Napoleon Hill… was extremely motivating to me. And I read that book and I started applying it right away.”


[00:42] Intro to Podcast

[02:20] Intro to episode guest

[03:33] One word that describes Kaaren personally and professionally.

[04:02] So let’s talk about your history and how you started uDirect and what you guys do.

[07:34] Kaaren explains what a self-directed IRA is and how people can use it.

[11:16] Let’s talk about the different types of IRAs.

[19:55] What’s your experience as a crypto administrator regarding people’s investments and ATM machines?

[22:17] How about depreciation? Can you talk about that a little bit? Are you allowed in your self-directed to take a depreciation?

[26:15] Any other new guidelines or rules that are exciting for people that have happened or are going to happen that you know of?

[30:30] What alternative investment options are available for my self-directed IRA when I don’t have enough funds for contributions or rollovers, and how can I maximize returns in such situations?


Phone: (866) 538-3539



Kristen: [00:00:00] Welcome to this edition of Insider Secrets, the weekly podcast that turns real estate investing goals into reality. Each show we interview guests who are seasoned real estate professionals, actively closing and managing real estate deals. Mike is the founder of My Core Intentions and would like to help you make your real estate investing dreams a reality. Mike coaches you to buy investment real estate, creating short-term cash flow and long-term wealth. Your host and real estate coach, Mike Morawski, has more than 30 years of real estate investing and property management experience. Here’s your host, Mike.

Mike Morawski: Hey, what’s up everybody? Good morning. I am so excited about today’s show and as I normally say, buckle up cuz you’re gonna enjoy this ride, that’s for sure. This is gonna be very educational and bring you some information this morning that you might not know or maybe you know, and just don’t know a lot about. Or how to access [00:01:00] this investment opportunity.

But before I bring my guests in, let’s talk about intentions. Let’s talk about intentionality. What have you designed for yourself? What are your intentions for the weekend? You know, we all have dreams, we all have goals, right? They’re all things that we wanna accomplish in our life, but if we don’t set intentions around them in order to get there, if you don’t have good accountability set up in your life to achieve the milestones to help you achieve your goals, we kinda end up falling flat or falling short.

So I just wanna encourage you to sit down, take some time, think about some intentions. But right now I want you to grab your coffee and I want you to sit back, if you know somebody who needs to hear about self-directed IRAs and using those to invest into real estate syndications. You might wanna give him a call or text him real quick.

If you’re new to the show, glad that you’re here today. Like us, love us on social [00:02:00] media. If you’re on YouTube, please smash the subscribe button. We love the followers and we’re always trying to bring good, relevant content to you on a daily basis.

So, the information we try to provide is at a high level. Where you can actually take it and go take some action with it. So I’m excited this morning. I get to introduce a longtime friend of mine, Kaaren Hall. Kaaren is with Udirect in California. They are a self-directed IRA custodian, facilitator.

I think I said that wrong. They’re not a custodian, but Kaaren will explain that a little bit more. I knew Kaaren way back when she first started her company. And just to watch her grow this company over the last number of years. And I’m not gonna date either one of us right now, but it’s been a while. Let me bring her in real quick though. Hey, how are you?

Kaaren Hall: Great. Cheers.

Mike Morawski: I hope everybody’s got their coffee this morning. Hey, thanks for being here. I appreciate it. [00:03:00]

Kaaren Hall: Yeah. Thank you. I really appreciate it. So yeah, I’m sorry, but it’s been 15 years.

Mike Morawski: It’s good to see you though. I always like connecting with you and I actually think the last time you and I got together was here in Chicago. We went to Tufano’s and had dinner at little Italian place that is my favorite place in the world.

Kaaren Hall: Yeah, we made that video promoting your event. That was fun.

Mike Morawski: Oh, that’s right. That’s right. We did. Hey, so listen, let’s get started. I always ask my guests in one word, what best describes you personally and professionally?

Kaaren Hall: Wow. I think responsible, I think is the word. You know, oldest sister and a CEO and mom, lot of responsibility. So I think responsible would be a good word, both personally and professionally.

Mike Morawski: You know, my next question would’ve been what makes you responsible? But you just said it, oldest sister. Right? We’re the responsible ones all the time. That’s for sure.

Kaaren Hall: A lot to take care of and that’s what I love to do, so.[00:04:00]

Mike Morawski: Awesome. Well, good. Hey, so let’s talk a little bit about your history and how you started Udirect and what you guys do.

Kaaren Hall: Yeah, so I’ve had a varied background and it’s not what most people would think. I mean, I started off my professional career as a radio announcer and I did that for 17 years in between doing other things like property management. I got a real estate license. I’ve had real estate licenses in three states.

I don’t know if you know that. In Washington, Texas, and California. But you know, for a year I was like a professional realtor along with radio. I did that together and then some property management. And then I got into mortgage loan servicing and did that for a number of years, in Dallas, for example, and also here in Orange County and then got into loan origination.

And so I stayed in loan origination, and this is spanning a lot of years. But I was in loan origination, right at the time of the great recession. So I got out and needed a job, and I said to a friend of mine named Aggie. I said, Hey, Aggie, I need a JOB, [00:05:00] and she knows everyone.

So she hooked me up with somebody who owned a self-directed IRA company. They’re opening a new office in Orange County. And long story short, they hired me and it was great. So I opened their office and was opening 50 accounts a month and they fired me. Oh man.

Mike Morawski: For over production, I’m sure.

Kaaren Hall: Yeah. So you gotta have faith, right? So I made it through and founded Udirect IRA services and that was 2009.

Mike Morawski: So first of all, I just wanna mention you and I originally met through a mutual friend Kathleen, who I love to death, great lady. And we connected way back when I used to come to California and speak at Kathleen’s events.

Kaaren Hall: Yeah by due diligence. Yeah.

Mike Morawski: And you and I both, would speak. I’ll never forget the one event we did just before the world went to hell in a hand basket, where you spoke. I spoke, I can’t remember the woman’s name, in the gas and oil [00:06:00] business.

Kaaren Hall: Kathy.

Mike Morawski: Yeah, I was gonna say Kathy, but I wasn’t a hundred percent sure. She had a ton of people there. And then before we knew it, the world was over. At least for some of us.

Kaaren Hall: We go on?

Mike Morawski: That’s right. That’s right. And if the world crashed, you pick up your pieces and you move on. That’s my message to people is you can’t let your past define your future and just move on. Alright, so let’s talk about Udirect and what does Udirect do?

Kaaren Hall: Well you mentioned we’re not a custodian, we are an administrator. So when I founded Udirect IRA services. I went around looking for banks and trust companies like somebody to hold the money and do the cash management for the clients. Because you have to be bonded and insured and there’s a whole long drawn out process to become a trust company.

And so I interviewed many banks and trust companies and I came to an agreement with one of them. And we’ve had this relationship now for about 14, 15 years. And that’s how I got started with that and opening one account at a time, it is just literally one [00:07:00] IRA at a time. And now we have like about a billion, just under a billion dollars under management.

Mike Morawski: Wow. Say that number again?

Kaaren Hall: Billion dollars.

Mike Morawski: How’s that make you feel? Responsible, right?

Kaaren Hall: Yeah. I mean it’s a big number, but thanks to computers we can keep track of everything and we’ve just worked with a trust company on a kind of a data migration to a better system. And so it’s always improving.

Mike Morawski: Awesome. So, let’s explain to people what a self-directed IRA is and how they can use it?

Kaaren Hall: Yeah. It’s like the best kept secret is what it is. It’s something that you’ve been able to do, right? And I’m sure you tell your people about that. Ever since 1975, you’ve been able to self direct your IRA, but nobody knows that.

Because that’s when IRAs were created and when they were created, you could always invest in anything except life insurance contracts and collectibles. So that’s when it started. And then a couple of [00:08:00] companies really got into it and some of the early adapters into creating self-directed IRA companies. Because you can invest in stocks, bonds, and mutual funds over here, but to invest in alternative assets, you need a different kind of account because people who are licensed to sell you stocks, bonds, and mutual funds can’t necessarily help you with alternative assets.

So self-directed space is all about alternative assets, private equity, which you’re so familiar with, and which is a path to getting into assets like multifamily. And also, like performing and not performing debt. You can get into precious metals. That’s huge right now. A lot of people are loving precious metals. Even crypto if you want. All different kinds of, a regular house, you have a renter move in, they pay your IRA, the rent. Lots of different kinds of alternative assets not correlated to the stock market.

Mike Morawski: Yeah. So I know there’s some rules and just wanna back up cuz I wanna be clear with people about what alternative investments are, right? It’s real estate, [00:09:00] gas and oil. Precious metals like gold, silver. You can invest in crypto, right?

Kaaren Hall: Yeah. Yeah.

Mike Morawski: But you can’t collect art and you can’t collect cars.

Kaaren Hall: No collectibles. Yeah.

Mike Morawski: Right, right. Which is interesting. You would think you’d be able to maybe do cars, but I guess they think that maybe the value’s not gonna always be there.

Kaaren Hall: Right. And it’s also something you can have personal use of. Because they’re prohibited transactions with IRA, so you can’t have any personal use of the asset. So if your IRA purchases a car, well, who’s gonna drive it from where it is to where it needs to be? If you drove it, that would technically be having personal use. You know, it just complicated. So it’s on the collectible list.

Mike Morawski: So talk about personal use for a minute. So I can’t go buy a house that I’m gonna live in.

Kaaren Hall: Correct.

Mike Morawski: With my IRA, right?

Kaaren Hall: Yeah. Yeah. You wanna keep it arms length. And that’s the thing, is it arms length. That’s one of the first tests of whether or not you can make an investment.

Mike Morawski: But I can do a flip through my IRA or I could buy an apartment [00:10:00] complex through my IRA or a piece of, right?

Kaaren Hall: Correct. Like a rental property. Sure. But you’re never going to live there. You also don’t swing the hammers or do any of the work yourself, cuz that’s called an over contribution of sweat equity. Yeah. So you can hire third party vendors and if, say you have a rental property, say your IRA owns like straight up, not through a private equity ideal, but straight up a multifamily, you can screen the tenants, you can collect the rent checks, you can hire third party vendors, but what you’re not gonna do is live there or do any of the work. So you keep it arms length.

Mike Morawski: Yeah. So how about, this just occurred to me, do you find a lot of people who are doing like short term rentals, like Airbnb in that using their IRA today for that model?

Kaaren Hall: There are some. I mean, the answer is yes and short term or even long term, like 30 day rentals in an IRA. And so is it passive or active income? If it’s active income, it can throw off the tax. You know, we’re dealing with the IRS here, so it’s not always simple, but yes, people do that. Or maybe my [00:11:00] IRA, for example, would lend money to you so you could invest in ADU or short term rental Airbnb.

Mike Morawski: I always say the IRS should be, I don’t know.

Kaaren Hall: Yeah. Or it depends. That’s what they say.

Mike Morawski: Yeah, right. It depends. Lemme look through this tax code. So let’s talk about the different types of IRAs, cuz I know there’s a traditional, there’s a Roth, talk about the different types of IRAs, solos, 401s, all that.

Kaaren Hall: Yeah. We call it a self-directed ira, but it’s sort of like a umbrella term for a lot of different kinds of accounts, like you mentioned. Traditional Roth SEP, which is Simplified Employee Pension. A simple ira, which is savings incentive match plan for employees. There is again, like you mentioned, a solo 401k.

A 401k for somebody who’s an entrepreneur who has no full-time employees in any of the companies that they own. If that’s, you can have a solo K, or even an HSA health savings account can be self-directed. But there’s something [00:12:00] new, and I’m glad you asked me about this so I could bring it up. There was something called the Secure Act 2.0 that passed at the end of 2022. And the Secure Act, what came with it is two variations on the theme of existing IRA.

So a SEP IRA, again, it’s for a self-employed person. It stands for Simplified Employee Pension, where instead of the contributions going in pre-tax like a traditional IRA similarly. Now your SEP, you can contribute to it as a Roth contribution. What? It’s very surprising. Now we are midyear and the IRS is still not giving us the guidance on what the rules are for the Roths.

And what it includes or excludes or limits or anything. We don’t have treasury or IRS guidance. In fact, I was just at a conference last week in DC and we’re asking, literally talking to the IRS, literally talking to the Department of Treasury. They just don’t have any guidance for us yet.

But there’s also going to be the simple IRA is [00:13:00] also going to have this ability where if you have a simple IRA plan, you can make contributions as after tax, like Roth type of contributions where the money can grow tax free for life. We’re just waiting on department of Treasury guidance.

Mike Morawski: Yeah. So why a Roth IRA? I think this is amazing, people need to understand this. But why do I want a Roth versus a SEP or versus a traditional?

Kaaren Hall: Well, every type of IRA has its own rules. A traditional IRA is actually the most common. I mean, by far of all the retirement accounts, most retirement accounts IRAs are traditional IRAs. Because a Roth has income limits. So if you make too much, you can’t even contribute to a Roth.

Right now, you can convert regardless of income into a Roth. But the cool thing about the Roth is, when you have this money in there that you’ve contributed, you can go invest it and it can grow like unlimited growth in that whatever the growth you see in that account is tax free for [00:14:00] life as long as you get a couple of qualifying conditions like turning 59 and a half and having a Roth of some sort for five years, for at least five years.

So you meet these qualifying conditions, the money comes out and you’re 59 and a half, tax free. I mean, that is great because I think you and I both know when we’re ready to retire, that taxes are probably gonna be a little bit higher than they are now, probably.

Mike Morawski: Just a little bit.

Kaaren Hall: Yeah, pay off that debt. And whatever it is, it’s nice to have money that is tax free, especially in retirement when you’re not working a job.

Mike Morawski: So as a syndicator, when somebody comes to me and they wanna invest in one of my apartment syndications, and just for people listening that don’t understand that syndication is just a fancy word for saying, Hey, you’re gonna partner with me. I’m gonna invest alongside you, you’re gonna invest alongside me, and we’re gonna share in the profits. That’s all it means.

But there’s bigger bonuses I [00:15:00] think that a lot of times people miss in that model because it’s not just this, right? But when I talk to somebody about tax free that means any money that they make from the distributions along the way, plus the promote on the backend when we sell the property and that money goes back into their IRA, they don’t pay tax on that, do they?

Kaaren Hall: No. No.

Mike Morawski: Ever?

Kaaren Hall: Well, if it’s a traditional, it’ll be tax deferred until you take it out, until you take personal possession. And again, with a Roth, as long as you meet those qualifying conditions, then it’s never taxable. Never, never. Except, I mean, there are a couple of it’s income taxable.

Mike Morawski: Which means income taxable. What does that mean?

Kaaren Hall: That means you’re not gonna put the income on your 10 40, but there are two like twin taxes or cousin taxes. Four IRAs and one is called UBIT, Unrelated Business Income Tax. Like if you’ve got that, Airbnb and it’s an active business, [00:16:00] that could put off UBIT tax or if your IRA invests in an asset that has leverage that can throw off another tax called UDFI Unrelated Debt Financed Income Tax.

And if your IRA owes either of those two taxes, your IRA files a 990T every year and your IRA pays any tax that might be due. But, a lot of times, you can take deductions, and so you may not end up owing any tax. There are ways to kind of write off some of the expenses. So that is a conversation to have with your tax person and they will help you with that.

Mike Morawski: So let’s qualify this for people right now too, cuz my attorney always tells me I need to qualify things and say, hey, I’m not an attorney. And I’m not an accountant. Go talk to your professional for the details. We’re just going to give you a global view, right?

Kaaren Hall: Exactly, right. Yeah.

Mike Morawski: Whenever I’m out telling my story or talking about multifamily, I always show that slide, that disclaimer that says, Hey, Go talk to your professional. So can’t you also do like, medical savings [00:17:00] plans and 529s, or college savings of some sort?

Kaaren Hall: Sure, sure. So there’s the HSA, the Health Savings Account. So if where you work, you have what’s called a High Deductible Health Plan, an HDHP. Then it’s high deductible and less coverage. And so you have a little savings account that goes along with that HDHP or you’re saving that money. You can put money into your HSA Health Savings Account. And actually it acts like a Roth. You put the money in there and except you get all the benefits, you get all the benefits, you get the write off, it grows tax free. And if you use that money for medical purposes, it comes out tax free.

You can use that for investing, but you need to make sure you work it correctly. So that can be self-directed. Now, the 529 plan isn’t self directable, and that’s because it’s a state based plan. That’s not a federal plan. And so 529s aren’t self directable, but the ESA Education Savings Account can be self directable. We used to offer them, but we don’t [00:18:00] anymore because the contribution annual limit per child is only $2,000 a year. They’re just small accounts.

Mike Morawski: Yeah. Here’s the other thing too that I really want people to get a handle on. Cuz I meet so many people along the way that say, I don’t have any type of retirement. And I’ll ask them, I say, well, where have you worked in the past?

Did you have some type of a 401K? Or something set up from that employer, and you’d be surprised at the people that all of a sudden can find money, right? They go, oh yeah, I have this from years ago. I forgot all about it. Or I get this statement. And those are the perfect people to be able to do these rollovers, right?

Kaaren Hall: That’s so true. Yeah. If you have an old plan, that is exactly the thing you wanna do. You want it to work for you.

Mike Morawski: Yeah.

Kaaren Hall: And right now what we find here, I mean, like I was telling you, we’ve had a record year. Every month is broken records for the best month ever. And that’s because people are looking for alternative assets outside of [00:19:00] the market. Tangible assets, they can touch assets that are outside of the control of Wall Street. It’s becoming very, very popular. So you can take those dollars in those stale. 401k previous employer plans could be a 457, could be a 403B and roll it over and do a self-directed plan and invest outside of Wall Street.

Mike Morawski: Now the restriction around that though is if I’m still employed at an employer and have a 401 there, I can’t do that with that entity. Correct?

Kaaren Hall: Probably not. If it’s a 401k, you can go ask the plan administrator, whoever it may be. If the plan agreement, it’s a contract, if the plan agreement says that an in-service transfer is allowable, and if it is, then you can transfer while you’re still in service. So that is a possibility.

Mike Morawski: Oh, that’s interesting. I don’t know that I ever knew that. That might be a road to take a little bit. Hey, I have to ask about the crypto world right now, and what your [00:20:00] experience as an administrator is with people who’ve invested in crypto, or what about ATM machines, any of that?

Kaaren Hall: Sure, yes. People invest in every single alternative asset. You bet. I think, obviously crypto and cash machines are different at today. Unless we go on Central Bank digital currency, but that’s another conversation. But with crypto’s..

Mike Morawski: That’s another Podcast.

Kaaren Hall: Another podcast. Yeah. With crypto though, everybody wants to get in, be an early adapter, because you’ve seen things start and then just go nuts. And I could see definitely the blockchain technology. I am all about the technology, but I think with crypto it’s the wild west. There was another self-directed IRA company where their particular storehouse of crypto was hacked and it was a big hack and if you just type in crypto hack, you could read a dozen stories about how hackers have stolen cryptocurrency.

And, it’s just the wild West. [00:21:00] So it is a high risk asset, but everybody has their, I guess, temperature for what they’re going to invest in. But you can, that’s the thing, it’s not like I don’t recommend or promote any particular investment. The fact is you can invest in it. And no investment is without risk. Right?

Mike Morawski: Yeah. Right. Exactly. And have you had some clients that are crying in their Cheerios because of their crypto losses?

Kaaren Hall: Sure. But when you’re investing IRA dollars, a lot of times it’s not the same dollars that you would use to make your house payment or put food on the table. Those are a lot of times you’re set aside dollars. Now you need to say for retirement, that’s pretty darn important. But a lot of times, it’s not gonna break the bank for a lot of people. But you just have to understand the risk with any asset.

And like you mentioned, Mike, when we first met, we were talking at that event about due diligence. And doing your homework. And so I’ve helped a lot of people over the years with due diligence, and crime fighting, and fraud awareness and in fact, you introduced me to [00:22:00] your friend James, and he spoke at our Rita group, the Retirement Industry Trust Association about, how do you look at a deal? How do you know if there’s fraud in a deal? And this is again another podcast for sure.

Mike Morawski: Yeah. That’s the fraud guy. Yeah. James.

Kaaren Hall: Yeah. Oh, he was a big hit.

Mike Morawski: Yeah. So good for him. How about depreciation? Can you talk to that a little bit? Are you allowed in your self-directed to take a depreciation?

Kaaren Hall: Yeah. I mean, not really, because if you think of it, depreciation from what your IRA isn’t paying tax, so there’s nothing to depreciate. Because there’s no tax. And when you take it out, it’s tax like income. The only time depreciation falls into the retirement account world is when there is UBIT or UDFI tax, and that kind of depreciation can offset, any UBIT, UDFI.

Mike Morawski: So most people that invest in a multifamily syndication, they’re not gonna have UBIT, are they?

Kaaren Hall: They might, not UBIT as much as UDFI. So say for example, you’re raising capital, [00:23:00] you’ve got a Reg D offering and you’re raising capital, but you’re not just taking equity investors. Like a lot of times an IRA will be an equity investor, you could be a debtor equity investor. But say, you’ve got some like IRAs, I know you’re capital stacking, and so maybe one of those stacks of capital is leverage.

And so if that’s the case, the K1 will describe that UDFIs passed through to the IRA and the IRA will need to file a 990T even if no tax is owed just to file and say zero. But a private equity deal can throw off UDFI tax to the IRA.

Mike Morawski: And what happens in a deal that causes that to happen? So I’m a syndicator. I wanna watch out for that and help my IRA people maximize the most. And let me just explain this real quick. So, we know a typical syndication deals like a 70 30. And investors get the lion’s portion, right? They get the 70% side. But within that [00:24:00] 70% side, what we just decided to do was we created a two tier investment strategy where if somebody has qualified funds, they’re on one tier where they can’t take participate in a depreciation. But the other tier is people that can participate in a depreciation so that the depreciation doesn’t get wasted.

On somebody who can’t use it. So, what would cause somebody, and what should I watch out for as a syndicator that we maybe could do differently to not have somebody have that tax consequence to deal with?

Kaaren Hall: Well, I’m just gonna give you the answer that’s in my head so that here it is. That if somebody invests in a private equity deal as a debt partner, so their IRAs lending money to the syndication, to the deal. There’s not going to be any UBIT or UDFI tax. It’s a loan, the money is lent and there’s some sort of agreement and the money’s gonna come back to the [00:25:00] account holder right back to the account.

The other way to prevent any of the UBIT UDFI taxes. There’s not exactly answering your question, but the other way is for you as an asset sponsor or any asset sponsor to take on no debt and everybody’s an equity investor and there is no debt at all. So either the IRA owner takes their account and invests that IRA as a debt partner. Great. No UDFI, no UBIT tax UDFI tax or the asset sponsor doesn’t take on any leverage at all. And all the IRA holders are equity shareholders, the IRAs or equity shareholders. No tax. Does that make sense?

Mike Morawski: Yeah, absolutely. Interesting. So a smart move, well, probably tougher. But if you’re doing a $30 million deal and you would maybe have to raise 12 million on the equity side. You just raised the 30 million and do the whole deal cash.

Kaaren Hall: Yeah. It’s just leverage. It’s [00:26:00] just with IRAs and leverage that’s the oil and water.

Mike Morawski: Well, that’s why in the multi-family business, we like leverage because it causes the return to be better.

Kaaren Hall: It does. I mean, everyone likes leverage. It just is a fuss for an IRA holder.

Mike Morawski: Yeah. So, any other new guidelines or rules that are exciting for people that have happened or are gonna happen that you know of?

Kaaren Hall: I think one of the most dramatic things is the increase of the RMD age required minimum distribution age. And so you can hit an age where you have to take the money out of your pre-tax accounts, like your traditional, currently your steps or simples or your 401K pre-tax contributions. So it used to be 70 and a half. And then in 2019 we had secure Act 1.0 and that raised the RMD age from 70 and a half to 72. Yay. So that meant that you’d have even longer for those retirement savings to percolate and grow and compound before you had to [00:27:00] take out some of the money.

But with Secure Act 2.0 effective 2023, that age is now 73. So it gives you like an extra year. So instead it’s gone from 70 to 70 and a half to 72 to 73 now. And in 10 years, in the year 2033, that age will be, let me just think about it at 75, which is great because say for example, you’re retired and you’re 73 years old and you think, ah, I have other streams of income. I don’t need to touch this IRA money right now, but if I have an RMD, I have to right now.

But, say it’s later on, say it’s like 2026 or 2036. In 2036, you can wait till you’re 75. That’s great. So those dollars in your retirement account can be growing and growing and growing and accumulating tax free or tax deferred. So it’s great if you don’t have to take the money out. The later the better, I think for the account holder.

Mike Morawski: Is there a special accountant that I should go to [00:28:00] when I have a self-directed IRA or can I just go to your general H&R block or whatever on the street corner?

Kaaren Hall: IRAs are pretty common I think. I think even an HR block could handle an IRA. They don’t really care so much what acid is in there. The trick gets in if they need to file a 990T and you need to tell them. When it’s self-directed, you take on more responsibility, like the responsibility to know that you need to file a 10 99.

This is why when people open an account with us, we have a consultation with them. We offer a free consultation to anyone. You’ll see it at the top of our website, free consultation cuz we want to talk to you, understand your deal, who are the parties you see any prohibited transactions or any kind of things that you might not think about that we could bring to your attention before you get into it.

Mike Morawski: Yeah. That’s awesome. Anything else that you want people to really be aware of?

Kaaren Hall: Just save money, contribute. Because a lot of times when you contribute, you may be eligible for a tax deduction, so you’re [00:29:00] paying yourself and not the IRS, but we are just as a country, severely unprepared to retire.

And I’ve heard this statistic, I say it, but I’ve heard other people too. If you have a hundred thousand dollars and you think I’m set for retirement, you are not set. Because if you were 59 and a half and you lived until you were 86 and a half and you took an even distribution every month, assuming no gain or loss, it would be about $400 a month that you’d have to live on off of.

So your a hundred thousand dollars really equals $400 a month for the next 30 years of your life if you retire. See? So you need to have a lot more. And there are layers of retirement, there’s social security, there’s life insurance, there’s annuities, there’s owning property, owning private equity personally, and retirement accounts, all these various layers of income, and assets that will pour into your retirement.

So you wanna have a little bit of everything. So the one piece of advice I would give is definitely take a serious look at your retirement savings picture and are you on track?

Mike Morawski: [00:30:00] Interesting. Hey so I have a couple other questions around this savings thing. So, if I put money in my self-directed IRA, if it’s not deployed into some other type of an asset. It doesn’t earn any money, does it?

Kaaren Hall: It just earns a little pinch. But at the same time, it’s also not at risk in the market. So we’ve seen a lot of market fluctuation, and money sitting in there where it does earn a little bit of interest, it is not at risk. So there you go.

Mike Morawski: So is there a strategy that I could use with my self-directed IRA to when it’s not deployed, or maybe I don’t have enough money in my IRA right now and I can’t make a contribution? And I don’t have a rollover option to make it enough to put in an investment. Or an alternative, like a real estate or gas and oil. Is there something else that I can deploy that money into that would make sense from a return standpoint?

Kaaren Hall: [00:31:00] Well, the answer to that is possibly. It’s self-directed, so we don’t sell or recommend any assets at all. So we don’t offer any brokerage accounts or anything, because we don’t sell assets. We provide self-directed accounts. Say for example, your IRA had a house, well, you would want to have a cushion in there, a pad, because say for example, an expense came up and you know, with real estate, it always does, right?

You can’t just pay for those things personally. What if your IRA owned house needs a new roof. You need to have a pad in your account to be able to cover that. Also, if a lot of these deals that are going on right now with that increasing interest rates, there are a lot of capital calls, so if you’ve got a capital call and your IRA has to come in with more money to the asset sponsor, that can’t come out of your pocket.

It has to come from the IRA. So you want it to have a pad, but if you’re not ready to self-direct, you can leave it with a broker dealer. You could leave it in a Schwab, fidelity, TD, Northwestern Mutual, whatever. You could [00:32:00] leave it in there and have it at risk in the market. And then maybe alternative assets later.

Mike Morawski: How does that go over with a capital call? From a sponsor standpoint, Hey, I have a deal that’s struggling, or my interest rate just went through the roof and I can’t pay my bills, so now I have to call capital from my investors. How does that go over with people?

Kaaren Hall: Well, you wouldn’t like it. I wouldn’t like it. They don’t like it, but it’s just a factor. Like you said, with a syndication, it’s everyone’s in the same boat about making this deal work. And if that’s what it takes, that’s what it takes. And you’re still going to be asking the asset sponsor.

You wanna probably look at their books, make sure they’re managing everything correctly, and see if you agree with the capital call. If you’ve got an equity stake in it, you wanna know more, but there you go. It’s part of the deal, and I’m sure it’s written into the operating agreement and the sub docs that say there’s a chance of a capital call and you’d walk in knowing that there’s that risk.

Mike Morawski: Yeah. Interesting. Listen, this has been great. I got a lot more questions answered. One more question, maybe two.[00:33:00] How do I make that investment into that alternative asset? So what’s the process? So let’s just say that I have an account, it’s funded. How do I make the investment?

Kaaren Hall: It’s super easy. You give us a call or you send us an email, you send us your docs. We have document upload portal, that’s soc two compliance. So we don’t have documents in the email, but you send us your docs, you give us a call, you talk to us about what you’re trying to do. And we have dedicated transaction coordinators who will work with you, and we assign them by letters of the alphabet.

So like Mike with Morawski. So every time you call, whoever has a letter M will be speaking with you and helping you. So you get to pretty much talk to the same person every time. And you say, this is my deal, this is what I wanna do. And they just handhold you through the whole thing. And basically we review the docs, fund the investment by checker wire, and then all the proceeds from that investment go back in the IRA.

Mike Morawski: Okay, awesome. How difficult, or is it not difficult to do a rollover?

Kaaren Hall: [00:34:00] It’s not difficult.

Mike Morawski: Go ahead.

Kaaren Hall: Yeah, not difficult at all. You open the account, so you’ve got an account number and there’s a place for the money to actually go. Then you call your previous employer, they’re a plan administrator and say, please roll over the money into this IRA. Here’s the account number, here’s the address. And usually they like to do checks. So they’ll send a check made payable to your IRA and it takes maybe two weeks and the money will come over.

Mike Morawski: Got it. And then what’s the climate like when you maybe have an IRA or some type of investment portfolio with a current traditional financial planner of some sort. And you wanna all of a sudden go and take a portion of that or that whole thing and put it into a self-directed. That process work, and what’s that like?

Kaaren Hall: Well, they get paid on assets under management, so they’re not gonna love it if you wanna take a big chunk of your retirement account away from them, because that’s their paycheck, literally. And they’re paid on assets under management. But you’re gonna do with your money, whatever you wish to do, because it’s your money. So just simply ask for a transfer. You [00:35:00] fill out our transfer form and sign it, give it to them or actually, long story short, we sign it, we send it in to them and they’ll move your money over as how it works. So you just fill out our transfer form.

Mike Morawski: Yeah.

Kaaren Hall: And the money will come over. But usually the financial advisor isn’t gonna love it at first, but a good financial advisor wants what’s in your best interest. And they’re gonna probably have a conversation with you about your risk tolerance and what are you investing in, and they may try to talk you out of it, but it’s entirely up to you. These IRAs are self-directed. You can choose to invest in the stock market. You can choose to invest in alternative assets, but every IRA is about your choice.

Mike Morawski: I remember, I have a good friend who rolled some money from a traditional planner into a self-directed IRA, and he was just doing a small portion of it. Not all his money. He was leaving 80% of it with his traditional planner. And the planner gave him a hard time. And I don’t believe, you have to treat [00:36:00] people what’s in their best interest, right? And you said it, and here’s a community service announcement for you.

And this planner gave him a hard time and he said, okay, forget it. Just roll the whole thing. I mean, we really have to operate for what’s best interest for our clients. Hey, I appreciate you being here today. How do people get ahold of you?

Kaaren Hall: The best way is to email us, so that’s our website Or maybe you can see the phone number above me, (866) 538-3539. That’s also our phone number. That’s the best way or just go to our website and we’re always happy to help. There’s always somebody to talk to you about what you need. We’re well staffed and happy to have a chat.

Mike Morawski: So, a couple bonus questions I always love to ask.

Kaaren Hall: Okay. Let’s go.

Mike Morawski: What’s the best book you’ve ever read?

Kaaren Hall: Wow. Besides the Bible.

Mike Morawski: Okay, I love that. Okay. Besides the Bible.

Kaaren Hall: I mean, as far as motivating me personally was Think and Grow [00:37:00] Rich by Napoleon Hill. You know about the Mastermind and the power of the Mastermind and about just taking action. And that was extremely motivating to me. And I read that book and I started applying it right away. And my income just really increased. That was the most dramatic change I’d ever seen.

Mike Morawski: Awesome. It’s definitely a classic, that’s for sure. So we all know that and maybe people don’t know, but my happy place in the world’s the OC and it’s amazing to me that people are still doing business there. The way the world is, cuz I have a lot of friends that moved their companies from California and Texas or went to Nevada. But anyhow, favorite restaurant in the OC?

Kaaren Hall: Wow. There’s a restaurant by our office and it’s called Andrei’s, and they named it after their son who passed away in a surfing accident, long story short. And it’s a great restaurant, it’s delicious that if you’re a beef eater, which I’m not. I have a lot of friends who are and just everything’s nice about it. So that’s what I like. [00:38:00] Andrei’s.

Mike Morawski: Andrei’s have to remember that. How about best tourist attraction in the OC?

Kaaren Hall: Well, it’s Disneyland, isn’t it? You know?

Mike Morawski: Come on. That’s a bad answer like the bible.

Kaaren Hall: Happiest place in the world, right?

Mike Morawski: Yeah. Right, right. Well listen, thanks for being here. This has been great. I appreciate you and all you do for my clients and how you help them simplify things as much as possible for the service that you provide. Thanks, and I hope this has been educational for people and I would just say, Hey, if you are thinking about doing a passive investment, you have an IRA, you’re looking for money to invest, an IRA or some qualified account could be beneficial for you, give Kaaren and her team a call and get your questions answered. And get your funds set up so that you can do some type of an alternative investment that will best suit your needs as an investor. Thanks for being here.

Kaaren Hall: Thank you Mike.

Mike Morawski: I know you be coming to [00:39:00] Chicago soon, so we’ll see you soon and catch up.

Kaaren Hall: Very good.

Mike Morawski: Thanks Kaaren.

Kristen: Thank you, Mike, and thank you for joining us for another great episode of Insider Secrets. As always, Insider Secrets is brought to you by My Core Intentions. Wherever you hang out on social media, you will find Mike and My Core Intentions. Please like and follow us to get the most up-to-date real realestate investing trends.

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