Host:
- WOLF(https://www.twitter.com/WOLF_Financial)
Speakers:
Edgar Alan Dough
- WOLF(https://www.twitter.com/WOLF_Financial)
Speakers:
Edgar Alan Dough
Category
🗞
NewsTranscript
00:00 Good afternoon all. Mr. Shorenson, I do see you in the crowd. You can go ahead and hit that request button. That'll get you up on the panel. You do need to be on a mobile device on a cell phone in order to join.
00:14 But yeah, once you're on a cell phone, you can go ahead and hit request and that'll allow you to come on up here.
00:19 Should be a pretty interesting one. I see Tim as well. And I see the Web3x Conference account. So let me go ahead and get you all up here.
00:34 All right, let me drop a couple of invites out here too.
00:38 Okay, looks like we got the account up here. Is that Alyssa or someone else on the account?
00:43 Hey, Gav, how are you?
00:47 Good, how's it going?
00:50 Going good.
00:54 Your service is a little lost there.
00:56 We got Tim on, we got Matt there.
00:59 This is Matt, by the way.
01:02 Hey, Matt, how's it going?
01:05 Yours sounds good, Matt.
01:07 All right, sounds good.
01:09 Yeah, Alyssa, I think you might need to switch off the Wi-Fi or something. Tim, how's it going?
01:13 Good, thanks. How are you doing?
01:15 Good, good to have you on.
01:18 Okay, we can kind of get rolling right into it. I know that we put up this space a little bit last minute, and I know it's a Friday afternoon, so I think we can kind of just get rolling with it.
01:29 And we're going to have more spaces around the Web3x Conference coming up in the coming weeks.
01:35 But let's start off with you, Matt. We'd love to get a little bit of an introduction of yourself and what you do and how you're involved with the conference, then we can take it from there.
01:44 Okay, sounds great. Yeah, I'm a tax attorney and also CEO of Directed IRA.
01:49 We're a trust company that custodies retirement accounts, and our niche has always been in clients buying "alternative assets."
01:58 Pretty much, they want to use their IRA or 401(k) to buy something other than stock bonds or mutual funds.
02:05 So I've been doing that as an attorney since 2006.
02:09 I wrote the number one book in the field on the topic. It's used by regulators, all the other competitors in my industry, tens of thousands of people who do it.
02:20 And then when crypto came around, I started getting clients wanting to buy it with their retirement account.
02:27 I still remember some of the first clients in 2016 and 2017 coming and asking me how they could use a Roth IRA in particular to buy crypto.
02:36 And I quickly realized I didn't know much about it, so I went in and bought and did it myself so I could help explain to all my clients how to do it.
02:46 Because I knew the tax and legal rules relevant to it, but I didn't know the practical ways on how to execute it, which takes a little bit of work to do with a retirement account.
02:55 So I did an experiment in 2017 and I bought Bitcoin. It was about $2,500 per Bitcoin at that time. I wish I was a little bit sooner, but it was a good time and it was the most profitable experiment I ever made.
03:10 And then I went out and started showing clients how to do it. It's since been a really popular asset for clients of ours that are trying to own crypto, but do it in a more tax-advantaged way using a retirement account.
03:26 So we help clients every day buy crypto with an IRA or 401(k) and we just think the retirement account, for those wanting to invest and do it for the long haul, we just think a retirement account.
03:38 And there's other accounts that can be used we can talk about, but we just think the retirement account, particularly the Roth IRA, is the best deal out there, period. There's no better, more tax-efficient way to do it than in a Roth IRA.
03:50 Yeah, we definitely echo the sentiment of the Roth IRA. I try to do personal finance bases on a weekly basis where we talk to people about setting up those retirement accounts.
04:01 So yeah, it definitely makes a lot of sense. And I think one of the greatest examples is Peter Thiel, I believe. Was it he who dropped a bunch in there in the early 2000s?
04:11 Well, Peter Thiel, he's got the $6 billion Roth IRA, but he used some of it in PayPal, which he was one of the co-founders, and then he was the first outside investor in Facebook.
04:23 So that was Peter Thiel's – those were his big hits since I've heard, who knows, that he's invested in crypto through that as well. But I don't know, that's really public. I have no knowledge about that.
04:38 But he got a lot of talk about basically investing in what he knew, and that's one thing we talk about with our clients all the time. I mean, Peter Thiel is the perfect example of investing in what you know.
04:48 I mean, he was a tech person in the VC scene, saw the new wave of what was going to be valuable in our future economy when no one else saw it, and he went and used the most tax-efficient way to do a Roth IRA.
05:01 Well, fast forward 15 years later, and he's got a slew of people in Congress all bent because he made all this money investing and taking risks and doing what he knew how to do well.
05:15 The IRS is going to get nothing out of it, and kudos to him for figuring out that strategy. But it's the same with crypto. I mean, our mantra is always invest in what you know.
05:25 If I'm at a real estate group and I'm talking to a bunch of real estate professionals, I'm like, "Why the hell do you guys own mutual funds in your IRA? You can own real estate in your retirement account."
05:34 If I'm talking to people in crypto, you spend all your time and you know crypto. You have a competitive advantage against other people. Why do you buy this crappy mutual fund with your retirement account?
05:43 And so we just like clients to invest in the assets that they know. And pulling that off, though, is a little more difficult than just clicking a button and buying Apple stock.
05:55 But that's what we're doing. We're helping. And I think Peter Thiel is a great example of just invest in what you know.
06:02 But I have lots of clients, 10 million plus in retirement accounts from crypto that started in the tens of thousands.
06:09 Like I said, a lot of those clients, they were the early ones coming to me trying to figure it out. We figured it out for them.
06:15 And at the time, they were pioneers, and people probably thought they were crazy. But now they're in a very tax advantage situation with their retirement accounts.
06:24 But we see it in all different ways. We have clients that have set up Coverdell education savings accounts, and they bought crypto in it for their kids for the future.
06:34 And they're like, "I think this is going to grow in the next 10, 15 years by the time my kid gets to college, and I just want to throw a little bit in a Coverdell education savings account and buy some crypto."
06:43 So it could be for retirement. It could be Coverdell education savings. It could even be a health savings account for your medical bills or future medical.
06:52 So there's lots of these tools that are available that everyone uses for the Wall Street product, stocks, bonds, and mutual funds.
07:01 But you don't have to throw that stuff in it. You can invest in the stuff you know that you think has greater growth potential and get all the same sweet tax benefits that you can in these Roth IRAs, education savings accounts, or HSAs.
07:14 Okay, perfect. I definitely want to dig into that with a couple questions. And I also have some great other speakers up here with Lucas, who I think is going to be really interested in this topic, too.
07:24 Before I do that, I just want to let the audience know, if you saw, I just actually updated the top of the space to the $1,500 giveaway.
07:31 That is going to be two gold passes to the WebEx Summit and the WebEx Conference, essentially, which is going to be happening in Las Vegas, October 10 through 13.
07:41 I will be attending that. I think a bunch of people from Twitter are going to be there. I know, of course, Matt's going to be there. He will be a speaker.
07:48 And I know that if anyone's familiar with the Drop run by Gannon, they're doing a lot of media for this.
07:53 So a bunch of people that you should be familiar with will end up being there. We're going to give away a couple of those tickets during this space.
07:59 So if you're interested in winning an $875 ticket, stick around.
08:04 All right, Matt, walking through the process here of somebody approaches you and says, "Hey, I'm interested in crypto. I want to be able to own inside of an account."
08:12 Where do you start with them? What are the first type of questions that you ask them?
08:16 So the first thing is, do you have existing retirement account dollars you want to work with?
08:22 Like, do you got money over at your TD Ameritrade IRA? Do you have an old employer, 401(k) at Vanguard?
08:30 So we first want to look at, do you have existing dollars you're trying to work with, or are you starting and you want to just do new contributions?
08:37 So you can set up a new account, but you can put $6,000 a year on a Roth IRA.
08:42 There's other account limits depending on what you're doing, but let's say $6,000 Roth IRA is probably the most popular for crypto.
08:49 But we look first, are you going to transfer existing dollars or start with new dollars?
08:54 If you're going to start with new dollars, it's easier. You just set up a crypto Roth IRA at our company, Directed IRA.
09:02 It's directedira.com. We have a whole crypto product and offering for clients.
09:08 But then if you – let's say you're at TD Ameritrade, Charles Schwab, wherever, it's pretty easy too.
09:16 You set up an account here, and you're going to transfer over the funds.
09:19 So your IRA can own crypto, but if you call up TD Ameritrade and you're like, "Hey, I want to buy ETH with my IRA," they're going to be like, "You can't do it."
09:29 And it's not because your IRA can't own that. It's because your IRA at TD Ameritrade can't own it.
09:34 So you're going to need to move a piece of those dollars or the full account, whatever you want to do, and it's tax-free.
09:40 It's just transferring from one Roth IRA account or traditional IRA, whatever existing account you have at TD Ameritrade, over to the new crypto IRA at Directed IRA.
09:52 So that's the step. There's really three steps in the process. That's really one and two.
09:59 Open up the crypto IRA with Directed IRA. There are some other companies that do it, but we do feel we're the best.
10:06 So step one is open the crypto IRA. Step two is contributing to it or transferring over the money from an existing account.
10:14 Okay, perfect. Love the process there. Real quick, I think the way that we'll do this giveaway, by the way, is we'll just give it to someone that retweets the space.
10:25 I feel like that's going to be the easiest way to do this. So if you're in the space and you're interested in winning an $875 ticket, I just pinned up top.
10:33 It's literally just the tweet about the space. All you got to do is go ahead, retweet, interact with that tweet that's up top in the space, and we'll make it pretty easy.
10:41 And to the winners, we're going to give you actually two gold passes each. That way you can bring a plus one if you're interested.
10:48 So you'll actually be winning each $1,500 in tickets. So it's going to be four tickets total.
10:53 So hopefully that sweetens the deal, and I can go ahead and even update the top to basically show that this is going to be a $3,000 giveaway.
11:00 There we go. So I see those that are retweeting the space. You've got very good odds right now. Two retweets on it. That is pinned in the top. It's also my last tweet.
11:08 Okay, Matt, let me walk back to you. How does this differ from crypto to crypto as people want to have those in there?
11:15 So what we do is when you have a crypto IRA, a directed IRA, we actually have a relationship with Gemini. And we set up basically a wallet and trading account in Gemini that is owned by your IRA.
11:30 You don't want to be doing this in your personal name and with your social and everything because you're going to get all the tax report and you're going to have to pay tax.
11:37 There's a lot of early pioneers in this that jacked it up because they didn't know what they were doing or realized the consequences.
11:43 So your crypto IRA, a directed IRA, which is a qualified retirement account, let's say this is a Roth IRA, you're going to pay no tax on it.
11:52 We are going to open up a Gemini trading account owned by that Roth IRA that's not taxable. Gemini's not going to send you tax reporting.
12:01 IRS is not going to ask them for it because they know it's owned by a Roth. And then when you're at Gemini, we're going to just put fiat basically.
12:07 We're just going to send whatever cash that you want designated into that trading account. And then you can go buy whatever you want that's at least on Gemini.
12:16 Now there's some other ways to do it using an LLC if you want to buy crypto or do staking or other things or even mining with a retirement account.
12:25 But just to buy and own or trade, the Gemini account option we have with our crypto IRA products is probably the easiest.
12:33 And so you can go buy Bitcoin, obviously, Ethereum, a lot of the popular stuff. You can trade it for other crypto, no tax consequence.
12:43 You're not tracking all that and your basis and what was the gain and all that crap. I mean believe me, I'm a tax lawyer. I understand the pain of that.
12:50 So you're just doing it right in your retirement account. Now we do have a half a percent trade fee that you're paying when you're buying and selling.
12:57 So you want to be careful there and that's super competitive. A lot of our competitors have a 1% trade fee.
13:03 But we just have a $2.95 annual fee and then a half a percent trade fee.
13:07 And you can go back to fiat if you want and then send money from your crypto IRA back to TD Ameritrade if you want to go buy stocks.
13:16 You can do whatever you want. And that's non-taxable. Moving between all these assets, it's not like in your personal name where you're going to have tax ramifications each time you sell or buy or exchange.
13:28 This is all in a retirement account, growing, not taxable and coming out tax free in the case of the Roth IRA.
13:37 Love it. Luke, I'd love to bring you into this. Maybe get some of your thoughts on this type of account if it's something that you have used or looked into.
13:47 I think it's crazy interesting and I didn't know anything about this until right now where you actually have to not have it in your name.
13:58 You have to basically start it with you, which makes perfect sense now that you say it because then you're right.
14:04 There are obviously tax ramifications. So if I had funds to send, you could start one for me and then those funds would not be taxable at that point, correct?
14:18 Yeah.
14:19 If they're going to the IRA and the IRA is opening the Gemini account. So anything you're doing in terms of trading inside the new Gemini account wouldn't count against basically your tax bill at the end of the year.
14:37 Right. Exactly. And so it's really just using the same tool that Wall Street's using to sell you stocks in your IRA or 401(k).
14:47 Now you have to be a qualified custodian, which is like a bank, credit union, or trust company that can custody a retirement account. But that's what we are. We're a trust company.
14:58 And so we just basically open the account. It's in your name. We do the filings with the IRS on it. It's called a 5498. We have a compliance. I'm an attorney. We've been doing this for a while.
15:10 We have over a billion in assets already in less than four years. So we've grown pretty quickly. But we've figured out how to execute on this and just make it easy for the client where you get that tax benefit and totally tax-free in a Roth IRA.
15:25 We're protecting it in your account, and then you're trading and doing it on Gemini and buying and selling whatever you want. And nothing's going to the IRS. Nothing's going on your 1040.
15:37 There's no tax you're going to need to send into the IRS. This is all tax-sheltered and coming out tax-free at retirement.
15:44 Now the one drawback, of course, is – let's say this. Remember, with a Roth IRA or any retirement account, you can't pull the money out until 59.5. So this is not a strategy if you're 30 years old that you're going to live on tomorrow.
15:59 This is something you're growing and trying to build for the long haul. And most of our clients who are doing crypto, they're doing this for the long haul, but they're also still doing crypto in their business or their personal name right now.
16:15 And so I'm not saying take everything and throw it into the Roth IRA because you can't touch it until 59.5.
16:22 But I did mention a couple other accounts that I think are interesting that we have found to be very popular that we didn't think about at first.
16:28 I mean we offered them, but we didn't know how popular they would be. A couple is the Coverdell Education Savings Account. That's an account you can put in two grand a year.
16:38 And you invest that money, and it grows, and it comes out tax-free for your kid's education.
16:45 So if you've got a kid 10 years old, let's say, eight more years left, you can put in 16 grand over that eight years, be buying crypto along the way.
16:53 And now eight years later, in 2030, that kid – you can be pulling that money out, and hopefully there's been appreciation and gain, and that could be paying for your kid's college.
17:02 So we've seen a lot of clients gravitate to the Coverdell. Health savings accounts, like I mentioned, you can use those too where you're putting money in.
17:11 You actually get a tax deduction when you put money in a health savings account, and it can be invested in crypto and grow.
17:16 And that comes out tax-free for any of your medical expenses. So that's another popular account.
17:23 Another one is we've seen clients do Roth IRAs for their kids. We call them Kid Roth IRAs. It's not a Kid Rock IRA. That's different, but Kid Roth IRAs.
17:37 And in that, the kid actually has to have earned income. So if you're a small business owner or something, and your kid has earned income, or maybe they've got a summer job or babysitting or something, they can have a Roth IRA and can contribute money in off of their earned income up to $6,000 a year.
17:52 And then they could be investing in this too. So we've seen a lot of clients that are in it themselves, getting their kids involved and interested as their kids are getting into finance and understanding how the world's going to work in the future.
18:07 So that's another option. So there's lots of different account types out there. But just think if you're using the Roth IRA for you, the traditional IRA. You've got an old employer 401(k) with hundreds of thousands of dollars in it.
18:23 And you're like, "I'd like to peel 50 grand off and just do a traditional IRA." That's cool too. That's super popular. Also, you're just growing this for the long haul, unless you're 55 or something. This is long-term wealth we're building to live on in retirement.
18:39 When do you typically recommend somebody open, somebody should open a Roth IRA?
18:48 Everybody should have a Roth IRA. I mean it's the one thing in the tax code. The government said, "If you have this account and you make money in it, you do not have to pay us taxes."
19:00 I mean it is the only thing. So really everyone should have a Roth IRA. I mean I do Roth IRAs. I have kids, a recent college grad and one in college. They have Roth IRAs. My high school kids are on the verge of her getting her Roth IRA.
19:18 So old, young, I don't care. Everyone that has earned income should have a Roth IRA. Now you can only put six grand in a year. So you got to start filling the bucket a little bit every year.
19:31 Right now, I mean you can put in six grand for 2022. And on January 1st, 2023, you can throw in another six grand. So you get six grand a year.
19:41 You can put in if you have a spouse, spouse could be putting in six grand also in their own Roth IRA. But everyone should have it because whether you're just buying stocks or mutual funds, you're actually buying something you care about like crypto or real estate or venture capital or private equity, whatever you're into, this account is growing and coming out tax-free at retirement.
20:04 And so it is the best deal out there, and I think everyone should have it. Now, there's one caveat to that though. There is a restriction on Roth IRAs if you're high income.
20:18 When Congress created Roth IRAs, they're like, "Man, these are pretty powerful. We want the rich to take advantage of them." So they tried to limit them to high income, but Congress didn't think it through.
20:32 They basically just said there's a restriction and you can't make a contribution to a Roth IRA if it's like over 150,000 single 250, 300 married. And they just – this number adjusts every year based on inflation.
20:45 So if you're high income, you can't do a regular Roth IRA. What you do though is what's called a backdoor Roth IRA. And many of you may be familiar with or heard of the backdoor Roth IRA for just buying, again, stocks, bonds, or mutual funds, Fidelity has it, TD Ameritrade has it.
21:04 Everybody in the retirement space does the backdoor Roth IRA, but we do it for our clients here. And all that is is someone makes a non-deductible contribution that's traditional.
21:18 There's no income restrictions on that, and then they convert it to Roth. Again, there's no income restrictions on that, so it ends up being a Roth IRA on day two. You just have to do this two-step process to get there.
21:29 That's called the backdoor Roth IRA. At DirectedIRA.com on our website, we have a good breakdown on how it works. I do the backdoor Roth IRA every year. Many of our clients do the backdoor Roth IRA every year because they're over the income limit.
21:47 So if you've ever been told, "Hey, you can't have a Roth IRA. You're high income," you can probably do the backdoor Roth IRA. It's very, very popular.
21:56 So to me, I'm like Roth IRAs for everyone. If you're into crypto and think there's going to be appreciation, whatever crypto you're into, or other strategies, it doesn't have to be buying and trading, why not do it in the most tax-efficient account the government lets you use and not pay tax on and not go to jail?
22:18 I think it's a great point and I love that you went over that. I believe the limit is $144K for 2022. And then over that, you'll probably have to go through the backdoor strategy. It's good for people to know though, because there are a lot of high earners and unfortunately $144K. There's a lot of discussion that we have around whether that is even necessarily a high, high earner.
22:40 It feels like you should still be able to take advantage of the Roth at that point. Okay. I got a question from the audience that I'm going to take. And then I also brought up some other speakers. We could take some questions from them. Before I do that, one more time, just recircling for anyone that's just joining us.
22:56 We have the pleasure of hearing from Matt Sorensen. He's the CEO at Directed IRA. He is a master of all things IRA, Roth IRA, and so much more. So if you are interested in this type of stuff, you can go ahead and give them a follow. We're putting this space on in conjunction with the WebEx Web3 Expo, which is going to be happening in Las Vegas coming up in October.
23:18 I will be there. A bunch of other people will be there. I know Ashley DeCann, who's up on the panel, she's going to be there. We know our friend Gannon Breslin over from The Drop is going to be there. Keith, you're going to be there? I'm seeing clapping hands.
23:30 Yes, sir. I'll be there.
23:32 We've got a bunch of people that are going to be there. And if you're in the space and you're like, "Hey, I'm kind of interested. I want to go to Vegas." Well, we are actually going to be giving away four gold passes, which each right now are selling for $875 on the website that will give you full access to the entire summit, the entire showcase, to be able to book meetings, all that type of stuff.
23:52 All you have to do is just retweet the space. So there is a tweet up top in the space. If you go ahead and take a look, it's just the one that is, here I'll make it the last pinned one. And you can go ahead and basically this will share out the space. It's just literally the tweet that says we have the space open.
24:07 I see right now there's only 13 retweets and I'll count the quote tweets too on it. So there's 15. So you have great odds right now. And we're actually going to give each person that wins, you're going to get two passes. So be able to bring a plus one as well.
24:18 So if that sounds pretty good, if you're social capital, which is completely free to use, you want to throw it at a shot to be here, you can come meet, hang out with a bunch of us. Obviously meet Matt, meet the people that are throwing this and yeah, be with us.
24:30 Very excited for this. This is only about a month and eight days out, I think. So we are pretty close to it coming in. So definitely recommend going ahead and taking advantage of that if you haven't already. And Vegas, I saw you shared out the space on your own too, which we really appreciate all the support from everybody that's in the space.
24:47 Okay. With that being said, we're going to give it another few minutes till we actually do the picking. So you do have a few more minutes here to actually go ahead and retweet the space. One of the questions that I got, someone wanted me to ask you Matt about IULs, which I believe is that the indexed, gosh, I lost it already.
25:06 The IULs, which was the indexed universal life insurance. And I don't know if that has a crossover with the Roth IRA or anything. I guess they just wanted me to throw the question at you. Is that something that you deal with?
25:17 You'll just need to unmute Matt.
25:22 Oh, yeah, the mute button. That's not something we deal with. That is a different strategy. The thing on that is I think the Roth IRA is way better, particularly if you believe the value of crypto is going to go up.
25:39 The IUL is kind of like a bank on yourself type strategy. I think one of their speakers, Chris, I forget his last name, is going to be speaking on that. And I've met him many times and heard him, and I think it's a good strategy.
25:53 It's a little different than the Roth, but there's some tax benefits to that strategy. And it's basically you're putting money in a life insurance policy, lending it out, and arbitraging the return you can get from the life insurance company and being able to still use that money that you otherwise would be in the policy because you get to loan it back out.
26:13 So it can be a cool strategy, but – and that's a major oversimplification of it. But the difference on the Roth is the gain in appreciation that's happening in the Roth IRA when it owns crypto and the crypto goes up in value, there's no tax on that at all.
26:35 So is that asset goes up in value? Let's take the bitcoin I bought at $2500 per bitcoin. If that goes up ten times in value, I mean I've got a 1000% return, and I'm paying no tax on that gain.
26:55 So that is a huge different differentiator rather than the universal life type policy, but I could be wrong. There could be a way to use it better with crypto.
27:08 I think at the end of the day, I'd rather own the asset in the Roth, let it appreciate, sell it later in the future when it's super valuable, and have a huge Roth IRA that I can pull out whenever I want at $59.50 totally tax-free.
27:27 What are the penalties for taking money out early?
27:30 It's a 10% early withdrawal penalty plus tax on the amount you withdraw. So in a Roth, you can actually pull out your $6000 you put in every year.
27:44 So let's say you put in $6000 a year for 10 years, and you got $60000 in there of contributions. But let's say you bought crypto and that $60000 you put in over 10 years has appreciated and it's worth $300,000.
27:58 And that account's really valued at $300,000. Well, there's $240,000 of gain there and $60,000 of what you put in. The $60,000 of what you put in, you can always pull out whenever you want.
28:10 So you can pull it out at $25, $30, $45, whatever. You can always pull that out with no tax, no penalty. But the gain, what you've made on it, the only – the perk Congress is giving you is to say we're not making you pay tax on this, but you've got to lock it down until retirement at $59.50.
28:30 Once you hit $59.50 though, it's a green light, and you can pull it out for whatever you want. And actually, just think of Peter Thiel. He had a $6 billion – has a $6 billion Roth, Harry. I think he just hit $59.50 this year actually.
28:46 So that money is all unlocked to him now to pull out totally tax-free. But he could have pulled out his contributions and stuff like that. I don't know how much that was, or maybe he did what's called a Roth conversion. I think that's probably what he did.
29:02 So if you – by the way, you can always convert to Roth too. That's another strategy. So some people are like, hey, I've got this traditional IRA where in a traditional IRA, that money grows, and I've invested in it. But when I hit retirement, I pay tax on the way out.
29:21 Because traditional IRAs are just a little different. When you put money in a traditional IRA, the IRS gave you a tax deduction on the money you put in. So if I put in $6,000 in the traditional IRA, the government gives me a $6,000 tax deduction today.
29:35 And then they let it grow and come out tax-deferred. When I start pulling that money out of retirement, I'm going to pay tax. Well, a lot of our clients are like, no thanks. I'd rather be in a Roth. I don't want to pay tax at the end of the day when this thing's grown and is huge.
29:51 So I think there's low value now in certain assets, and let's say it's crypto. I think it's going to appreciate – what they'll do is they will take traditional IRA dollars and convert them to Roth.
30:02 And so you can always convert traditional IRA or traditional 401(k) dollars to Roth. You just have to pay tax to do it. So if you said, hey, I've got a $300,000 traditional IRA. Maybe it's an old employer 401(k) I built up that I rolled over to my bank or TD Ameritrade or Fidelity or whatever.
30:23 But it's traditional dollars, and you're like, man, I want to buy crypto, but I don't want to buy it in a traditional IRA. I want to buy it in a Roth. Well, we can do that, but you're going to have to convert the amount you want to use in crypto to Roth.
30:35 So let's say you want to do 50 of that 300. You do a 50,000. It's called a Roth IRA conversion. It converts into a crypto Roth IRA with us, and then that 50 grand can go out and buy crypto, and now it's Roth dollars.
30:47 Now that's growing and coming out tax-free. Now, in order to convert, though, it's not free. The IRS is going to give you tax-free on the way out when this thing grows and you hit retirement later on.
30:59 But in order to make that trade, the IRS is like, you need to pay us some tax. So that 50,000 you convert now, you've got to pay tax on. So you'll get a 1099. It's called a 1099-R. You'll get that from your IRA company.
31:14 So if you're doing it with us, we're going to send that to you at the end of the year and say, "Hey, this 50,000 is going to go on your tax return as income, and there's a line on this on your 1040."
31:30 Now you've moved that 50,000 of traditional dollars that the IRS gave you tax deduction to put in, and you've moved that 50,000 over to Roth, and it's going to grow and come out tax-free.
31:35 So you can always convert traditional dollars over to Roth, too, as an option.
31:40 Perfect. Okay, let's take a couple of the questions from people that joined up on the panel.
31:45 Peter D. Wake, I saw you requested to come up. Did you have a question that you wanted to throw out, Matt?
31:51 Try it once for Peter D. Wake. Also, I saw GenX DGen requested to come up as well.
32:01 Hey, how you doing, bud?
32:03 Doing good, doing good. Did you have a question for the panel?
32:06 I did. Two rather quick ones. The first one's pretty quick. I'd heard of self-directed IRAs a while back and dealing with real estate.
32:16 It was a real estate conference that I went to. The question is, is there a way where we can invest in both in one, or would that be two separate types of IRAs that we would have to invest into?
32:28 Great question. We have clients that do both. Our crypto IRA product is designed for crypto only, just because we link it with the Gemini Trading account and a wallet.
32:41 It's a little unique and just our reporting that we have to do with the IRS. For us, we do them in two separate accounts.
32:49 You would have a self-directed IRA with us that does real estate, and you'd have a crypto IRA with the Gemini Trading wallet that you could do with Gemini.
32:57 Now, there's another option though within there called an IRA LLC. Some people call it a checkbook IRA. We call it an IRA LLC.
33:06 In that option, what you do is you have your self-directed IRA own an LLC 100%, and that LLC can go out and own asset.
33:17 This is actually what I do, and this was the old school way to do it. My IRA LLC owns a rental property.
33:26 When I was back in – and it's done some other things, but right now it just owns rentals – when I was back in 2017 and I had my clients asking me how to do this, I used my IRA LLC.
33:37 I've moved it since, but at that time I set up an institutional account at Coinbase, which back in the day was a lot easier to do.
33:46 Now we have other resources and places we send clients for these, but I basically set up an institutional account at Coinbase in the name of the LLC, LLC owned by my IRA.
33:55 What I do is – and I have lots of clients do this way too because they want to own multiple assets, real estate, crypto, private equity, whatever, and they want to do it in one thing.
34:08 You could do it in the LLC. It's a little more complex structure because it requires an LLC, but if you're going to be doing real estate, frankly, with an IRA, you'll probably want an LLC.
34:18 The LLC is not necessary for crypto because you're just going to have a wallet and be on an exchange, but we use the LLC for real estate clients just as a way to get some asset protection from the rental property and also just to make it easier to pay bills and manage the rental when an IRA is involved.
34:34 But yes, it's possible to do both. Hopefully those options make sense.
34:40 It makes great sense. And another quick question is dealing with inherited IRAs. My mother passed in April and I took possession of her inherited IRA.
34:51 Is there a way to transfer those? Right now, my attorney was telling me he doesn't really know anything about self-directed, so he's basically just going the old school route with the 10-year drawdown or whatever that is to avoid those taxes on payout.
35:08 Is that the main way I'm going to do that, just break it down over 10 years? And then how would I go about getting that into crypto or checkbook IRA at that point?
35:20 We have a crypto inherited IRA or crypto inherited Roth IRA, depending on what type of account you inherited. You can do that. You do have the drawdown and there's this 10-year rule on the inherited accounts, but it's tax deferral for 10 years, so you're able to at least stretch it out and still keep it invested.
35:41 So you could do that with us, just use the crypto inherited IRA, or you could do the LLC. The one thing you just have to keep in mind, of course, which you already know, is you just have to sell some assets or have cash available to take a distribution each year.
35:57 Now this 10-year rule, by the way, I don't want to get too much in the weeds, but it's much in dispute right now. Basically, there was the Secure Act that came out and changed the rules on this a few years ago.
36:10 And basically everyone thought, "Oh, if I inherited an account under this new law, I have 10 years and I just have to pull it out at the end of 10 years. I don't have to pull out a piece one-tenth over 10 years. I just have to have the whole thing out at 10 years. So at year 10, I could just take a lump sum and draw it out in year 10 if I wanted."
36:28 Well, the IRS wrote regs on it and didn't write it that way. The person who, when they passed away, was already in RMD, which is age 72. Again, probably in the weeds. So there is some kind of rules on these inherited accounts that are a little different or in the murky right now with the IRS sticking their nose in it and writing some regs.
36:50 The whole financial services industry, by the way, is challenging and is challenging these regs. But yes, the bottom line is that inherited account, you're going to have a 10-year window to pull it out. But if you want to buy crypto with it, we have an option. You can do the crypto inherited IRA or you can do an IRA LLC with it. Just keep in mind you got that 10-year window.
37:13 Okay. Definitely something I want to look into, man. I appreciate you getting up here and explaining everything to us.
37:20 Yeah, my pleasure.
37:23 Love it. Love it. Okay, awesome. I think we have a couple more questions that are coming in. This is the last time that I'll announce it for those that want to enter. One more time, this space is being supported by the Web3 Expo, which is going to be in Las Vegas on October 10th. You can see their account is up here co-hosting with me. Very excited for this one. Myself, Keith, Ashley, Lucas, are you going to be there?
37:46 Unsure, my friend. Unsure yet.
37:49 Okay, hopefully Lucas and many more will be there. If you want to win free tickets to this incredible venue, all you have to do is share out the space. If you're on mobile, you can just click into the spaces chat at the bottom right. It's got the number 14 on it and just click retweet on the space. There's already 32 retweets. Your odds are very, very high, I would say at the moment. That is not a lot of retweets. You can go ahead and check that out. There's 120 people in the space.
38:16 I'm assuming some of you haven't already done that. Again, you will not just win one ticket, you will win two tickets. You'll be able to bring a plus one. Tickets are selling for $875 right now. I can only imagine it's going to go up as we get closer to the event as they potentially sell out of this tier of ticket as well.
38:32 It's going to, of course, get you the recognition and shout out from myself on the space as we pick you and you throw your hands up in celebration as you are excited for Las Vegas in a month and a half. All good things to be looking forward to here. Of course, I want to just make sure that you are also checking out the Web3 Expo account that's up here. If you need more details or information, you can see it's going to be at the Wynn, which is a beautiful location.
38:55 Of course, Matt will be there too. If you're interested in all your Roth IRA questions and you're desperately wanting to ask them in person, you'll probably have the chance there too. There we go. I see another seven of you all came in. We're going to do the picking within the next 10 minutes. Stick around. It's going to be soon. Again, you can win $1,500 in tickets right here.
39:14 It's actually more than that. I did the math wrong because tickets are a little bit more expensive. It's actually more like $1,650 in tickets. Don't mind my math. I just run Twitter spaces. All right. I think we have a couple more questions that came up. El, I saw you requested. Do you have a question for Matt?
39:32 Maybe it's E-L-E, El Divine. Or did you just want to sit on the panel with us? Okay. I see how it is. No worries. Okay. I got a couple more questions and then we'll let Matt go. I know it's a busy Friday and there's a lot going on.
39:51 Matt, right now, can you walk us through just the popularity of different cryptos that people are putting into this? I assume Bitcoin's the most popular. Have you seen more people leaning towards adding Ethereum into there or even other altcoins?
40:03 Yes. I would say Bitcoin has definitely been the most popular, but I'd say Ethereum has been more popular, at least this last few months. That's just what we're seeing with clients, new people coming in and buying.
40:22 We have a lot of people that just buy and sit. They're in it for the long haul. They're not trading in and out. So it's a lot of them that are just new accounts that come in. But definitely Ethereum. I just know. I was just talking yesterday to our executive VP that oversees this on our finance side.
40:40 That was just the conversation of the day, actually. It was just that that seemed to have shifted for at least people opening accounts with us. I don't know how widespread that is, but that's what we're seeing.
40:54 It's anecdotal. Gemini has a lot of different crypto, and so what we do see is we'll see people either buy Bitcoin or Ethereum, and then they might buy a little bit of something else, but they really put more money into Bitcoin or Ethereum.
41:11 But we do see people that invest in a specific coin that they are just really – that's all they're going for that's not Bitcoin or Ethereum. But I don't have the stats on that. Gemini doesn't have everything. That's one downside to it.
41:29 Gemini is a little more conservative in the stuff they've done, and they're regulated, which is frankly why we use them. Our space, we're a regulated financial institution too in order to custody people's Roth IRAs. So they don't have everything. There's a lot of crypto we wish that they had that they don't.
41:48 But there's ways to get those other crypto. You can go – the IRA LLC structure, so let's say you're looking at Gemini. You're like, man, Gemini just doesn't support purchase and sale of this crypto that I want to do.
42:05 Let's say ADA. I want to buy that. Okay, well you can do – you'll need to go do the IRA LLC structure and open up a business or institutional wallet owned by the LLC. LLC of course owned by your Roth IRA. And then you can kind of go into whatever altcoin you want, frankly.
42:25 So we've had lots of clients do that. Like XRP was really popular for a lot of our clients using that IRA LLC strategy. You can't get that on Gemini.
42:36 Got it. Yeah, I think that makes sense to me. Two other questions that I think are pretty popular. People say, "Hey, when I'm being told to prepare for retirement, I'm often shown the Roth IRA and I'm shown the 401(k). Where should I be putting my money first?"
42:53 So our – I mean the 401(k), let's say you have a day job. Let's say you've got a job, and the company you work for offers a 401(k) with a match.
43:06 If you have a 401(k) with a match, our advice is always go take that at least up to the match because that's free money that the company you work for is giving to you that you get to save for retirement.
43:17 After that, we prefer to go to the Roth IRA next. And the reason for that is your 401(k) at the company you work for, I mean you get a bunch of mutual funds and target date funds you can buy.
43:31 Maybe you can buy some individual stocks, but that's about as exciting as it gets in the 401(k). And so once I've gotten my free match from the company I work for, we're like throw it into a Roth IRA.
43:44 Now whether you're trading stock or you're self-directing and buying real estate or you're doing a crypto IRA, that's what we've been telling clients to do for years because you're just in control of it.
43:54 That money, that six grand a year in the Roth, you're in control of it. Now let's say you did the money in the 401(k) at your job, you got the match, the next $6,000 you threw in a Roth IRA.
44:05 Then go back to the 401(k) and drop more money in it. But the 401(k) just has limited investment options. And it looks like it's going to be that way for a while by the way.
44:16 The Department of Labor like six months ago sent out a letter to 401(k) businesses basically saying, "Hey, you better not be offering crypto."
44:25 I didn't say it that way, but they're pretty much like, "Hey, if you're offering crypto, be aware you're going to have fiduciary liability concerns. This goes bust. Just wait for the lawsuits to come."
44:38 They're really trying to scare the industry away from offering crypto. Now to their credit, some of the bigger financial institutions were like, "Yeah, we're still going to let people at least buy Bitcoin."
44:47 I know Fidelity's been going down that path and some others where they're going to allow a certain amount of allocations in 401(k)s to own crypto.
44:54 I think for the crypto industry at large, just think how huge that is. The retirement space, there's $35 trillion in retirement accounts in the U.S.
45:05 As these assets become more and more normalized, I think the last increase we saw in crypto over the last three or four years is a lot of institutions started buying it.
45:17 Well, wait until the retirement account industry gets into it. We're just dipping our toes here in with Roth IRAs and individuals who want to go buy it who are going to do the work and use a company like us to get a Roth IRA, get in early, figure it out.
45:32 It's not hard now. We've made it pretty simple. But once 401(k)s are opened up to it, there's tens of trillions of dollars in those things and people want to allocate to that.
45:43 That's going to be something that's going to help support it as an asset class in the long haul, I believe.
45:49 So we'll see how that regulation goes. But I just think, back to your original question, get the free money on the match, but then try to get to the Roth IRA because you've got more investment options. You could do crypto if you want.
46:04 Very nice. Okay, that's a great explanation there. All right. This will be my last question, I will say, before I just ask Alyssa if she has anything that she wants to add. And then we'll go ahead and we'll do the drawing.
46:18 So again, if you're in the space, now's your moment. Retweet the space. You'll have a chance to win $1,600 plus of tickets to a huge event coming up in Las Vegas. I'll be there too if you win the tickets. I don't know, maybe I'll post you on Twitter space or something.
46:34 There's something in the suite of the deal. I'll give you a high five in person. We'll make it happen.
46:40 Okay, the last question I had was someone asked which broker will allow them to put XRP into a Roth IRA?
46:45 Well, that's where you need to use the LLC structure, and you probably want to talk to our office directly on that. So really, frankly, you can buy it peer-to-peer. You don't need a broker. You don't need to go through an exchange.
47:03 Once you're in the LLC thing, you can buy it from wherever you can get it. There's not a restriction in terms of it for retirement account rules. So I just know Gemini, you're not going to get it.
47:17 So you just need to be able to go get it. You just can't buy it from yourself. That's one of the rules, by the way, and one of the restrictions you can't do is if you own crypto right now, let's say you own XRP right now, and you're like, "Holy shit, I think this is – sorry about that.
47:32 I think this is going to increase in value. I don't want to own it personally and pay tax. I want to throw it into my Roth IRA." You can't do that. You can't move existing crypto you personally own into your retirement account.
47:45 But you could go buy new crypto, so you can go get new XRP that the Roth IRA owns. In this case, you need to use this IRA LC structure.
47:54 If you go to directedira.com and just go to our crypto IRA page, we go over our standard strategy with the Gemini wallet and exchange account, which is the easy button method way to do it.
48:06 But if you want to do something like XRP or even staking and things like that, then the IRA LC structure is what I'd recommend. And that's on that page.
48:15 If you just go to directedira.com, look for crypto on the homepage, it's pretty obvious there. It's just right below the fold on the homepage. That'll get you the details to learn about it.
48:25 And then we have senior account reps that have been in this industry for years that you can schedule an appointment with, and they can go over the steps and process on how to do it.
48:33 There's just a ton of educational content too. I have an article on Cryptopedia on how to do this. I've got an article on Entrepreneur on it too. I contribute to both of those places.
48:44 As well as just webinars and stuff we've hosted on our site just to try and help people figure this out and how to do it and see if it works for them.
48:52 Okay, perfect. With that, I just want to ask, I believe it's Alyssa on the WebEx account, if there's anything that you wanted to share, any questions you had, and then we'll go ahead and we'll do some picking.
49:05 Yeah, this was really great. Matt, thanks for the last minute changes. I appreciate it. I think this space really taught me a lot.
49:15 I didn't know what I was going to do on this space. I was like, wow, I'm going to learn a lot. I'm not going to have much to say. I'm probably going to have a whole bunch of questions, but I feel a lot better.
49:25 Thank you so much for that. Yeah, Gab, just to tell you guys a little bit about WebEx, we're going to have some awesome speakers like Gab and Matt and Ashley.
49:36 I see Ashley down there and Jenny as well down there in the listeners. And so we're bringing together a whole bunch of investors, retail investors, a whole bunch of people that are very web curious, ready to pivot into Web3 for a four day conference in Vegas.
49:51 We have a startup alley for emerging companies that are looking for some investment and strategic partners. We're going to have daily networking events, nine masterclasses with Scott Melker from Wolf of All Streets, a lot of really great NFT project meetups.
50:09 And so I'm really excited to be able to have some of you guys come. And all right, I think I think we're ready. Gab, you want to do the honors?
50:18 Yeah, so very fun. It used to be that when we would do these raffles, we had the drum roll like on ourselves. But now Spaces has given us actually sound so we can do this.
50:28 I love it.
50:31 Oh, yes. All right. Who's excited? Let's see some reactions.
50:37 We can hit them with the "Ooooh." This is how you know that the big one's coming.
50:44 Okay. All right. I'm pretty excited to share. And I didn't even look at who was retweeted or anything. I just went, I dropped the tweet right into TweetPicker. I said, pick me two winners. I said basic parameters. You didn't have to be like following anyone. You just had to have to retweet the space.
50:59 I just went ahead and tweeted that tweet out. So y'all can see. Big shout out to our two winners that we have for today. The first one is going to be Mr. G. Mr. G, I see you in the audience. You actually retweeted the space like six times with quote tweets.
51:14 So I don't know if that factors into TweetPicker, but you have one. And then the second one is actually Rebel. I saw you a little bit farther down in the space. I saw you commented on the space as well.
51:25 It's @HoffyTech. So Mr. G, shout out to you. We've actually had Mr. G on a space before. And we also shout out to Rebel, who I'm unfamiliar with, but it looks like you went ahead, you entered, you even commented. Didn't even set parameters of comments. But yeah, looks like they both showed a ton of love to this.
51:43 So each of you are going to be able to go ahead and claim two Gold Pass tickets to this event. Alyssa, how should they claim those?
51:51 Yeah, congrats, guys. We're super excited to have you just learn more, get really excited for a whole bunch of really cool things that we have planned. If you are the winners, all you have to do is send me, DM me on the WebEx account, your first and last name, as well as your email, and we'll get all that set up for you.
52:11 And Gav, also, for those who didn't get a chance to win on this space, you can get 20% off of all passes with the code THEWOLF20 in all caps.
52:25 There you go, THEWOLF20, all caps. I highly recommend checking this out. I'm super excited for this event. I've been looking at all this stuff in Vegas. I'm ready to get back to Vegas. If you want to play Blackjack with me, come. It'll be fun. We'll have a good time. I love a Blackjack table.
52:42 With that being said, congrats to Mr. G. Congrats to HathiTech. If either of you guys want to just go ahead and shoot those emails, and then for anyone else, please come join us at the event. Link's up top. Check it out. And if you didn't know about it beforehand, now you do.
52:57 With that being said, Matt, I just want to give you a minute or two here for anything else you'd like to share on this space before we wrap up.
53:03 Yeah, no, thanks for having me on. I'm going to be in Vegas, of course. I'll be getting into this topic in depth. So this will be one of the things I'll be speaking on. There's learning how to do this. I kind of have a more formal presentation and some materials that will be available to you on how to figure out how to do this.
53:19 Let me just say this too on this topic. I just want to take a step back because I got in the weeds on some people's questions. I just love this crap, so I want to answer your questions and try to give you info.
53:31 But if you just take a step back, the one number I gave in answering one of those questions was $35 trillion.
53:40 If you're in the crypto space, I don't care if you want to grow your own account or not. If you're like, "Matt, I don't care about having a retirement account. Why should I listen to this topic or care about it?"
53:48 Because there's $35 trillion in the US in retirement accounts, and what's the number one most popular asset been in growth over the last few years? Crypto.
53:56 Do you think people are going to want to figure out how to do this in a retirement account? How much business opportunity is going to be there? It's going to be significant and important.
54:03 That's why we're just trying to be experts on it, spread the word, let people know how to do it, and let people know about the strategies.
54:10 I look forward to being there in Vegas, and we'll see all of you there. Hopefully you make it.
54:15 Absolutely.
54:17 Thank you, Matt.
54:19 Absolutely. If you guys haven't already, just make sure you hit a follow. We're going to be doing a whole bunch of spaces with our speakers, sponsors like Gav and Matt and everyone else.
54:30 We'll be giving away more tickets for you guys to come see us and get excited.
54:35 There you go. You can follow the main account. I'll be hosting more spaces probably after I get back from Bali, because I'm going to be gone for a week and a half.
54:43 Afterwards, I'm definitely going to come back, host some spaces with the WebEx account. I'm pretty excited.
54:49 Just one thing, I just wanted to give an oversight. I think that a lot of people who are in the audience, you may have gone to the conferences.
54:58 You may have been to, "I was at NFT NYC. I was at other stuff earlier."
55:02 This is a different approach to conferences than I've seen from the others.
55:07 I think it's going to work a lot better than we've seen with some of the others, because the whole entire approach to this one is looking for investors and looking for people that are actually trying to really make their mark in this space.
55:18 If you notice, if you go to the website, I just recommend going, it's just web3expo.live.
55:25 You'll see that there's going to be a whole bunch of different showcases.
55:29 There's going to be even like Shark Tank style pitching. There's one-on-one meetings. There's networking events.
55:34 It's not the classic conference where you show up and you basically just sit and listen to speakers and mill around and talk to sponsors.
55:43 There's going to be a ton more structure built into this, which is going to allow for people that are trying to raise money, people that are looking to invest, and all different types of people to actually connect.
55:52 Then I would also just say, go ahead and look at the sponsors that are already on the website for this.
55:56 Everything from MasterCard to Unstoppable Domains, the Bitcoin Foundation, a bunch more that you can already see, Directed IRA, of course, we see you on there, and a bunch more.
56:06 There's great people that are going to be at this event.
56:08 Plus, I just think a better layout than we've seen from others.
56:11 If you're thinking about it, you're on the edge, you're like, "I really want something that's going to maximize not just my connections, but also really be business focused and Web3 focused," I think that this is the right place for you.
56:22 That's the way I'll put it. Alyssa, anything else you want to add on before we close out?
56:26 I think actually Matt also wanted to give away his playbook, his e-book.
56:32 Oh, yeah. You can go, by the way.
56:33 We almost forgot. Yeah.
56:35 Should I do one more?
56:37 Well, that's for everybody because you can just download it on my website. So if you just go to mattsorenson.com, you can download it there.
56:47 Or shoot me a message. You can DM me on my Twitter, and I'll share that with you.
56:52 That just goes over basically how you can use your retirement account to invest in alternative assets.
56:57 I have a separate crypto resource as well that I'm willing to share with you. So either get over to my website, mattsorenson.com. It's right on the homepage. Or shoot me a DM, and I can get that shared to you.
57:08 Even better. For free. Everybody gets it.
57:11 So if you saw this space and you were interested in the topic, there you go. Shoot Matt a DM or just go right to his website. Alyssa?
57:18 Amazing. I'm really excited to have everyone here. This was great. And keep an eye out for the next spaces that we have coming up next week.
57:27 All right. Viva Las Vegas, everybody. Take care.
57:31 Let's go.
57:32 Enjoy the rest of your Friday. If you're looking for more spaces, I'll be back with spaces on Monday. I'll be doing spaces Monday and Tuesday.
57:40 If you want a bit of chicanery, tune in Monday evening. I'll be doing a live fantasy football draft on spaces with 12 people. It should be insane. So keep a lookout for that.
57:51 All right. That's it for now. Thank you, everybody. Enjoy the rest of your Friday. Have an incredible weekend. I hope you made money this week and all the good things.
57:59 All right. That's all I got. Take care.
58:01 Thanks, Gav.
58:03 Thanks, Keith.