The Wealth Elevator Podcast: Real Estate, Taxes, Investing · Lane Kawaoka, PE

Jailbreaking you 401k: Investing Through Self-Directed IRAs & Solo 401ks

·55 min·3 clips

A 50/50 IRA deal must keep the ownership percentage fixed for the life of the investment.

1. The Wealth Elevator Podcast episode centers on using self-directed IRAs and solo 401(k)s to invest in real estate and alternative assets. 2. Lane Kawaoka hosts the conversation, and Ted Steinkamp of Advanta IRA joins as the custodian-side specialist with more than 25 years in financial services. 3. The episode asks what investors can actually do with retirement money once it is moved into a self-directed account. 4. Ted says he wants to focus on partnering of funds and co-mingling because many owners think self-directed IRA investing is an all-or-nothing proposition. 5. Lane describes a personal story about losing roughly $40,000 on an early self-directed Roth IRA investment in 2013. 6. Ted uses that story to underline how a bad asset can still teach the mechanics of opening up otherwise inaccessible capital. 7. The first rule set covers prohibited investments, with collectibles like antiques, artwork, fine wine, and exotic sports cars excluded from IRAs. 8. Ted adds that U.S. Mint gold and silver coins can qualify, while Roman emperor or Greek god coins are treated as collectibles. 9. The second rule set covers prohibited transactions, which Ted defines as dealings between the IRA and a disqualified person. 10. Ted points listeners to IRS section 4975 on irs.gov for the legal definition of disqualified individuals and prohibited transactions. 11. UBIT is explained as unrelated business income tax that can apply when IRA-owned assets generate business income such as rental cash flow. 12. Ted says rental real estate often does not show much UBIT impact until year two or year three, depending on the holding period. 13. Lane adds that leverage can create UDFI, which then feeds into UBIT reporting and often requires a CPA. 14. Ted says Form 990T is the reporting form for UBIT and that carry-forward losses can reduce tax over the life of the deal. 15. The disqualified-person chart becomes a major teaching tool, and Ted says siblings, aunts, uncles, cousins, and in-laws are not disqualified. 16. Ted gives a concrete example of a brother-to-brother loan, while warning that direct lineage transfers to parents, children, and spouses are off-limits. 17. Lane and Ted explain that the IRS is trying to stop people from using IRAs to dodge estate-tax and generation-skipping rules. 18. The case study with Paul and Linda shows a $150,000 rental purchase, $20,000 in repairs, and $1,500 monthly rent split proportionately through two IRAs. 19. The episode is conversational, practical, and lightly comedic, with Lane interrupting to translate rules into plain English and Ted answering at a high level. 20. Real estate investors, syndication sponsors, and retirement-account holders who want compliant deal structures will get the most value, while listeners wanting simple index-fund advice may skip it.

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