The Tax-Free Retirement Strategy 95% of Americans Don’t Know About

BiggerPockets Money Podcast

BiggerPockets

Investing, Education, Business

4.6 • 2.9K Ratings

🗓️ 4 March 2025

⏱️ 65 minutes

🔗️ Recording | iTunes | RSS

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Summary

The wealthy are using one unique retirement account to build their fortunes tax-free. You may have never heard of it, but knowing about it can change the course of your retirement planning, allowing you to invest in much more than stocks, index funds, and bonds in your retirement accounts. We’re talking about making passive real estate income tax-deferred, flipping houses and sheltering the profits for when you retire, or having a rental property portfolio producing massive passive income, all with the tax benefits of your 401(k), IRA, or Roth IRA. We’re, of course, talking about the self-directed IRA (SDIRA) and the sizable benefits that come with it. To help, John Bowens (Certified IRA Services Professional) from Equity Trust is on the show to share the tax advantages most Americans have zero clue about. Scott starts the interview by coming in hot, throwing out his most significant objections to an SDIRA. We were even surprised by just how many benefits this single account has and how you can use it in ways most people would never assume of a retirement account. We’re talking about how to buy rental properties IN your retirement accounts (and profit from them tax-free/deferred), whether a self-directed IRA or 401(k) makes the most sense for you, the “material participation” rule that you CANNOT afford to break, and how much this account costs to set up. This is a game-changing account for retirees who want to live a rich life, so do not skip out on it! In This Episode We Cover Scott’s biggest objections to the self-directed IRA (is he wrong?) How to get tax-free/deferred passive income from real estate in your retirement accounts The one tax that you MUST know about before investing in an SDIRA Can you get a mortgage for a rental property in an SDIRA? How much an SDIRA costs to set up and keep going (less than you’d think) And So Much More! Links from the Show Mindy on BiggerPockets Scott on BiggerPockets Listen to All Your Favorite BiggerPockets Podcasts in One Place Join BiggerPockets for FREE Email Mindy: [email protected] Email Scott: [email protected] BiggerPockets Money Facebook Group Follow BiggerPockets Money on Instagram “Like” BiggerPockets Money on Facebook BiggerPockets Money YouTube Channel How to Access Retirement Funds Early Maximize Your Real Estate Investing with a Self-Directed IRA from Equity Trust Want More Smart Tax Strategies? Grab “The Book on Tax Strategies for the Savvy Real Estate Investor” Sign Up for the BiggerPockets Money Newsletter Find Investor-Friendly Lenders The Self-Directed IRA: What You Should Know About This Wealth-Building Tool Connect with John (00:00) Intro (08:26) Tax-Free Real Estate Gains (16:45) One Tax to Watch Out For (19:59) Self-Directed 401(k)s vs. IRAs (27:36) Making $34,000 Tax-Free! (30:42) The "Material Participation" Risk (35:41) Financing Rentals in an SDIRA (39:40) SDIRA Fees and Costs (50:05) Completely Passive Income (51:56) Active Investing in an SDIRA Check out more resources from this show on BiggerPockets.com and https://www.biggerpockets.com/blog/money-611 Interested in learning more about today’s sponsors or becoming a BiggerPockets partner yourself? Email [email protected] Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

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0:00.0	What if the wealthy have been using a retirement strategy that 95% of Americans don't even know
0:05.6	exists? While most people struggle with market volatility in their 401ks, a small group of
0:12.4	savvy investors are building tax-free empires through self-directed IRAs. Please note,
0:18.9	this episode is not for the everyday investor. Even though this is an introductory
0:23.6	episode, it's still an advanced discussion. So keep that in mind if you want to listen up.
0:33.2	All right. Hello, hello, hello, and welcome to the Bigger Pockets Money podcast. My name is Mindy Jensen,
0:38.8	and with me as always is my fabulous co-host, Scott Trench. Thanks, Mindy, great to be here.
0:43.7	I don't have a pun for Fabulous today. I have instead a quick short story, every morning, we wake up
0:50.0	our two and a half year old, and we comb her hair and put her in the bathroom and get her
0:55.3	ready for school and all that kind of stuff. And we tell her she's at the salon. And at the end,
0:59.8	we ask her how she looks and she says, I look fabulous. Thank you for calling me fabulous today.
1:06.1	Bigger Pockets is a goal of creating one million millionaires. And specifically, we're really working on
1:10.8	this kind of
1:11.5	two and a half million dollar net worth that enables real true personal financial freedom and
1:17.3	escape from middle class trap. So you're in the right place if you want to get your financial
1:20.8	house in order and potentially use that 401k or self-directed IRA or the new tool of a
1:26.8	self-directed IRA to escape from that middle-class
1:29.0	trap because we truly believe financial freedom is attainable for everyone no matter when or where
1:33.0	you're starting. And we hope that the advanced discussion on this episode is a helpful reference
1:37.8	for you in years to come as you just are aware of this option with your 401K or self-directed IRA
1:43.7	funds.
1:44.9	We are so excited to be joined by John Bowens today.
	...

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