BiggerPockets Money Podcast

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

Mar 4, 2025

Join John Bowens, Director at Equity Trust Company and self-directed IRA expert, as he unveils the little-known self-directed IRA (SDIRA) strategy that could revolutionize your retirement planning. Discover how this unique account allows you to invest in real estate tax-free, generate passive income, and even flip houses without the usual constraints. John tackles objections to SDIRAs, shares invaluable insights on the 'material participation' rule, and explains the potential for wealth-building that most Americans overlook. Your retirement could be richer than you think!

01:06:10

Episode guests

John Bowens

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Episode notes

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Quick takeaways

Self-directed IRAs allow wealthy individuals to invest in diverse assets, including real estate, beyond traditional stocks and bonds.

Investors must navigate complex tax regulations and potential pitfalls, such as UBIT and prohibited transactions, when using self-directed IRAs.

Solo 401ks may offer superior advantages for self-employed individuals, including tax-free growth and higher contribution limits compared to self-directed IRAs.

Deep dives

The Potential of Self-Directed IRAs

Self-directed IRAs offer a unique retirement strategy, allowing individuals to invest in a wider range of assets beyond traditional stocks and bonds. Unlike typical 401ks, this strategy provides avenues to build wealth through real estate and other alternative investments. An example cited in the podcast is a real estate investor who successfully utilized their self-directed IRA to purchase a property for $63,000, which later sold for $115,000, reflecting a substantial return on investment. Such cases highlight the potential of self-directed IRA investments in diversifying and increasing retirement wealth.

Intro

4min

Unlocking Self-Directed IRAs for Real Estate Wealth

9min

Maximizing Real Estate Investments and Tax Management

2min

Navigating Retirement Accounts for Real Estate Investment

12min

Navigating Retirement Strategy for High-Income Earners

5min

Unlocking Retirement Wealth

16min

Understanding Solo 401k Fees and Management

2min

Navigating Self-Directed IRAs for Real Estate

16min

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

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