Tax-Free Income for Life with Self-Directed IRAs


Description

In this first workshop session, I set the stage for creating tax-free income for life using self-directed IRAs. We covered the basics of account types, contribution rules, IRS guidelines, and real-world case studies of investors making it work. You’ll see how to protect your nest egg, avoid mistakes, and use Roth IRAs to build generational wealth. Plus, I’ll show you creative ways investors are structuring deals — including seller financing and using trusts — to stay in control while keeping everything tax-free.


Key Takeaways

  • Taxes are your single biggest expense — cutting them is where you save the most money.

  • A Roth IRA can turn ordinary deals into 100% tax-free wealth for you and your heirs.

  • You need only two things to qualify for a Roth: earned income and the ability to fog a mirror.

  • Contributions can always be withdrawn anytime (earnings have restrictions).

  • The “five-year rule” matters — your Roth must be open 5 years before you can pull out gains tax-free.

  • You can (and should) open multiple Roth IRAs for different investments to manage risk.

  • Trust structures allow your IRA to hold property while giving you control over banking and expenses.

  • Overcontributions can be corrected by year-end with no penalty — but don’t ignore them.

  • Your IRA custodian is a neutral record-keeper — you find the deals, and they do the reporting.

  • Don’t be fooled by “self-directed” accounts at big firms — they usually only allow what they sell (stocks, bonds, mutual funds).


Action Steps / Exercises

  1. Check Your Status: Do you have a Roth IRA open? If yes, write down the year it was started (your 5-year seasoning clock is already running).

  2. List 3 Investments you’d like to hold inside a Roth IRA instead of in your personal name.

  3. Draw a Trust Diagram: Sketch how a trust could hold one property with your IRA as the beneficiary.

  4. Overfunding Drill: Pretend you accidentally contributed $12,000. Write out how you’d fix it before year-end.

  5. Case Study Reflection: Look at the “Ralph” example — 21 properties, $950K seller-financed — and identify how you could structure a similar deal inside a Roth IRA.