#110 - The IRA Club Advantage: The Self-Directed IRA Strategy for Pilots with Ramez Fakhoury

[00:00:00] Welcome back to Passive Income Pilots, everyone. Tait Duryea and Ryan Gibson here on another week of financial education. What's up, Ryan? Not much. I'm excited. You know, IRA investing has been like the number one thing that people ask about. Definitely. And there's always those pilots that have like a 401k or something sitting at a previous airline or a TSP for those military pilots. That's right. And they're kind of like, what do I do with this? How do I access? Or they have the million dollar question, which is,

[00:00:30] can I use my current airline employer's IRA to invest? You know, how does it work? What's the process? How long does it take? When do I do it? All these things. Hey, I'm going to a new airline. You know, there should be like a little beacon that goes off. Like you're going to a new airline that that should like, what am I going to do with my old retirement account? And so like, this is just such a great storytelling episode of what to do when those situations come up. And a really good friend of mine, somebody who I've referred, you know, hundreds of clients to is coming on to talk about it. So I'm

[00:00:59] just, I couldn't be more ecstatic for the show. Well, it was a great episode. You know, self-directed IRAs are just such a great vehicle to invest with. And it's also a source of capital that a lot of people just don't think about. They think, you know, I'd love to get into this deal, but I don't have 50k. And you might have 50k sitting around that you didn't think of a source of capital to, to utilize.

[00:01:26] And so anyway, we're really excited to have Ramaz on. You want to tell the listeners a little bit about his background? Well, Tate, you know, I know that you have his bio, so let's just tell his background, but Ramaz is like a really interesting guy. He, he had a background in owning and operating his own restaurants. So he's a Somali. He's really good at picking out wine. And trust me, if you ever hung out with him, have him go to a restaurant. He's such a fun guy.

[00:01:51] And, uh, you know, from Chicago. Amazing. Anyway, he came upon IRA club in this whole concept and just fell in love with it and just pursued it endlessly. And now basically heads up IRA club. And you know, I've worked with him so much. Anyway, Tate, can you kind of give his background and bio officially? Ryan, there's nothing more to be said. Vice president of IRA club is an amazing self-directed IRA custodian. And, uh, it's just, it's an amazing episode. I'm excited to get into it. Now he's going to tell a story about a Southwest pilot who went to another airline

[00:02:22] and did this whole strategy. So with that, we're going to jump right into the show. Let's get to it. Welcome to passive income pilots where pilots upgrade their money. This is the definitive source for personal finance and investment tactics for aviators. We interview world-renowned experts and share these lessons with the flying community. So if you're ready for practical knowledge and insights, let's roll.

[00:02:51] So Ryan, you and I actually were at an event not too long ago, collectively together. And it was so funny. I was actually with, I had a one-on-one conversation with a Southwest pilot. His name was Jeff. Right. And he just coincidentally, no, saw my area code was eight four seven happened to live in Chicago himself. And, um, he was trying to learn and understand, you know, how to utilize retirement dollars within the alternative space. So he was

[00:03:20] kind of like a deer caught in headlights when we were talking about this. So I suggested let's set up a call. Notice that was an eight four seven number. Again, knew that I lived out of Chicago. And one of the things that I caught wind of is like, where do you travel from? And I said, I actually prefer Midway. So I do travel Southwest often. And one of the things that he said is I hate Midway with a passion. And I started laughing. I said, wait, why? And I didn't understand. I didn't even know this. I just, I hated O'Hare. It was just so hard to get in out of it. So he says to me,

[00:03:49] the reasons why is because the runways are so short. So, and it's like one of the hardest landings for a pilot to do. And the only reasons why I truly, uh, full disclosure fly Southwest is because it's one of the main hubs in Midway and also Delta. So those are the two that I fly out of, but back to the story, he goes to me. So you're trying to tell me that I could use my 401k currently, um, at Southwest to invest in an alternative asset. And I said, are you currently

[00:04:18] employed with Southwest? And I go, and he goes, yes. So I go, unfortunately you could not use your 401k at this time. However, you should learn the strategy and understand it. Why? Because at some point, are you planning on switching over to a different, you know, airlines? And he looked at me and he goes, funny, you should say that nobody knows this except for me and you, but yes, I am actually in the process of transferring out. So I said, listen to me, this is very important. What, what airline was he going to? Do you remember?

[00:04:47] Actually American, he was switching over to American. So he actually, when he said that to me, I said, okay, very important that you understand this. Now you could take advantage of using your 401k dollars and diversifying into different asset classes. Like you just stated, you wanted to get into some real estate. And I said, okay, he goes, what do I do? Well, this is what's going to happen. When you decide to roll over to your new employer, say American. And I said, they're going to offer

[00:05:13] you three options. Option one, keep your 401k with your current plan, the way it's structured. Option two, roll it over to your new employer, which I highly recommend that you do not do. That means you give up the control aspect of it. And three, roll it over to an IRA. Those are the three options are pretty much going to give you and every company gives you. So he said, okay, just to be clear, do not roll my 401k over. We're going to roll it over to an IRA to do what? And I

[00:05:42] said, invest in alternatives. So what's the next step going to be Ramaz? And this is where he got a little bit confused because his current 401k plan was, I'm assuming with at that time, Fidelity Vanguard, one of the two. I said, think of IRA club in the exact same manner. In fact, they're a trust company. IRA club, our bank Meridian is a trust company. So what are the main differences between Fidelity

[00:06:08] Vanguard and let's say IRA club? I said, it's simple. I give you the best of all worlds, not just the stock market. I let you use your retirement dollars to diversify in what you're looking into real estate. So the first thing that you got to do, Jeff is establish an IRA club account. Why? Because it is now in this facet of what we're talking about, a self-directed retirement account. Now here's, what's funny, Ryan and Tate, he goes and says to me, wait a second.

[00:06:38] I was told that I could self-direct at Fidelity or Vanguard. And I looked at him and I said, Ryan, let me ask you this question. What do you think, pretend as I'm talking to Jeff, what do you think his fiduciary or registered investment advisor or broker probably told him? Well, yeah, you are in Fidelity. You can invest in whatever you want. You can self-direct whatever you want to invest in. You can pick whatever stocks, bonds, and mutual funds you want to do. Just let me know.

[00:07:04] But that's the thing is if you told him, oh, I found or identified, let's say, a house on 123 Green Street, or I wanted to invest in a self-storage facility. The answer to that question is going to be, sorry, that isn't part of the portfolio. That's how they talk to you. But here, you could self-direct with us, but here's a pool of alternative investments that you can do. Because in our eyes, that is not true self-direction. That is not true diversification.

[00:07:33] So I told him, you have to establish an IRA club account in order to facilitate these types of alternative investments. So step number one is because we don't want to trigger a distribution, right? We want a like-on-like. When I say like-on-like, I'm implying a traditional IRA account established here at the IRA club. And then we can now transfer the funds or in this particular case,

[00:07:58] because you have an old employer 401k, we can roll that over to the IRA without triggering, again, a 10% penalty or a taxable event. So that's what he couldn't understand. So Ramaz, tell me, when did he do all this? In this particular case, he actually was just learning the strategy, knowing that within the next 60 days that he was going to be transferring over to American Airlines.

[00:08:24] So I was teaching this strategy to him before he pulled the trigger. So I said that you would have to wait 30 days, 30 days is the grace period. Then you could go ahead and establish an IRA club account, and then we can roll the funds over to the IRA club. And then the very last step, and this is the one thing that we always have an issue here at the IRA club, us being the administrator and a self-directed

[00:08:47] IRA company is we are not financial advisors. We are taking the control away from Fidelity, Vanguard, and Schwab, or one of the other 10,000 brokerage firms that are out there, and giving the control back to you, the investor, to pick and choose investments that are better suited for your future. So that's the point, Ryan, that I was trying to make was, I was teaching him a strategy that he did not understand, and he didn't realize that can be obtained or you can do. That's something that

[00:09:16] they don't teach you growing up or any classroom that I've ever seen. And trust me when I tell you that is a big issue and hurdle that we always face here at the IRA club is choosing the investment for the investor. I think this is so, so important that, you know, we've been teaching people this, this strategy on a few episodes in our, our past 110 ish episodes is people just don't know. And so they get those three options. You know, Jeff gets to American Airlines. He sits down

[00:09:44] at Indoc. They give him these three options. Well, I mean, if you didn't know that you can invest in, let's say real estate or other alternatives into, in your IRA, of course, you're going to say, we'll roll it into the American thing because it's, it's simple, right? Why do I need two cars? I only drive one. But when you realize that you can diversify because you're his American 401k is going to be massive. Whether he rolls that Southwest, let's say a hundred thousand dollars

[00:10:11] that's in there or not. American's going to be pumping money into his 401k for the next multiple decades. It's going to be huge. And that can only be used while he's employed by American to invest in stocks, bonds, mutual funds, ETFs, whatever's in the American plan, right? So why not take the, the a hundred thousand or whatever it is in the Southwest 401k that's now unlocked because you have left that employer, roll it out to a self-directed. And it's a shame that there isn't

[00:10:40] a different name because it's self-directed, you know, fidelity sells you, it tells you it's self-directed IRA club self-directed and they use the exact same vernacular, which is, it's a shame because they're totally different. I want to jump in real quick. I want to pause that just first, hold that thought. There's actually four things you can do by the way, when you get to ground school, not to correct you, you can do nothing, right? Like you could, you can just leave it at Southwest and you don't have to like, you're an in doc, man. Like you're going through SIM,

[00:11:09] your ground school tests are coming up. You're like stressed out. Your wife's like calling you, whatever, you know, you're going to all this, you know, going through all this stuff. And it's like, and then they plop another thing down and you're like, I got to make a decision. And you're like, oh man, episode one, 10 said something about, and I can't remember if you can remember, just take away one thing. Don't do anything. Just don't do anything because if it's still sitting at Southwest, you can do it later. Right? True. And the other thing is like, if you're like, and it's just going to stay there and it's going to make money or do whatever the market's doing,

[00:11:39] right? Or lose money, whatever it's, you know, it's still going to just chill. So you can leave it there for a minute and then, and then decide late when maybe we get out of school and you're on IOE and life, you know, this, the sun, you know, the light at the end of the tunnel. And then now you're like, okay, now I know what to do with this money, right? Like, okay, like let's make that call. Let's look, re-listen to this episode, whatever it is. And then I'll just say like, so, so you can leave it there. You can roll it into IRA club and do alternatives. You can roll it into the new plan. Or you can just, if you really want to like change things up and then like

[00:12:08] manipulate it later, like you can roll it into like a Charles Schwab or Morgan Stanley outside of your employer's plan. So you can still control it. And then, you know, Ram is, I wanted to talk to you about like, you know, it's like the other thing is too, is it goes into IRA club and then IRA. I think what's really cool about what you guys do, which is why I wanted to really have you on the show is like you guys have the ability, I believe to do like stocks, bonds, mutual funds within IRA club, which is different than a lot of custodians. I think that's the biggest differentiator is that

[00:12:38] like some of these custodians that allow you to do real estate, but they don't want to let you do the other things. So then your money, all that money that goes in there is super limited. Yeah. I think the only other custodian that I've heard of that has stocks, bonds options is equity trust. Equity, yeah. Equity trust. Yeah. And, and for full transparency, for anybody listening, there are dozens of self-directed IRA custodians out there, but you know, Ryan, I know we, we both

[00:13:04] had great experiences with the IRA club and Ram has a great friend and you, you have an amazing business here. So we wanted to invite you on and, and get some information from you. You know, I was going to illustrate Ryan back to what you were just talking about. It's one of our pillars here at IRA clubs education, just like you, right? One of the things that we want to do is diversify. And that's how I kind of look at IRA club. Cause you hit the nail on the head is we are a one-stop shop. We don't have a problem with the stock market.

[00:13:32] There is no problems. Like we just think like you should be thinking about alternatives. Why? Because if you actually look at the history of the 401k established in 1978, from now until then, you're looking at an average return of six, seven, maybe 8%. Why? Because most people do not realize that when you have an employer's 401k, 83% of them sit within mutual funds and mutual funds

[00:13:58] are their definition of diversification, which is large, mid, small international stocks and bonds. That is not our definition of diversification. We don't have, again, we don't have a problem with the stock market. As Tate mentioned, we offer the stock market as an option here at the IRA club. Um, but we think again, real estate land syndications, private equity deals, um, crypto, anything your

[00:14:24] heart desires outside of three things. There's only three things that you could not use your IRA, 401k HSA, TSP, or any qualified retirement account. Three, your own life insurance and S corp or a collectible. And everybody always asks, what's an example of a collectible could be an antique car and antique rug, anything art related. So it's so funny because Tate Ryan, my daughter actually drew

[00:14:51] a stick figure four years old. And I told my wife, Vanessa, I think I want my raw fire rate to buy that, that, that, that awesome piece of art. And she looked at me and she goes, you think that's a prohibited transaction to my wife? And my wife is like, no, I would pay a million dollars for that. That's why there's a rule now that States you could not use any, now listen, let's, let's take a step back. If it is a collectible, like a Picasso, that's a different Avenue of, of what we define as

[00:15:19] fine art. But again, the looks in the eye of the beholder. So those are the only three things that you could not use your retirement account at the end of the day. So. There's also prohibited transactions while we're talking about that subject, uh, up and down with family lineage, right? So if you buy a rental property, you, your parents, or your kids can't rent it from you. Right. Yep. So again, just think of a linear ladder up and down. So this also includes my spouse,

[00:15:47] right? So this is my children, my grandchildren, my mother, my father, right? Those are the people that could not get involved in any of your deals and, or you could not lend money from your retirement account too. Now, what's funny is, can I lend money to my sister or brother or uncle or best friend, or get them to invest in one of their deals? The answer to your question is yes. So there are very limited rules that you can and cannot do within your retirement

[00:16:15] account. And again, most individuals just don't realize that 97% of individuals have no idea of this concept. In fact, they leave their retirement funds in only three places, banks, and in particular, we're talking about CDs. Two is going to be annuities and three, which is the biggest of the three that I just mentioned is stocks, ETFs, mutual funds, employer plans. This are, these are basically the only three spots that individuals for some reason or another,

[00:16:45] we just can't fathom why education is, education is key for us at the end of the day. This is why we're here talking about it. Wait, look, I, I can't, I, I'm restraining my side. Really? I just want to jump in on something, which is, you know, Jeff goes to American, American is going to be putting, I don't know what their defined contribution is. I don't know what the matches at American, but you know, at Delta, it's either 16 or 17% now.

[00:17:10] Yeah. 16, 17% of your paycheck, uh, or what, or what you earn is automatically put in that 401k for the rest of your career. Right. So if you're, if you're like, you know, a younger, it doesn't even matter. Like that, that is a substantial amount of money that is just going to go there and go into the stock market and buy these mutual funds. And this stuff is great. Right. And you don't even have to match it or anything. It just goes and it's, and it's a hundred percent vested. It's

[00:17:37] amazing. Right. One of the themes in the show is like, Hey, what? So, so you, so that's maxed out and you sort of like taken care of your retirement. What do you do with the excess cash other than buy a, you know, a carbon cub or, you know, a boat or a couple of extra houses you don't need. Right. What do you do with that extra cash? Right. Like a great way to diversify into syndications and real estate is through a syndication, right? Like, so you, so you, you have this extra cash,

[00:18:04] you actually, you're, you're trying to get this extra 50, a hundred K a year because your 401k is completely taken care of. And so here we are giving you a vehicle. And, you know, I know we're really niched into like a, a moment in time here where you're leaving one airline and going to another, but like, you could even think backwards. Like I run into pilots all the time where we're like, Oh, I used to work for Atlas or I used to work for polar or whoever. And like that 401k is still sitting there and they didn't do anything with it. And they're like, how do I invest in your

[00:18:32] deal? Can I use my fidelity at Delta? And it's like, no, it let's talk about, you know, Oh, you flew at Misaba or Pinnock, you know, whatever. And that's still over there. You know, you can dust that off and like put it to work into real estate. And that's a diversification because otherwise your whole career, you're going to be a hundred percent in the stock funds, mutual funds. You're going to be a hundred percent. This is the entire reason I started turbine capital is because I realized that pilots needed an Avenue to diversify. You get to the end of your career as a pilot with,

[00:19:01] with the airline dumping in 15, 16, 17% into your 401k. You're going to have five, $10 million sitting in your 401k. It's all tied to the stock market and you're just completely lopsided, which there's nothing wrong with stocks, bonds, mutual funds, but keep in mind that the average billionaire has 55% of their net worth in private market alternatives. Yeah. And 25, uh, what 20 to, uh, 35% in the stock market. So this is not how billionaires

[00:19:29] invest. Billionaires don't have a hundred percent of their money in the stock market. Yeah. Right. So, you know, you, you want to, you know, there, there, and there's the illusion of diversification as Ramiz you, you alluded to that all these mutual funds, it's like, Oh, you're diversified. It's like, well, when Trump says, Hey, we're, we're slapping 150% tariffs on China, the whole market drops. I don't care how diversified you are. Your entire portfolio is

[00:19:56] dropping. Right. So we want to, we want to have a nice basket of non-correlated alternatives to balance it. Yeah. And the tape, just to add onto what you're saying. Yeah. When the tariff and all that seasickness was being created in the stock market. And again, this isn't a bash on that. My storage facility still maintain 90% occupancy. My distribution is still consistent. Like nothing changed. Family deals, right. Real estate takes steady, steady, steady, right. So you have this up and down and that's great because like, I mean, yeah, I mean, when the tariff, you know,

[00:20:26] we all know the tariff thing, right. It's like going to probably be all we gone in nine months. Like, let's be honest. Right. I mean, today I think it was big headway made, but anyway, without going into that, it's like, that's going to be temporary things that you can take advantage of and be diversified into the swings there. That's a good thing to be in. Right. But also like the stable, I, you know, the more, you know, other things that, that diversify that way. So Ramiz, okay. So we get this all the time. There's equity trust, there's Inspira, there's, you know,

[00:20:52] there's all these, you know, and, and I, I have kind of dealt with all these custodians. The reason why I like IRA club and I, and I want to kind of really double click into this is it seems like you guys are small and nimble and have all the technology tools that, that limit other groups. And, and then it all kind of comes with that high touch. And so that's what I really appreciate. Like, cause you know, equity trust, and this isn't anything, they're huge, right? They're

[00:21:20] huge and it's kind of hard and, and they're kind of a Walmart approach to the whole thing. You know, it's cheap and whatever, but you can't, and then there's some that are so small and so not technology focused that you, you can only do a certain asset types, you know, their technology is limited. It's hard to get ahold of people. So I, the reason why we're having you on the show is, you know, we like working with IRA club and, and I feel confident sending people to you and,

[00:21:47] and knowing that they're going to get a good service. Right. So, and we've sent dozens, if not hundreds of people your way. And I was about to say a hundred dozens, I was going to say a few hundreds. Yeah. So like, I feel really good about what you do and how much you charge and all the tech. So can you kind of just in layman's terms, like, you know, cause people, people are always like, like, who should I use? And I heard this one and I recommend that one, but, but like, what's the, what's the kind of the pitch on IRA club?

[00:22:13] So it's not so much a pitch again. Yeah. You know, I look at it that for simple, very simple. Nope. Nope. Okay. Everybody's now, when we go to events, you and I, Ryan and tape, everyone's now heard of a self-directed retirement account, whether it's from fidelity, Vanguard or Schwab or IRA club or one of the other dozen, a few dozen. The problem is just because you heard something, doesn't mean you understand the process. And that was actually Jeff's biggest issue is he didn't

[00:22:39] not understand the process. So again, what IRA club offers is number one, we are not a call center. Okay. You call, you get the receptionist and you ask to speak to whoever's in charge of your account because we want to handhold you every step of the way, which I like to say is a true system of checks and balances here at the IRA club. So it starts with our onboarding team, right? Uh, Ryan, Mandy,

[00:23:06] we've got a whole onboarding team, her and her team will onboard the client, which means we will establish the IRA club account. Starts off very quickly with a welcome call, welcome email, welcome text. You are assigned to one IRA club representative. So when you, again, you call the IRA club, you ask to speak to that individual, which really leads you into the next segue, which is going to be funding your account. That will be step number two. So the funding process will vary,

[00:23:33] Ryan, from individual, from individual to individual. It also depends on the custodian that you're currently dealing with that will determine the timeframe. Okay. Traditionally, it'll take anywhere between five to 10 days on average. This is what we see. And our transfers team will actually manually either go get, if it's an IRA to IRA transfer over to the IRA club, or we could roll over the entire 401k over here to the IRA club, which is going to be the second step. Okay. You

[00:23:59] could also make a contribution. As I mentioned, if it's under the age of 50, it's $7,000 over the age of 50, it's 8,000 401ks are substantially higher. As you all know, 23,500 and then 30,500 if you're over the age of 50. Okay. So this is the process of opening and funding. And this is what IRA club offers from that portion of it. Now, the very last step, Ryan is where the confusion always

[00:24:24] kicks in. And in the case of Jeff, he didn't understand, or he better yet thought he bought that IRA club was choosing the investment. Yeah. That was the part that Jeff couldn't grasp was no, we are taking the control away from where your current 401k is at and giving it to you to diversify into a house or a self-storage unit in particular. We were talking about self-storage units. That's how

[00:24:49] that conversation with Jeff and you, Ryan kind of transpired. Okay. So that's it. It's one, two, three. And then we are actually, we will make sure and ensure that is IRS compliant. That's the other thing that most people don't understand as the administrator, we do the forms for you, the 5,500 forms, the 1099R forms, everything's always up to date. And again, if you don't know the answer to the question, or if you think you're causing a prohibited transaction, call, I don't know

[00:25:16] what form to fill out. Yeah. Call that's the cat, but that's great. So I thought that was a really good overview, but I think one thing that goes, you know, on, you know, all the Spartan deals that we, that we have, we send over all of our documents, you guys go through all of them and then you put them on what's called investors row, which is like a marketplace to go and look at alternatives, right? So IRA club.com, I think forward slash investors row or something like that. Yep. Investors row.

[00:25:46] And what I love is like, so, so let's just say you're Jeff and you you're at Southwest and you quit and you go to American and you're like, okay, I want to use my Southwest IRA to 401k. I want to roll that into IRA club. Now I could invest in real estate. And so like, okay, what do I, you know, so you talk to me and you know, yeah, you're convinced to do our deal or whatever. You go to investors row, you like click, make a pledge and like all the paperwork is there and done. Right. Versus like all these other custodians are like, well, now you got to like fill this out.

[00:26:14] And it's, it just so clunky. Right. And what I love is it's so such a smooth process to like onboard your documents and get them in. Um, and then from an operator's perspective, like you guys do the ACH transfer. So like we can send the funds to you guys every month. And it just, it seems like you guys have a tech stack that's super dialed in with the customer service that you mentioned earlier. So I really appreciate that. Yeah. Yeah. It's, you know, what's funny is when we talked to, when I was talking to the other principal partners of IRA club, it's for me,

[00:26:44] it's, it's like, how do we streamline this process? Cause I know everybody's pain points. Okay. Not the fact that just, they don't understand the process, but what is everybody's pain point? And the pain point is really the, the e-signature process. Cause everybody here to five years ago is doing everything by hand. Yeah. Everybody does it differently. Yeah. Sorry. We work with dozens of IRA custodians. The only consistency is there is no consistency.

[00:27:11] It's totally true. We've had to take the entire document signing process off of our, our dashboard because everybody does it differently. Right. So, so we're on an email thread with, you know, two, three dozen different IRA custodians. Yeah. So I, I feel that pain point. Ramaz, I want to talk about rollovers versus contributions, because I know there's somebody out there going, why are these guys just talking about rollovers? Because can't you just contribute to an IRA? Can't I just start up a new

[00:27:36] IRA? Well, I'll tell you why. Tell me again, what the contribution limit is this year for, for an IRA. So for an IRA, it's $7,000 if you're under the age of 50, and then it's an additional 1000. If you're over the age of 50. Ryan, what's the typical minimum investment for a real estate syndication? 50 grand. You might find the 25 K ones. There we go. So how many years will it take you

[00:27:59] to contribute your way to, to a minimum investment a lot? Right. And IRA club has fees as does all the self-directed custodians because fidelity makes money on a trade arbitrage and, and fees that they make on mutual funds and things like that. Right. IRA club doesn't. So you, you and every other self-directed IRA custodian out there is fee-based. So can we talk about what those fees are and what

[00:28:28] sort of that critical mass is within an IRA for it to start to make sense to pay those fees? Because let me tell you, if you put $7,000 into an IRA club, uh, account and you're paying those fees, I don't care how much money you're making in your, your real estate deal. It probably isn't going to clear the fees. So yeah. Actually, 100%. That was actually one of the conversations that me and Jeff were having is he didn't understand. And believe it or not, he had a couple hundred thousand

[00:28:54] actually inside us, uh, um, the, uh, sorry, Southwest, uh, employer's plan. The thing that he couldn't grasp was what you just talked about the difference between percentage-based models and flat fee models and how percentage-based models will probably eat away a third of his retirement account. And he said, why don't you elaborate a little bit? Well here, as I just mentioned a split second ago, 83% of employer 401ks sit within mutual funds. Mutual funds have the highest fee-based

[00:29:23] structures across the country. In fact, if you go Google this number, I think the national average is about 2.275 to 2.56. And it's what the average is. It's all hidden. Yeah. It's all hidden. It's hard to find. So that's what I try to explain to Jeff is like, think about that per $100,000 or taking a bare minimum, minimum of $2,200 potentially from your 401k. And the only time that you get paid, Jeff, is when the market is up. If the market is flat or if the market, as of this year,

[00:29:53] is losing money, are they still taking their 2% from you? Of course they are. So I said, how do you distinguish the difference with the IRA club? And that's what Tate, you were just illustrating is it is a flat fee model, right? We charge per IRA account $195. And I said this to Jeff, I don't care if you have 10,000, a hundred thousand or a million, what is the most IRA clubs going to take from you? $195. So Jeff's next question was like, well, how the heck are you guys

[00:30:19] making any money at 195 bucks? So I said, it's per investment. So per asset class, we charge an additional 195. So the IRA account is 195. Let's say, for example, you did want to invest in the self-storage facilities. It is an additional $195. So you're talking about $390 per year. So to your point, if you're just making a general contribution of $7,000,

[00:30:44] those fees don't tack up. But again, there are other solutions here at the IRA club. For example, if you want to use our trading platform, I told Jeff, we don't charge an asset fee of 195. It's absolutely for free because we want to practice what we preach at the end of the day. Hold on. That's really important. That's really important. If you're listening to this, the trading platform, right? Because a lot of these IRA custodians won't let you trade.

[00:31:09] So you get into this weird situation where you put a bunch of money in your 401k and you're like, okay, I like Tate's deal. I'm doing a new IRA. I'm going to do 50k. Then I'm going to, oh, I love Ryan's deal. I'm going to do a 50k, whatever. And then there's this weird amount left over. There's like 6,296 bucks. And you're like, what do I do with this? There's cashflow coming off a deal. That's another issue is you got a deal that's kicking off 300 bucks a month and it's going back into your IRA and it's sitting there and it doesn't make the minimum.

[00:31:37] And then you've got, you know, a thousand, 2000, 3000, 4000. You're like, what do I do? Why do I send it out? And then of course, you know, get charged a fee to roll it out back to Schwab. That was our issue, right? That was our biggest issue was like, so when I actually, how our trading platform came to fruition was three, four years ago, I'm sitting with, you know, Dennis Blitz, president of IRA club and the, you know, compliance team marketing team. And I'm sitting here and I'm

[00:32:02] listening to guys. The number one question that we get from our IRA club clients is what do I do with this access money? And what do you think they were doing? Ryan and Tate was, they were just shifting that money back over to Fidelity, Vanguard and Schwab every single month. Right. So we needed to come up with a solution. So we got together with the tech team, with the marketing team and said, Hey, I want to develop our own trading platform. So if you use, for example, Jeff, who is now actually investing

[00:32:31] just so happens to be in one of your deals, you guys, and he also has a house on one, two, three green street. Let's just say the rental income and the dividends are coming back to the IRA club. All he's doing is just shifting the money to the trading account. And then he's throwing it inside. And by the way, since we're talking about tech, we are the first in our industry to launch an AI driven platform where the AI is protecting the retirement account from market volatility. Exactly

[00:32:56] what's going on currently today. So a lot of our clients utilize the trading platform for those two reasons is to preserve and protect your retirement account using our AI smart folio. I love it. But great point. The, the, you know, it just, it, for us, it's, it's going back to the fees. It's just, most people cannot understand the fact that percentage-based models will literally eat

[00:33:21] away a third of what you make. And again, since we're talking about diversifying here, what the other thing Jeff didn't seem to understand is if he did roll those funds over and he was in this current market where you, you know, I think it's your right. Correct me if I'm wrong. I think year to date, it's down like 16, 17% year to date as of January 1st until now. Yeah. Maybe not for today. I think today that the tariffs came up. I didn't even look at today. I don't want to look

[00:33:47] at today, but the point that I'm trying to, I know, I know your point. It's down. It's down. Yep. Yeah. It's, it's down bottom line. But the point I'm trying to make is if there have been 12 total recessions, right. In the last 50 years, we're not going to go through all of them. Yeah. Many of us, including our parents do remember the 2008 crash, right. When we lost half. So I tried to explain not only to Jeff and all the rest of our, you know, our IRA club clients is what are you, what's your most important asset? What is the most important asset in your life? And it's your

[00:34:17] time to your life. So I'm using my father as the perfect example, right? When he was approaching retirement way back when, and I buy, and it was roughly, I would say, you know, he had about $800,000 all tied up in the stock market, all of it. And then 2008 comes around and he loses half. Yeah. Well, guess what my father had to do. He couldn't retire anymore. He had to work 4.7 years

[00:34:44] to get to that break even point. And that's what most people do not get is the time aspect of what you lose to get back to break even. And that doesn't happen in real estate, right. Or alternatives. That's how you hedge against it or protect yourself against those type of drops. And again, not that we have a problem with the stock market. We just teach it a little bit differently here. Use your alternative assets, get the money back into the retirement accounts tax-free or tax-deferred,

[00:35:11] and then roll it into the stock market, which we have that option for you here. Yeah. And that's the beauty of it. I just want to, to stop on this. The larger your IRA is, the more efficient it is. The larger your self-directed rate, you know, if you only have 50K in there, you have to make, you know, X amount just to cover that fee. But that X gets smaller and smaller and smaller and smaller,

[00:35:35] the larger this SDI rate gets. So that's, that's why these rollovers are so powerful is because it gets you to, it, it allows you to seed that account with, you know, a hundred, 200, sometimes many hundreds of thousands of dollars to get you started. And of course you can only put $7,000 a year in. It's, it's tiny, that contribution, right? So if you can get that seed capital from your previous employer and roll it over, it's just, it's incredibly powerful.

[00:36:02] And Tate, just to add a little bit more to that, you know, I always tell people, everyone's contribution limits are the same. I always tell people be obsessed with the investment process. Right. Okay. And we all, we all know the perfect example of Peter Thiel, right? How he took an $800 Roth contribution that he made and invested in a company that we all know PayPal. And that company

[00:36:25] blew up to be $5.2 billion. I'm sorry, that is Roth IRA blew up to be $5.2 billion. And keep in mind tax-free, right? Always think of ways. This is a strategy to eliminate and tell uncle Sam kick rocks. So, you know, he eats a fourth of, you know, fourth of what you make in within your lifespan. So this is a way to accelerate, right? When, when you, Ryan, when you talked about,

[00:36:49] you know, ROI being at 15, 16, 18%, when you use your IRA dollars or 401k dollars, it's not 15, 16, 17% returns on your money. It's more like 17, 18, 19% returns on your money, because I just mentioned you eliminate uncle Sam out of the equation. So always keep that in mind. I want to touch on the fact that you can have as many IRAs as you want. Sometimes people think you can only have one because you can only contribute a maximum of $7,000 to the aggregate.

[00:37:19] Right. You can't, you can't contribute. If you have five IRAs, you can't contribute $7,000 to each one of them. But can you talk about the fact that, you know, somebody, if they say they have a half million dollars, right. And they don't want all of it over in IRA club, can they roll half of it? And do you know what? Back to the story with Jeff, one of the questions he asked me was, do I need to roll over all $200,000 over the IRA club? I said, absolutely not. You could remove over, you can move over a portion if you want, right. You still want to diversify a little bit in the

[00:37:48] stock market. Feel free to do so. You can move over a hundred thousand dollars. Let's say over to the IRA club. You're more than welcome to do so to diversify. But the answer to your question is you could have multiple retirement accounts. You could have an employer's 401k, make your contributions to your employer 401k. And you could also have an IRA club account and make a contribution to your IRA. Most people think that there, that is a prohibited transaction. The answer to your question is no, it's not. So, um, that that's another powerful tool or powerful, powerful advantage

[00:38:18] that we always talk about. Yeah. The other thing I wanted to bring up too, we talk about this, you know, what do we do with this $5,000 that's left over after we make a couple of syndication investments. I've had investors say, Hey, I'm going to put in 95 grand of cash. Can I take the other $5,000 of my IRA money and put it in as well? We say, absolutely. Like, so you can kind of combine that cash with, you know, taxable cash to make the minimum. You'll get 2k ones, keep in mind.

[00:38:45] Yeah. 2k ones and all that. Yeah. Two, two different things. But, you know, Hey, if you really like the deal or the investment and you want to do that, you know, we always accommodate things like that. So it's, uh, you know, it's pretty lucrative, but yeah. Referred to as partnering, the strategy itself, Ryan is referred to as partnering. So, um, very powerful tool, by the way, I always tell people if you have access money or let's say $25,000 sitting inside your retirement account, most people don't realize that you could partner with yourself. So let's say you have $25,000

[00:39:12] at Chase bank, use your retirement dollars and your personal dollars in the same manner. Why am I saying that to you? Because it's not just about diversifying your personal dollars. You should be also diversifying your retirement dollars. That's right. Except with your retirement dollars, it grows so much faster. Yeah, absolutely. Let's talk about the TSP. Thrift saving plan. We have a lot of military folks who invest with us, who end up rolling their, their TSP and they don't realize

[00:39:39] that their TSP can actually be a great source of seed capital. They're coming out of the military. They're joining the airlines. They're realizing, Hey, I'm going to have a massive 401k with Delta, United, American Southwest, whoever. And Oh, wow. I have, I have my TSP though, that I can roll some or, or all into a self-directed IRA. And that can be my seed money to get started in alternatives. So can you talk through that? Yes. So for those, uh, again, a TSP is also a very powerful tool. If

[00:40:07] you're in the military or government employee, and most, uh, individuals don't realize that you can, that is a federal, uh, a federal, a federally regulated retirement account that can be rolled over into an IRA. So with that being said, that'll give you some of the positives, some of the negatives. The positives with the TSP is they have some of the best fee-based structures, hands down, no questions asked. I would even say better than a self-directed retirement account. Okay. Um, but

[00:40:36] they're very limited to what you can do. I think there's like five options within there and full disclosure. I don't remember what all five options are, but because of that, those five options, um, depending on your risk tolerance and what it is that you want to get involved. That's the reasons why, again, the fees are so drastically low because they're not giving you that many things that you could be looking into when it comes to that. So for those of you that are currently in, uh, uh, working, sorry, within, um, uh, for the government better yet, or in the military and are active,

[00:41:06] um, you could not touch those TSPs until you leave. Uh, and then the only, uh, just treat them the same way as an employer 401k account or 403b 457 TSPs. They're all the same way. Love it. Through savings plan. Yes. Tate, you said something a minute ago that I wanted to address that I think is really important. So, and, and guys, I, you know, for those, I don't want to get so technical on the show, but K one is just the thing you get when you invest in these syndications,

[00:41:35] right? So you're a limited partner in an LLC that owns real estate. So you're going to get, you're going to get your partnership share of the taxes, you know, the gains and losses of the investment. So you get this K one form usually comes out in March. And now you've got this form in the, in, in your inbox and you're like, but this is an IRA. I, why do I have to file taxes on an IRA? Like this is in my IRA. Ramis, will you kind of walk through like what you do when you invest with your IRA and you get that K one? What's the, what's the,

[00:42:05] what does the investor to do then? Nothing, nothing, absolutely nothing. So you want to give you a clear cut? Nothing. You actually, if anything, you would want to probably provide it to the administrator, us being the IRA club, if it is going to your house, cause we have a lot, I mean, we have tens of thousands of alternative investments here. And in, in all we would do here as your administrator and bookkeepers, we would just keep it on file. Just in case you ever get audited, we have all your paperwork in one spot, ready to go. And you pass it along, um, to your

[00:42:33] CPA and he'll do the rest of the work for you at the end of the day. So yeah, there, there's nothing you need to do with a, uh, an IRA or solo 401k K one. I wanted to ask something, uh, Tate and Ryan, do airlines offer HSAs at all? Some do, some don't just wondering. Some do, some don't. Yeah. So Delta does. Yeah. Delta does an HSA. Yep. Yep. Okay. So I'm going to teach you guys

[00:42:58] something new. So for those that don't know what an HSA is a health savings account, I think it's one of the more powerful retirement accounts that are out there because the contributions that go in, go in tax deferred, right? And they grow tax free. What most airline pilots do not realize is they can also be self-directed. And here's something really cool, Ryan and Tate is you don't have to wait to

[00:43:26] leave your employer to roll over an HSA over to the IRA club. You could actually do that the next day. Um, but I would also like for you to confirm with your HR department. Some do have rules and regulations. For example, uh, there is one, a few companies that are out there that if they make a contribution to your HSA, meaning there's an employer match, please forgive me. You cannot roll over the employer match, but your contributions can be rolled over to the IRA club. So keep that in

[00:43:55] mind and you could use your HSA and IRA to what Ryan was talking about. And you could partner those to accounts to make an investment. So million dollar question. Yes. So I'm, if I'm an active pilot with Delta, do I need to have a qualifying event to then unlock and be able to self-direct that HSA or did you see what I'm saying? Like what, like, cause like a 401k, you know, I can't take my

[00:44:22] fidelity and use that to invest. I have to have a qualifying event. I have to quit Delta, go somewhere else. Right. But HSA, is it the same or retire? Exactly. Oh, no, no, you could move over an HSA. Even if you're currently employed, but just to be clear, always reach out to your HR department and ask that question because 80% of the time, the answer is you could roll over whatever you've contributed to the HSA over, let's say to the IRA club. But again, not sure, not the employer,

[00:44:52] not the match. If they offer a match to your HSA, you can not touch that. Okay. Or the capital gains per se. So if you have capital gains or an employer match, you can not roll that over. So the question here then is there are regulations that the IRS or somebody, some governing body prohibits you from moving your fidelity into a, out of that ecosystem and into an IRA club while you're gainfully employed with it. But the HSA doesn't have those restrictions, but it might be further

[00:45:20] reduced or further restricted by your employer's regulations and policies. Okay. Correct. Got it. Correct. We have so many clients that have HSA that are currently employed that don't realize that they can move those over, but it is a question. We always recommend that you reach out to your employer or your HR department before you pull the trigger on anything. And keep in mind, if you made that mistake, by the way, we have 60 days to correct it. So we could roll it right back over if there's

[00:45:47] an issue and or problems without triggering a 10% penalty. We had Mark Koiler on, you know, a few episodes ago and he was saying how he had, he has a rental property that is owned by his HSA. That's like pumping him cash every month. And he's literally funding his medical expenses because he's got a rental property that's kicking out cashflow and, and paying all of his medical bills, you know, any, any, I mean, that's, that can be a super. And the appreciation on the house is tax-free and when he pulls it out, it's tax-free. It's an amazing vehicle. Yeah. I want to underscore that

[00:46:16] Ramaz. I think I just add a third one to it. Like the triple tax advantage is what I hear with the HSA goes in tax-free. The distributions are tax-free and then you pull it out. It's tax-free unlike a Roth or a traditional where you get one or the other. So super powerful. But again, Ryan, most, again, most people don't understand is you could actually use your HSA to invest. That's where the loophole is. Most people that have HSAs, they just leave it sitting there doing nothing.

[00:46:41] So keep that in mind. Right. Okay. Going back to IRAs, we were talking about K1s. I want to talk about the tax benefits of investing in real estate and the pros and cons of having it inside of an IRA. We don't provide any tax legal or investment advice, right? Neither do we. Yeah. But, you know, Ryan and I are doing deals all the time. We're talking to investors and I often get the question, hey, is this a good deal to put inside of my IRA? So what we'd like to do is just provide some

[00:47:09] education around how to think about this. So one of the benefits of investing as a passive investor in a real estate deal is oftentimes we'll say, hey, you're going to get a phantom loss in year one, meaning we're going to give you a K1. If you invest a hundred thousand dollars, we're going to give you a K1 for 2025 that shows that you lost in air quotes, something like 20, 30, $40,000 on your investment, which is great. You can't usually take it against your W-2 and we've got lots of

[00:47:37] episodes on that. We're not going to dive into that, but it's a passive loss that you can use against passive income, whether it's coming off that specific deal or other rental properties that you might have or other passive deals that you have. What happens to those phantom losses? And of course, those losses are just generated by writing down the assets. We're using depreciation losses, which is the wonderful power of real estate. Ramz, what happens when you put that

[00:48:01] deal into your IRA? Unfortunately, you cannot take those deductions, right? And the reasons why is because you already have all the tax advantages that your IRA or 401k are providing. I like to say in the eyes of the IRS, they're probably looked at as double dipping. You can't really double tip, right? So although I think everybody would want that, but the answer to your question is you cannot, if you're using your IRA or 401k, you cannot get those deductions. And just to elaborate just one

[00:48:29] step further, well, most people are like, then why would I use my IRA or 401k to invest in real estate, which is typically the next question. And I said, remember at the end of the day, the name of the game is diversifying one's portfolio. I don't care again, if it's your personal retirement dollars. And Tate, I think you wanted to elaborate on a point that I was trying to make. I do. I just want to say when it sells, if you buy real estate with cash and you sell,

[00:48:55] unless you do a 1031 exchange, which in passive investments, it's very difficult to 1031 from one project to the next, you're going to be paying that 40%, let's say that you took, you invested a hundred thousand, we give you a $40,000 loss. You go out and offset other income with that. Well, guess what? If that project sells, if and when that project sells, let's say five years later, you're going to have to pay back those tax benefits, the tax benefits that you took

[00:49:23] at recapture rate, usually 25%, and then 20% long-term capital gains tax on the upside. Now you can go and take those proceeds. If it was a cash investment, roll it over into another deal that generates some more losses and offset that. And we sort of call that the lazy man's 1031 exchange. You can kick the can down the road, down the road. But if it's in an IRA, you don't care. You could have a deal

[00:49:48] that goes full cycle every few years. Obviously, you didn't take the tax benefits, so there's no recapture, but all the capital gains, there is no capital gain. You just get 100% of those proceeds back into the IRA. You redeploy it. That deal goes full cycle. You redeploy it. So I just wanted to paint the picture there in terms of, yeah, you lose the tax benefits. So sometimes investing in deals that

[00:50:11] have a very large tax benefit component to them might not be the best options to put inside of your IRA because you're losing it. But deals that have very good upside and that are planning to exit with some capital gains might be the kinds of deals that you want in your IRA. Would you agree with that? 100% agree. That's what we run. We have cashflow deals. We have deals that are going to have a distribution every month. And then we have ground up development deals that are going to have a huge

[00:50:39] pop at the end, potentially. Exactly. And we say, hey, look, if you're going to tie this up and you got a choice, put the ground up deal in your IRA because it's like you're just rolling that over and you're going to have a bigger gain. And then there's no cashflow from it anyway. So it's not like you're benefiting it from it now as a 45-year-old pilot or something, right? So those development deals, a lot of times it's just you're buying raw dirt and you're building something on it. And so year one, there's nothing to depreciate anyway. Exactly. Yeah.

[00:51:06] So there is no tax component. There's no pop of tax benefit on the front end. So that's a great deal to put in your IRA. Yeah. Now you will get the tax benefit though in year two or three when you build it and you enter into service. And actually it'll be an outsized amount of, it'll be a bigger potential depreciation because you'll have a better cost. Anyway, Ramis, we're coming up on time. You know, really appreciate you coming on. I'm going to put you on the spot. One quick thing I want to jump in on. So some of our investors at Spartan have currently kind of undergone the Quest

[00:51:36] blow up, right? Where Quest got to, you know, Inspira. And so you've actually handled a handful of our clients and have transitioned them from Quest or Inspira over to IRA Club. And I believe you're waiving their fees, right? For the first year or so. So Ryan, full disclosure, that was for 20, uh, the end of 24, 24, 2025. But as my friend,

[00:52:00] I will honor that if anybody's listening here right now today, I will honor that for 2025. So if you do want to roll over a, an account, I'm more than happy to do so. But even still, you know, you and I, when we talk, we always want to practice what we preach. I always say that we offer anybody who wants to invest in any deal that, you know, you're offering. We always offer the first year for free. So the 195, you know, if they use a promo code, we'll waive that 195 membership fee.

[00:52:28] Yeah, that's great. Ramaz, I really appreciate you doing that for us. And, uh, so just, you know, again, mention your listener, passive income pilots with Spartan or Turbine Capital. Ramaz will take good care of you. Ramaz, how do people get in touch with you and learn more about IRA Club? You know, who should they email? What website should they go to, uh, to learn more? I'll be honest with you. Keep it real simple. If you go to IRA club.com, um, you just want some more information. There's a great resource center that also learn about all the different types of,

[00:52:56] you know, things that we do offer, uh, blogs, YouTube videos and whatnot. But also if you just want to have a conversation with anybody right on the top, right side, it says schedule a call, big blue button, click there. You know, we have an entire onboarding team and we understand everyone's goals and situations and types of retirement accounts that you may or not, you know, some of them just don't realize what they have or don't have just have that initial conversation. And I always feel like networking and talking is the biggest thing that you could do. Educate

[00:53:23] yourself on what's out there, what's available. We're always just trying to open up doors and opportunities. And at the end of the day, if everything is working against your retirement account, think about that. Everything today is working against your retirement account. What better way than to protect you by diversifying it. So think about that, think alternatives, think double digit returns, and we're always here to assist you and walk you every step of the way. We'll link to that in the show notes. Yeah, we'll put that in the show notes. And, uh, thanks for so much for coming on. Uh,

[00:53:51] this has been a really amazing episode and I hope people take a lot away from this. I know that I did. Thanks for listening. Uh, catch you on the next episode. Until next time.