Special Guest: Daniel Blue
Most people don’t know how to achieve financial freedom. They are stuck in a job they hate, living paycheck to paycheck.
Do you feel like you’re working harder than ever but not getting anywhere? Are you tired of being told that you need to save for retirement? You can’t rely on the government or your employer to take care of you.
On this episode of the Chasing Financial Freedom podcast, we have a special guest Daniel Blue. Daniel is an entrepreneur who went from having a daughter at 19 years old, being addicted to Oxycontin, a college dropout to owning a 7-figure business. He will teach listeners how to make money tax-free, pay off debt, get capital to grow their business, and have more control over their 401k and IRA.
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How To Make Money Tax-Free, Pay Off Debt, and Get Capital to Grow Your Business
[00:00:00] Ryan: Hey guys, Ryan DeMent from Chasing Financial Freedom Podcast. I hope you guys are having a great day this week on the podcast. We have Daniel blue. Daniel started his life out and in, in a pretty tough spot, he had a daughter at the age of 19, got addicted, Oxycontin dropped outta college, but then built a seven-figure business.
[00:00:23] Ryan: And he has a very powerful story that he wants to share with us. Daniel, welcome to the.
[00:00:29] Daniel: Ryan. Thank you so much for the introduction and appreciate you having me here on your show.
[00:00:33] Ryan: You’re more than welcome. I really think what you’re doing is really cool and I get it. We connect it on a couple of pieces, but before we get there, tell the listeners a little bit about yourself.
[00:00:44] Daniel: Yeah. So the company that I own solves a big problem in the marketplace, helping people access their retirement accounts. So think 401ks, IRAs penalty, and tax-free. So that’s the firm that I own today, right here in Las Vegas. And we’ve got customers in all 50 states, but [00:01:00] this idea, this strategy that I just touched on was first introduced to me back.
[00:01:05] Daniel: 2008, 2009. That was a pretty dark point in my life. As you alluded to earlier, I had a daughter in 2009, I was 19 years old. I was addicted to Oxycontin and I was in the real estate sales space at this time, just trying to figure out figure life. I just quit co-college because college was something that society told me to go to.
[00:01:25] Daniel: I wasn’t there to go to college to become a doctor or, some kind of specific niche. I just went because that’s what America told me to do. So when I found sales, Why do I need college? So after three months I dropped out and ended up finding sales as a career that allowed me to control my own income.
[00:01:43] Daniel: And in that space, I was able to listen and hear and be surrounded by other people that mentioned things along the lines of. Using a 401k or IRA to flip a house. I remember hearing people say they used their retirement account to purchase a rental property and that [00:02:00] stuff was foreign to me, Ryan because I grew up thinking that 401ks and IRAs are where you buy Nike stock.
[00:02:06] Daniel: It’s where you buy mutual funds. I had no idea that you could use a retirement account and the types of ways that I was told right. Using it outside the stock market, like real estate. So I thought this concept was really cool. I knew one day I wanted to jump into this space. And then I ended up jumping into this industry right around 2013, and 2014.
[00:02:25] Daniel: I got into what I call the self-directed retirement account space. And it’s pretty crazy to think that we’re in 20, 22, and about almost 10 years now that I’ve been at it.
[00:02:36] Ryan: So you heard all that you, you started researching. What did you have to do to get into the space? Is there licensing?
[00:02:45] Ryan: Is there, what it requires for you to actually help people with their self-directed 401ks or IRA?
[00:02:51] Daniel: yeah. The cool thing about what we do, Ryan is we’re not financial advisors, so I’m not here to sell stocks or insurance or really push
[00:03:00] anything. What we’re purely designed as is an education company, right?
[00:03:05] Daniel: And a lot of where I’m at today is because of other people learning from other people, getting wisdom. And then obviously there’s a lot of work that you have to do on yours. Whatever, whether you’re a teacher, whether you’re a digital marketer. Like you have to roll up the sleeves and you gotta stay up late.
[00:03:21] Daniel: You gotta work weekends, you gotta get up early and you gotta get better at your craft. So there definitely was some of that. I’m blessed to have an awesome team. I’ve got about 13 employees and, combined, my staff has decades of experience in the self-directed space, but to put it in really simple terms, Ryan, what we teach people.
[00:03:38] Daniel: Is Googleable information like you literally can Google the stuff on your own. You can Google solo, 401k, you can Google self-directed IRA. All of this stuff is public information. So we don’t sell investments, which means, again, we’re not licensed. We just provide pure education and help people understand that there’s this whole
[00:04:00] another world out here, right?
[00:04:01] Daniel: I’m not here to beat up the stock market or. Where your money is now and how it’s set up now stinks. You should change. I’m just here to say that there’s another tool in your tool belt that you could be using, right? I’ll give you an example. We had a gal that was working as a hairdresser for a number of years and she wanted to start her own online business.
[00:04:20] Daniel: She needed about $20,000 to buy some products to get that business launched. She didn’t want to borrow money from the bank. So the idea of accessing her retirement account penalty and tax-free to fund her business appealed to her. So we were able to teach her how it was possible to take her IRA or 401k from her old job, move it into what’s called a solo 401k,
And then from there, she can access that money penalty tax-free using the loan feature. And she was able to use that money to pull the $20,000. Out of the account, buy her product, fund her business, and make money that way. And then fast forward now, she was able to quit her job as a hairdresser right now she
[00:05:00] has her online business that she’s running full time.
[00:05:02] Daniel: That, was just a tool in the tool belt that she was able to use at that time. So that’s really what we love doing. Ryan is just, that we don’t sell investments. We sell solutions, where is someone’s point a and how can we get them to point B? So I’m
[00:05:15] Ryan: guessing you’re not custodial.
[00:05:19] Daniel: No. So we’re, essentially the middleman. So we’re and guys, what Ryan is referring to is called a custodian that, you’re super savvy. So maybe some of your listeners, already know this, but maybe there are some of you guys who have to like a custodial. Who’s that?
[00:05:33] Daniel: So when you have. the ability to invest in a real estate property. Maybe you wanna invest in multi-family some kind of syndication, some kind of real estate deal. You have to have a custodian that could administer that type of investment, right? If your money’s at fidelity, Or Edward Jones or Vanguard, and you wanna invest with grant Cardone or some other big syndicator real estate investor, and you call your financial advisor and [00:06:00] you’re like, Hey, I wanna make this investment in this real estate property.
[00:06:02] Daniel: Help me. They’re gonna be like, yeah, we can’t do that, but we can sell you this re. They’ll gladly sell you so going back to the fundamentals, there has to be a custodian that is self-directed that can administer alternative assets, like a promissory note, a private equity placement, and things of that nature. What Ryan was asking is we are not the custodian. I never wanna be the custodian, cuz those guys really just have their hands tied. And I think it’s a boring model. They serve their purpose. They’re just in the background, they hold your money like a bank and that’s about it.
[00:06:32] Daniel: They don’t provide a ton of customer service. Speed. Isn’t really their thing. They don’t provide a ton of education. So if you’ve got a self-directed IRA or a solo 401k, A custodian that could administer alternative assets, a company like ours could help you because we’re there to take you by the hand, cross the Ts dot the, and take a lot of the paperwork burden off of you, educate you and just give you that white glove customer [00:07:00] service.
[00:07:01] Ryan: And they also charge you a lot of fees. I’m not complaining. Cause it’s a great, it’s a great asset. It’s a great tool. There are several, not several there’s many out. But we’ll get into that later and we can talk about that, but I’m just, I just wanted to get into that piece.
[00:07:14] Ryan: So your entity, quest education how can individuals, let’s say I’m leaving my current job and I’m deciding that I don’t know a good example. I get, here we go. I’m I’m current job leaving. I got my Jo Johnny side hustle going on. It’s now come to fruition. It’s making money.
[00:07:32] Ryan: I’m gonna leave. And where I’m gonna go that full time. What are some options other than what you just talked about for that hairdresser and doing our online business, what other type of options does quest education offer for somebody like that? That maybe they wanna raise some capital. Maybe they wanna have investors or they want to do it all their own and be able to transfer that 401k from their employer to somebody that excuse me to somebody that can help ’em out with that.
[00:07:59] Ryan: Yeah. [00:08:00] So
[00:08:01] Daniel: I always like to start with, when we kinda geek out on this, when we hear about a self-directed retirement account, if you guys think of self-directed retirement accounts, just as a way to invest your money outside the stock market. So if you wanna invest in precious metals in real estate, private equity, crypto, things of that nature, you’ve gotta have a self-directed retirement.
[00:08:20] Daniel: And there’s different types of self-directed retirement accounts. There’s a self-directed IRA. Some of you listening or watching, you guys may have already heard of this, or you may already have this type of account. It’s a more popular self-directed retirement. The second type of self-directed retirement account.
[00:08:34] Daniel: That’s not quite as known is what’s called a self-directed solo, 401k, and that’s for someone that is how Ryan is describing them. They’re an entrepreneur. Maybe they have a side hustle. And they have no w two employees, they most likely qualify for a solo 401k, a self-directed IRA and a self-directed solo, 401k.
[00:08:54] Daniel: They invest the same way they can invest into multi-family. They can invest in precious metals. [00:09:00] What fundamentally separates these two accounts is an IRA does not have a loan feature in a solo 401k does it does, so Ryan, there’s really three ways that we show value to people. We help ’em pay off high interest rate debt.
[00:09:13] Daniel: A lot of people that come to us, they’ve got 8% that they’re making on their money. And this is something Ryan, you probably hear this more than I do. And it just kind drives me crazy is when someone will send me a DM and I actually just got one last week and he is Hey man, where should I invest my money?
[00:09:29] Daniel: And I’m like one, I’m not a financial advisor, but two what’s your debt situation look like. And I can’t tell you, Brian, how many times I’ve talked to someone where they’re like, I got $20,000, this chilling, I wanna invest into something. What should I invest in? Meanwhile, they’ve got $20,000 in credit card debt.
[00:09:46] Daniel: That’s costing them 25%. Crazy. I don’t know about you, Ryan, but I don’t know a ton of places to make 25% consistently without a lot of risk. Like 25% is really good. If I hear that kind of return, like my [00:10:00] antennas are up. Sounds great. What’s the risk, right? Yep. I always think it’s a good idea to have a good foundation and the average American that has money in their retirement account in the stock market.
[00:10:10] Daniel: They’re making what? 5, 6, 7, 8%. On average. I know right now your retirement account is making you wanna take a shot of whiskey or tequila or whatever you drink, cuz the da NASDAQ’s down like 25% S and PS down double digits. But during the lows and the highs 6, 7, 8, 9% a year. If you’re making 8% a year on your money, And on the other side of the coin, you’re losing 25% because of your debt.
[00:10:35] Daniel: You’re losing money faster than you’re making money. Yep. And a pro a solution to that problem is just being able to access the money in your retirement account penalty and tax free and use that money to pay off your high interest rate credit card debt. So basically you’re taking money. That’s making you 8% and you’re taking that same money.
[00:10:53] Daniel: That’s making you 8% and you’re paying off debt. That’s costing you 25%. Now you’re not bleeding interests. Your [00:11:00] 25% debts paid off one shot. There’s no more monthly payments to chase. Now you’re just making payments back to your solo 401k, because it’s a loan. So you’re replenishing your retirement account.
[00:11:10] Daniel: Yes. There’s gonna be some opportunity costs there. You gotta weigh that out, but you’re knocking off 25% in interest. That’s huge. and then you’re replenishing your retirement account. So you’re not completely robbing from your future. Paying off debt. That’s a big one. We help a ton of people there, Ryan.
[00:11:26] Daniel: So that’s number one. Number two is the example I mentioned earlier is using the loan feature on the solo 401k to fund a business. Maybe you need some money for advertising. Some ad spend, maybe you wanna invest into a coaching program. Or you need some money for product, right? You can use money from a 401k from your old job or an IRA.
[00:11:47] Daniel: You can’t access that money penalty and tax free to fund your business. But what you might be able to do is move that IRA or that 401k from your old job. Into the solo 401k. And then from there, use the [00:12:00] loan feature and take 50% of the account value or 50,000. Whichever number is less. Take that money out penalty and tax free and fund your business.
[00:12:09] Daniel: So one, we help you pay off debt. If that’s your pain 0.2, we’ll help you get some working capital. If that’s in need of yours three. Is helping you have investment options outside the stock market and both a self-directed IRA and a solo 401k can accomplish that. Like I mentioned earlier there’s a lot of people that want diversification.
[00:12:29] Daniel: They’ve got money in the stock market. They’ve got their index funds, their stocks. But they’re like, man, it’d be cool to have some, my retirement account money, do some things outside the stock market, in the alternative investment space. And there’s a ton of options out there. It’s just, unfortunately, your financial advisors at Edward Jones and fidelity.
[00:12:46] Daniel: They’re not gonna talk to you about the stuff that Ryan and I are discussing because it doesn’t make them money. No. Why would they teach you how to access your money penalty and tax free to fund your business? Doesn’t make them any. Yeah.
[00:12:57] Ryan: And they have to pitch products that they’re [00:13:00] told to pitch.
[00:13:00] Ryan: They’re not fiduciaries. And we can go into a whole nother line of that.
[00:13:03] Daniel: Oh, that’s probably like a two hour episode. Oh yeah.
[00:13:06] Ryan: That’s a big one. So can we go back to the first one? Cuz I think this is where we’re you hear it? And I hear it. When people come to me for financial coaching, they tell me they got 20, 30, $40,000 worth of debt and they have no idea what to do.
[00:13:20] Ryan: And the, and it’s one of the things I first ask is, do you have a 401k because I would talk about a 401k loan, but ultimately that is not a great step. I stopped pitching that a long time ago, but it used to be an option, especially if someone was in bad shape, let’s say they were delinquent collections going down the route of unfortunately legal.
[00:13:39] Ryan: I would talk to them about that because it is an option. They can do it and it would save them. But now with this option that you presented with a self-direct or a self-directed solo 401k, it’s a great, it’s a great option. I have two questions, so we can go through it. One I don’t know enough about this piece.
[00:13:56] Ryan: If you have w two employees, can you [00:14:00] have a solo four?
[00:14:00] Daniel: Are they part-time if they’re part-time then yes. If they’re. When we
[00:14:05] Ryan: say part time, is it a true 20 hours or is there a
[00:14:08] Daniel: calculation? Yeah. Yeah. So basically the rules are, is if you have full-time w two employees that are not you okay. Or a spouse, then technically you’re not a solopreneur.
[00:14:18] Daniel: Okay. So you could still set up a 401k and do some of the things that we’re talking about, but it’s no longer a solo 401k. And then also you’re gonna have to offer the plan to your employees. Got.
[00:14:30] Ryan: So let’s say I’m in that situation. I have $25,000 worth of debt. I don’t have employees. How does the loan work?
[00:14:37] Ryan: And could you walk through a little bit of that of how, if someone comes to you guys at quest education, what you guys would do, and then I guess we need to back up one other step two is how do they find a provider that they can work with?
[00:14:52] Daniel: Yeah. So basically the numbers are pretty set set in stone.
[00:14:56] Daniel: So you can take 50% of the account value or 50,000. [00:15:00] Whichever number is less out of your solo 401k. It’s a five year loan and the interest rate is prime plus two. Okay. The interest goes back to your retirement account. It’s pretty crazy. When we were helping people with solo 401ks feels like a couple months ago, we were telling people the interest rates were like four and a half percent, but then the government’s been jacking up interest rates.
[00:15:20] Daniel: So depending on when you’re watching or listening to this, the interest rate on a solo 401k, loan’s probably gonna be around six to 7%. But when you take the loan out, it’s fixed and it goes right back in your retirement account, that interest. So I’ll use an example. Let’s just say you’ve got 20,000, $25,000 in credit card debt, and you’re paying 25% in interest.
[00:15:40] Daniel: If you had 50,000 in the solo of 401k and you took out 25,000 penalty in tax free, you used the 25,000 and you pay off the 25,000 that you own credit card debt in one shop. So now you’re not making any more monthly payments on that 25% interest rate, $25,000 [00:16:00] debt. Now you’re making a new payment back to your solo 401k.
[00:16:04] Daniel: The IRS requires that you make it minimum of a quarterly payment. If you go beyond, if you miss a quarter, then technically the loans in default, we always tell our customers to make a payment every month. Like just every month, get in the habit of doing it that way you don’t get caught behind. So a monthly payment.
[00:16:22] Daniel: On $25,000 that you technically owe yourself, owe your solo 401k five year term at let’s just say 6% interest. The monthly payment on that bad boy is gonna be somewhere in the 500 S right. That would be the monthly payment. You would have to pay back to your solo 401k. Shoot. If you had $25,000 in credit card debt at 25% interest, the monthly payments you’re paying on that credit card debt are probably a lot higher than five.
[00:16:46] Daniel: They’re probably six, seven, $800 a month. Easy probably pushing,
[00:16:50] Ryan: probably pushing a thousand bucks, I would say. Yeah,
[00:16:52] Daniel: exactly. Exactly. Especially if you’re trying to pay a little bit more than just the minimum, right? Yes. So you’re with this scenario, you’re gonna save a [00:17:00] lot of money every month. Just the spread between the monthly payments.
[00:17:03] Daniel: And then now you’re not. Losing money on the interest, cuz we both know Ryan. When you make a monthly payment to chase and you owe 25% interest. A lot of that’s just going straight to the interest. It’s not even going towards the Princip.
[00:17:15] Ryan: Yes. And it just gets you in trouble. It’s just, it’s a long term problem that you got a short term solution five years.
[00:17:22] Ryan: So you got five years of making that $500 a month payment. Think about the money that you’re saving from what you are paying to the creditors. And now you’re paying yourself back, still making money. And the other piece that I always talk about is I don’t have the ups and downs of the market to deal with.
[00:17:40] Ryan: So if you’re invest, let just say, you’re investing in a real estate deal, cuz I’ll just let’s call this a real estate deal. You’re staying across the board and it’s equal and you’re not getting that dip like you are today. Like you said, go get that shot of whiskey or tequila cuz it’s down 25%. You’re making your six or 7% and it’s steady and you don’t have to worry about it and you could sleep at night.[00:18:00]
[00:18:00] Daniel: Yeah. And also another talking point, Ryan, a lot of people forget is when you pay off a good chunk of personal debt, like the example of the $25,000 in credit card debt, not only are you gonna save thousands of dollars in interest, but your credit score, like what do you think it’s gonna do to your credit score?
[00:18:17] Daniel: The more personal debt that you have, the higher your utilization rate is, which is gonna bring down your credit score. And I know what it’s like to have a 500 credit score. I’ve been. it stinks. It sucks. I also know what it’s like to have a 700, an 800 credit score. It’s so much better, right? Like I can get 0% interest rate credit cards.
[00:18:40] Daniel: I can get lines of credit at 8% interest. So one thing I wanna really stress is the scenario, the strategy I’m talking about with Ryan here, guys, this isn’t the only strategy, right? If you can get a home equity line of credit at 3%. Cool. That’s a great option. That’s an option worth exploring, right?
[00:18:56] Daniel: I just like to have options. And I think everyone listening to this, watching this [00:19:00] wants to have more than one option. And if what I’m explaining to you using the solo 401k sounds like a great option. You should be the captain of your own ship and make your own decision. However, it’s just good to have options out there.
[00:19:11] Daniel: I just love the fact that this is a strategy that can pay off your debt. But really improve your credit score because I can’t tell you how important it is to have a really good personal credit score. I started quest education four years ago on 0% credit cards. Like I maxed these bad boys out, went into a lot of credit card debt, but I was able to buy myself time because I had 0% for 12 months, 15 months.
[00:19:33] Daniel: And being able to have that kind of leverage is huge. And you just have access to a lot more options when you have a good personal credit. It,
[00:19:42] Ryan: it, it makes a huge difference. I’ve got a question cuz I I haven’t re I haven’t recently heard this one or asked or someone’s asked me, I’m currently employed at my job XYZ company.
[00:19:54] Ryan: I have a 401k I’m still employed. Am I able to move it [00:20:00] to a self-directed? If
[00:20:01] Daniel: I want to the only way is if you’re over 59 and a half years of age, okay. Then there’s a decent shot. If you’re 40 years old and you have only one retirement account and it’s a 401k with a current job, current employer. Yeah.
[00:20:14] Daniel: You’re handcuffed to that plan. So you have to,
[00:20:16] Ryan: you, it has to stay in place until you leave the company.
[00:20:20] Daniel: Yeah. Yeah. And what you could do too. Another scenario is let’s just say you’ve got money in a 401k with a current job you’re 45 years old, but you do some consulting on the side. You’ve got the side hustle and you’ve got a 401k from an another employer.
[00:20:34] Daniel: You could take that 401k from your old job and still move it to a solo 401k while you’re a w two employee with your nine to five. So like that still works.
[00:20:44] Ryan: What about if I got Johnny side hustle going and I wanna create a solo 401k? Can I do that too? Yeah. So I’m consulting on the side and I want to be able to put some of that into my retirement fund that way.
[00:20:58] Ryan: Can I do that?
[00:20:59] Daniel: [00:21:00] Yeah, you just need to really make sure, the numbers because the total contributions for a solo 401k is just right around $60,000 total. But that’s combining contributions that you’re making as an employee of your business and the employer of your business, because the solo 401k is tied to an entity it’s tied to either.
[00:21:19] Daniel: At LLC or an S Corp like some kind of business it’s tied to that business has to be earning, generating you income. So you have to be able to take income from that business. And then you can contribute that into the solo 401k. Meanwhile, if you are a w two employee. And you have a 401k there and you’re putting money into that plan that can still be done but you can’t max out both contributions, right?
[00:21:43] Daniel: Like you can’t max out the 19,500 as you, the employee of a company you work for. And then the 60 K you having a business on this side. So it has to be together all
[00:21:54] Ryan: together in aggregate. It has to be a total for them. Yeah. Okay. Yeah. That’s cool. At least if people [00:22:00] have something on the side going and they’re consulting and they have a way to do that, then that would be great too.
[00:22:05] Ryan: Yeah, that’s another option. What other options do we have? We’ve stick stuck on this one. What other, what else do you see on a daily basis and in what you help people with?
[00:22:12] Daniel: I really see a lot of people, especially right now wanting just more freedom, more options, the ability to do use their money in different ways.
[00:22:23] Daniel: And I think it’s always a, an important topic, especially now during this time. And I try to just stay in my lame Ryan. There’s another type of account called the Rob’s plan. It’s a rollover business startup plan. That’s for a lot of franchises. That’s pretty complicated plan. It’s a 401k with the C Corp and shares are exchanged and that’s a beast that’s a behemoth
[00:22:43] Daniel: We don’t go down that road just because you have to have a really good CPA. You have to have a really good legal team and we just try to stay in our lane, Ryan, like we stay in, in our lane in the sense of solo 401ks and self-directed IRAs, mainly solo 401ks. I probably would say.
[00:22:59] Daniel: 95 [00:23:00] 90 7% of our customers have solo 401ks because when we explain the difference between a self-directed IRA and a solo 401k, it’s a no brainer, right? Oh yeah. The loan feature that doesn’t apply to the IRA you can contribute oh right around $60,000 a year into a solo 401k. Whereas an IRA, you can only contribute $6,000 a year.
[00:23:21] Daniel: So the contribution limits are a lot higher on the solo 401k. And then I don’t want the audience to get confused. When I say, contributing $60,000 a year into solo 401k, or $6,000 can contributions to an IRA per year. Don’t get that confused between the amount of money you can put into these plans, because basically there’s two ways to fund a solo four.
[00:23:43] Daniel: You can either take a 401k from your old job or an IRA and convert it to a solo 401k. There’s no ceiling there. If you’ve got $300,000 or $30,000, you can take those dollars and convert it into a solo 401k. And because you’re taking money from a 401k, from an [00:24:00] old job or an IRA, and you’re moving it to a solo 401k, there’s no taxable event that’s created here because the money is just going from one retirement account into another retirement.
[00:24:11] Daniel: Both of these accounts are IRS approved. That’s the cool thing about everything I’m saying to you guys here is this isn’t brand new. Like this has been around for decades, it’s all IRS approved. So like you’re not, walking into some new situation. The other way to put fund money into retirement account is a contribution that’s cash, money contribution.
[00:24:31] Daniel: That’s new money contribution. There’s a ceiling there. And that ceiling. That 60,000, right around that 60,000, depending on how much money you bring in from your business into the solo versus the 6,000, into an IRA
[00:24:46] Ryan: it’s complicated and people get overwhelmed with it. And I, it took me a while to understand it for sure.
[00:24:55] Ryan: And I know. There’s so many benefits and I we haven’t even touched on it yet is, one of the things that I got, [00:25:00] the reason why I got into it is because real estate note investing, buying defaulted mortgages I’ve also used it to fund a business. I’ve done a lot of different things with it, but a lot of people don’t understand the vehicle and being able to have those options, like you said, and.
[00:25:19] Ryan: I don’t know how to say it. Other than it’s disappointing that we don’t put this information out there. Like you said, it’s, you can Google it, but no one talks about it. It’s like this secret. I don’t know what a secret world or something to that extent. What causes that? Why would we not wanna use these type of vehicles to better ourselves?
[00:25:37] Ryan: Especially for our futures when we have to retire.
[00:25:41] Daniel: Yeah I do think it just comes down to money. Wall street, those guys run, they run the world, right? That’s true. Those guys donate a ton of money to politicians. They spend billions of dollars on ads on, cable news stations. They’re no joke and they’re there to protect their business.[00:26:00]
[00:26:00] Daniel: It’s very simple. They make money based off of assets. Under management. They’re making one to 2% a year, give or take on trillions of dollars, the more money that they have under their umbrella, the more money that they bring in. So it’s just by design. You mentioned it earlier, the employees for these companies are there to pitch products that benefit.
[00:26:21] Daniel: Just like a doctor is going to have, and I’m not here to shit on doctors. If you’re a doctor, don’t get upset at me, but we all know there’s doctors that have deals with pharmaceutical companies. They’ve got commissions, they’ve got spiffs. Hey, if you can get these, pills out here, these drugs, these pharmaceutical products, We’ll take you to Mexico, right?
[00:26:43] Daniel: Like that stuff happens that’s real life. There, there is that in the financial world as well. So ultimately the self-directed space where people can call their own shots, because everything I’m describing to you doesn’t involve a financial advisor. You’re the captain of your own ship.
[00:26:57] Daniel: You’re the one that decides to do [00:27:00] a promissory note. Like Ryan said earlier, maybe you wanted to get into private lending or maybe you wanted to invest into some kind of. Or some kind of private business, or you want to take the risk, cuz everything that we’ve talked about here today, it’s all at risk.
[00:27:12] Daniel: There’s risk in everything we’ve discussed. If you want to take some of the money and from your retirement to fund your business, certainly a risk there. It just comes down to your appetite, your goals, what your your’re wanting to accomplish financially. And also there’s just a lot of ignorance too, Ryan.
[00:27:27] Daniel: I was laughing the other day. We were talking to a customer of ours and he calls. And he’s just Hey guys, like I’m freaking out right now. My, my CPA, he doesn’t know what a solo 401k is and he’s making me question, did I do the right thing?
[00:27:41] Daniel: I was like, dude, tell your CPA to Google solo, 401k. Like it, you legit can Google solo, 401k. IRS and the IRS has a page talking about this. Yes. Yes they do. They’re the ones that created this plan because they saw, okay, cool. There’s set [00:28:00] IRAs. There’s simple IRAs. Like we need to have entrepreneurs in America, have other places to put their money, to get some more tax benefits.
[00:28:09] Daniel: Like we don’t want our citizens to just rely on pensions and social security. Like we gotta hook these Americans. Let’s create the solo 401k. That’s the IRS, that’s the government, right? Like that’s, that, that’s how this country works. So I just think it’s funny. There are some of those people that are just, they just don’t know, like that person’s CPA.
[00:28:27] Ryan: It’s amazing. It’s been around for a while. Whew. There’s a lot. We can unwound a lot here and we’re up against time, but I really want to ask one other question. If you’re an individual that just left a business or left a company and let’s say you go to work at a new business, new job W2, what would be some highlights or some suggestions you would say to do with that old 401k?
[00:28:49] Daniel: Man. That’s a really good question. So one you wanna write all of this down and then really think ahead. So for example, the obvious option is you can take [00:29:00] that 401k from your old job and cash it out. You’re gonna get crushed in penalties and taxes, right? You’re probably gonna lose 30% in penalties and taxes, probably the last thing that you wanna do, but that is an option two.
[00:29:11] Daniel: You could take that 401k from your old job and move it into the 401k with your current job. . However, if you do that, Are you gonna lock your money in, right? Because we’ve encountered some people where there, they actually were able to Ryan take money from their 401k, with their current job. They were under 59 and a half and they were able to move it out.
[00:29:32] Daniel: And that the reason why is because that money came from another job. So think ahead, if you. Really like this 401k plan that your new company offers, like it’s sweet great matching contributions, like really good funds. And like you just like it. And you’re like, oh, I might as well just move my money from my old 401k, my new 401k.
[00:29:52] Daniel: But one question you should ask is. How can I access this money? Am I able to move it somewhere else? If I want to do I have to wait until [00:30:00] I quit? Or you guys fire me to move this money? What happens if I take my 50 grand for my old 401k, am I, and I move it into my new 401k. What are the ramifications?
[00:30:09] Daniel: What’s my exit strategy with this money. So you really need to think that through, because every situation’s a little bit. Another option. Most people do this, they take their 401k from their old job. They move it into an IRA. And most people do that because now they can have more investment options, right?
[00:30:23] Daniel: Index funds, single stocks, mutual funds, things like that. And then another option is, they can move it into either a self-directed IRA or a solo 401k. You really want to think these things through and think about your end goal. Your needs now your needs down the road, because if you’ve got a 401k from an old job, you always can leave it there too.
[00:30:45] Daniel: There’s some people, I think people that are notorious relieving their 401ks. also known as TSPs. The example I give you guys right now, people that work for the government, they’ve got a TSP, thrift savings plan. Those people are notorious [00:31:00] when they quit their job, they just leave the TSP where it’s at and a big reason why is because their funds are so dang cheap, like super low fees.
[00:31:08] Daniel: And that’s actually a pretty solid setup. Like I’ve seen worse, but there’s people that are like, nah, I’ll just leave it where it’s at. It’s cool doing what it’s doing. I know the returns I’m making, I know where it’s invested and I like what it’s doing. Cool. Just comes down to your own situation,
[00:31:26] Ryan: lot of options, and we could keep on going and we definitely need to have you back on another conversation, cuz I think we could really talk some great things about not just self-directed items, but just money in general and just approaching that piece.
[00:31:40] Daniel: Love it, man. That’s always it’s always a fun time geeking out.
[00:31:43] Ryan: Hey, I’m all for it. So I thank you for coming on today. It’s been a pleasure. It’s been an awesome conversation. Somebody that understands self-directed IRAs and 401k solo 401ks. That’s awesome because there’s not too many people talking about this
[00:31:58] Daniel: again.
[00:31:58] Daniel: Thank you for having me. [00:32:00] And hopefully we’ve been able to impact at least just one person here today.
[00:32:03] Ryan: I hope so too. Cause that’s the whole. Thank you, sir. I’ll be talking to you.
[00:32:09] Daniel: All right. We’ll see you, Ryan. Bye-bye.