Adam Torres and Adam Bergman discussed alternative assets.
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Show Notes:
How do self-directed retirement accounts work? In this episode, Adam Torres and Adam Bergman, Founder of IRA Financial, explore IRA Financial and Adam’s journey as an entrepreneur.
About Adam Bergman
Adam Bergman is an author, former tax and ERISA attorney, and the founder of IRA Financial – an industry leader in self-directed retirement solutions.
IRA Financial has helped over 25,000 clients take control over their retirement and invest over $4.6 billion of retirement funds into alternative assets.
Mr. Bergman is also the owner of two leading pension administration firms, has authored 9 books on self-directed retirement plans, and is a leading voice in the self-directed retirement industry. He is a frequent contributor to Forbes.com and is a member of the Forbes Finance Council.
He has been interviewed on CBS News and has been quoted in over one hundred and thirty major news publications – among them Businessweek, CNN Money, Forbes, Bloomberg, USA Today, and American Lawyer – in the area of retirement tax planning.
About IRA Financial
IRA Financial is a leading public trust company specializing in self-directed retirement solutions. With nearly $4 billion in assets under management, we empower individuals to take control of their financial futures through innovative investment options. Headquartered in Sioux Falls, SD and regulated by the South Dakota Division of Banking, we are committed to providing exceptional service and unmatched expertise to help you invest, your way.
Full Unedited Transcript
Hey, I’d like to welcome you to another episode of Mission Matters. My name is Adam Torres, and if you’d like to apply to be a guest in the show, just head on over to mission matters.com and click on BER Guest to apply. All right, so today my guest is Adam Bergman and he is founder of IRA Financial. Adam, welcome to the show.
Adam, thanks for having me. Come on man. You get two Adams on the line. You know it’s gonna be a good episode. We already know that for sure. It’s gonna be good. So Adam for my long-term listeners, they know I was in finance for quite some time and I’ve been in media now going on a decade or so.
Time oof. Time is passing. But that being said, I’m excited about today’s topic ’cause I need some updates. So we’re gonna talk about for be listing investing in alternative assets with a self-directed retirement account. And I’ll tell you, I haven’t had any updates on what’s going on in this. Space in quite some time.
So before we get into that and kind of get into the meat of the show and also maybe some of the specifics around what type of investments can be held in a self-directed account. Maybe just talk a little bit more about, how you got started in finance and how you got on this path to helping people with your investments.
Absolutely. So I have pretty interesting story actually. I was a, a tax lawyer. I consider myself a pretty smart guy. I have a law, obviously a law degree. I have a master’s in tax law. I worked with some of the largest law firms in the world, in New York City, and I was a eighth year tax associate, and the partner I worked with asked if I can help a client.
Research whether they can use their IRA to invest in a hedge fund that they are involved in. And I was totally blown away. I had no idea that you could do this. I thought you had to use your retirement accounts to invest in publicly traded assets like stocks or mutual funds or ETFs, and I had no idea that you were able to buy real estate or invest in a hedge fund or buy gold with.
A retirement account. So I literally quit my job months later. It took me about a year to kind of get, get the business off the ground, and my passion for the last 15 years has been to help educate people and explain how the IRS and Congress allows you to diversify and invest in almost anything you want using a retirement account so you can generate tax free wealth.
Hmm. So when you decided to make this shift and you I’m just always curious about this, especially for when, people would switch up, like focus areas. Like what was that like for you? Like what was that like? Was everybody around like, oh, this is a great idea. Or like, I’ll tell you, for me, they were like, what are you crazy, Adam?
Like, you blah, blah. Like, I won’t get into my, I’ve told this story on this show before, but what was it like for you? So this was crazier because this was around. Beginning of 2009. So it was a financial crisis. Crisis. I knew, I knew you were gonna say that. Yeah, of course. Better. So I was taking a big risk.
Yeah. I was taking a big risk, obviously. I was doing pretty well. I worked at, you know, big law firms in New York City. So, but I did, I did after probably five or so years practicing law, mm-hmm. Which I, I enjoy practicing law a lot. I just didn’t have like. The the passion that I thought I should have.
And when I saw this opportunity and I said, oh my God, I believe in multiple things. But when it comes to investing, I believe in tax reinvesting as a tax lawyer. So a compounding returns, being able to shelter your income and gains from taxation. And I believe in freedom that hey, we should be allowed to invest in what we want.
And when you marry the two. To me, this is like, oh my God, I just, hit the super bowl of action. Like, this is what I want to do. And I, since then, this is all I’ve been focused on. We have Ira Financial, the company I founded, we have over 26,000 clients, over 4 billion in assets. And I think we’re successful because we’re not only the best at what we do, but we have the passion that we are going to work with our clients to help unlock their retirement money in the most tax efficient manner possible.
Hmm. What do you think attributes for some of the success? because that’s a tremendous amount of assets. Yeah. I know that’s not easy. I know that you’ve been working on this for a long time, but what do you think has made this, this firm so successful? I think the best advice I ever got.
So when I was thinking about. Deciding whether I was gonna start this business or just stay in law. ’cause again, I was doing really well. I was making good money. I was, you know, I was a big law firm. Maybe I eventually would make partner. I had a, a friend whose dad was a, a, a major software entrepreneur.
Mm-hmm. And I, I told him what I was thinking of doing, and he said. You should do it. I said, why? He goes, if you’re gonna be an entrepreneur, you want to be in an area that you have expertise in. He’s like, if you, if you told me, Hey, you’re gonna start making chairs, I’d say, Adam, you know, there’s probably a thousand people in the world that know more about chairs.
It’s gonna be very hard lift to get into the chair business, for example. But you’re a tax lawyer. You’re gonna immediately have a level of pedigree and expertise that your competitors probably don’t have. It seems like a natural fit to go into a business that can take advantage of your background or your passion.
So he’s like, you should do it. You can always go back to law if it fails, but you should go in head first and say, I’m gonna give three years to this and do it. And that was the best advice I got. And I think because I had a tax background. And I went into an area, a business that was focused on tax. He was right.
Initially, I came in, I was already smarter than all my competitors. Mm-hmm. Not just, just because this isn’t, this is what I know. I, I have a master’s in tax law. I know tax law in this area better than most people in the country. And that was initially able to lift me up above my competitors. And I’ve just been able to accelerate ever since.
Hmm. Let’s talk, a little bit, I mean, only so much we can get done, obviously in in a podcast episode, but give us some of the, high level brush strokes of, how self-directed retirement accounts work. Yeah, so it’s, it’s actually quite easy. There’s only three things you cannot do with an IRA and it’s found in two sections in the tax code section 4 0 8 and 4 9 7 5.
They’re, they’re quite simple. Three things you can’t do. You can’t buy life insurance with an IRA. You could with a 401k. You can’t buy collectibles like art baseball cards ‘ cause there’s, it’s harder to find an ascertainable value. And then third category, the broadest is found under internal revenue code section 4 9 7 5 and basically says, listen, you can’t do anything with your IRA then in any way, directly or indirectly.
Personally benefits you or your lineal descendants, your parents, your children, your spouse. Daughter-in-law, son-in-law, or any entities, 50% or more controlled by such person. So for example, you can’t buy a house and live in it. You can’t take your IRA by yourself, a Rolex watch. You can’t take your IRA and take your family to Disney.
Mm-hmm. But you can do everything else, right? You can buy Bitcoin gold, you can buy real estate, and you can rent it to a brother, sister, aunt, uncle, cousin, friend. Third party, you could buy and flip real estate domestically, internationally. Commercial, residential, you can invest in private equity, hedge funds, venture capital funds.
You can do hard money loans, private business stock. If you owned 20% of a business, you can technically use your, I rated invest in that business, right? So there’s so much you can do other than those three things. You can do it. And the beauty, Adam, is that you generate tax free income, right? So let’s say you bought Bitcoin at 5,000, you sold it at 89,000.
Tax free. Let’s say you bought an AI stock private company invested 10,000 bucks from your Roth IRA, into an AI company called Chat, GT, you know, six years ago, and now it’s worth $20 million tax free. That’s the beauty. Where do you find in implementing these strategies? And I don’t mean necessarily working with your firm, ’cause obviously your tax attorney and, you know, I mean, you, you have yours together, but you also see the entire landscape of self-directed.
Yeah. Retirement accounts, where do people go wrong? So I think when people, when people go wrong, and it’s a great question is, is I think the rules are quite simple, right? You, as I mentioned, you can’t buy life insurance, can’t buy collectibles, and you can’t invest kind of with yourself or a close family member.
Yep. I think there’s some other not so I. Well-recognized tax rules like unrelated business income tax and other maximization tax strategies that can be employed that a lot of other companies don’t know. Like for example, hey I have a traditional IRA, maybe I should convert to a Roth and if what’s a Roth?
A Roth ira once you’re 59 and a half and the Roth’s been open five years. All your distributions are tax free, so whatever you pull outta the Roth is tax free. So there, there’s a lot of different stuff that you just want to be well versed because when you’re structuring, whether it’s real estate or a private business investment, you wanna make sure that you’re working with the right team of experts that can just pinpoint all the potential pitfalls.
You know exactly how to structure your investment. Not super complicated like, and that’s why our fees, you can do this for less than 500 bucks a year. Flat. Mm-hmm. Like it’s not expensive, it’s not super complicated, but again, you just wanna make sure you’re working with the right experts that could at the outset, set you on the right path so you can maximize your tax reinvestment.
Yeah. And what about like, and so I guess when you think about the, when I, when I think about an I rra, and correct me if I’m wrong on this, but I, look at it kind of like that, that it’s, you’re putting these assets under an umbrella. So like the, in terms of liquidity or other things like that, that’s directly related to the assets.
So if they, you know, like let’s just say a home or something of that nature, like if that’s held within the account you’re still like. Liquidity, things like that, like you’re still facing the same kind of challenges you would with the asset in general. It’s just sheltered now. Am I off on any of that?
No, I think you’re kind of right. I mean, listen, this is an IRA, so it is a retirement account. Mm-hmm. So if you are looking for immediate liquidity yeah, it’s probably not the best investment tool. This is a mm-hmm. Tool that is used to build long term wealth. Right? Yeah. You wanna be looking 10, 15, 20, 30 years down the road, and that’s why the whole.
Premise of the IRA is based off the tax principle of compounding returns. Yeah. Compounding returns. Yeah. And I mean, for the asset, by the way that you’re holding, you’re gonna keep it in the account and under the umbrella, like regardless like that, you know, because I agree with you, it’s a long-term retirement account.
Right. But for the asset, like it’s not going to make an, and I, the reason I bring that up is because for those that are listening that are thinking about, or maybe they’ve, you know, most. Invested in like, let’s just say crypto, right? Mm-hmm. Like they’re thinking about like crypto or something else, and they think about the tax implications of what that could mean if they’re doing it in an individual account versus a retirement account.
I don’t under, I don’t wanna under assume that everybody understands what that means, especially for those that have not interested. Now with this next group of investors that are coming up, some have invested in more crypto than they have in maybe stock or the traditional investments. So that’s why I bring that out there.
Yeah, so let, let me just touch on that, if I may. I’ll double click on it. Yeah, please. Mm-hmm. Stocks, Bitcoin real estate, they’re treat as property. So when you buy and sell property under the tax code. It’s triggered capital gains, okay? Mm-hmm. And there’s something called short term and long term capital gains.
Short term capital gains is when you hold asset, whether it’s stocks, bitcoin, or real estate, less than 12 months, you pay ordinary income tax, which can go up to 37%. If you hold it greater than 12 months, you’ll, you’ll pay long term capital gains, which is 15%, but can go up to 23.8% for high income earners.
When you buy and sell any property in an IRA stocks real estate, Bitcoin. Tax free, right? You don’t have to worry about holding periods, you don’t have to worry about capital gains. Short term, long term, you don’t have to worry about ordinary income. It’s all tax free. All the returns go back into the IRA without tax, and that’s what is compounding returns, and that’s what Albert Einstein said is the H one of the world, right?
The rule of 72, you can double your money every. Let’s say eight years, assuming a 9% rate of return, if you get a 10% rate of return every 7.2 years, you can double your money because it’s not subject to tax. And that is how smart people save is through a retirement account. ’cause you take advantage of the power of compounded returns.
Adam, this has been great. I mean what’s next or what should we know going in and we’re in April of 2025? What, what should we know about the, the market or, or retirement accounts in general? Like, what’s next? So, I think if you could take anything, take these three things away, whether you wanna buy stocks, real estate, bitcoin goal, it doesn’t matter.
Mm-hmm. Know that government wants you to save. That’s why they’ve given you opportunities to save in traditional assets like stocks and also alternative assets like real estate or gold or Bitcoin. So these are the three things to keep in mind. Start an IRA start a Roth IRA, never too late. Mm-hmm.
Okay. Just start it if you don’t have one. Start. Number two, save. Contribute. Annually, the maximum is seven or 8,000 if you’re over 50. If you have a business, potentially you can go up to $77,000 a year. So you have opportunities. To even maximize your annual contributions, whether you wanna make pre-tax and get a deduction or Roth where it’s after tax and you don’t get a deduction, but once you’re 59 and a half, you can pull it out.
Mm-hmm. That’s your choice, but be consistent. And then the third is the easy part. Trust the process. Be patient. Okay. Let the investment work for you. Take advantage of the power of compound returns and just sit back and relax and watch your money grow. If you do those three things, you’ll have a million dollars plus in a retirement account.
When you retire, it’s guaranteed. Yeah. Adam, what’s the best way that people can follow up and connect and learn more about IRA financial I. Yeah, you can go. I mean, I think the best place, obviously our website, ira financial.com, IRA Financial group, but our YouTube channel’s really great ’cause there’s tons of, there’s thousands of videos on there that will go through each area of the self structure.
I’m talking about a lot of really cool stuff and it’s obviously just peruse it at your convenience and it’s fun, it’s easy. And it’s just great to educate yourself because listen, This is how smart people get rich. I’ve seen it. You know, again, I have 26,000 clients. I’ve, I’ve seen people start with 5,000 and now have 25 million.
I’ve seen people start with 50 grand and have 6 million. Like over the last 15 years I’ve seen an enormous amount of wealth created. Guess what? Because people want and do better when they get to invest in what they care about. So if you don’t necessarily wanna put all your money in the stock market and you just can’t wake up every morning looking at where the market is, then.
You can diversify. The government allows you to buy real estate. They’re, they want you to invest in, in other things. So you should, if you’re interested, take advantage of it. You don’t have to, I’m never, I don’t market, I don’t sell investments. Right. We just unlock people’s money so you can invest in whatever you want.
Hmm. Wonderful Adam. And for everybody listening, just so you know, I’ll put, we’ll put the links in the show notes so you can just click on it, head right on, over to IRA Financial and speaking of the audience, if this is your first time with Mission Matters and you haven’t done it yet, hit that subscribe or follow button.
This is a daily show. Each and every day we’re bringing you new content, new ideas, and hopefully new inspiration to help you along the way on your journey as well. So again, hit that subscribe or follow button. And Adam, man, it’s really been a pleasure. Thanks again for coming on the show. Same. Thanks Adam for having me.
Really, really enjoyed it.