Welcome to episode three of Inside the Family Office Live Investor panel, tax -free
compounding self -directed IRAs, lots, and alternatives. Now, in this episode, Dr.
Cook is talking with John, who runs the trust company division of a single family
office and custodians over $70 billion in assets. You're going to hear how
sophisticated families quietly use self -directed IRAs, Roth IRAs,
HSAs, and Solo 401Ks to buy real estate, fund private deals,
and compound returns that are tax -free, sometimes growing accounts to tens of
millions of dollars. John is unpacking real examples and explains why alternatives
inside retirement accounts are more mainstream than ever. Let's go to John next.
Thank you so much. Great comments so far. So I'll look at this and speak from a
little bit different, through a little bit different lens. I do work for a single
family office, but I work within a division within the single family office,
which is our trust company. And so as a trust company, what we focus on,
specifically as a trust company, is serving as a non -fiduciary trustee Stodian. And
the origins of our company date back to 1974. And fast forward to today,
we have over 71 billion in assets under custody and administration. Now, we do a
lot of different things, but I'll stay focused on one particular area, and that's
alternative asset custody. And more specifically, alternative asset custody within self
-directed IRAs, Roth IRAs, which I'm incredibly passionate about. I see Mark over
there. I know you're as passionate about Roth IRAs, HSA accounts, and solo 401K
plans. How I stumbled across Richard in the family office is because I serve a
family office, work directly for the owners, because I've gotten to know a lot of
multifamily offices and single family is oftentimes the patriarchs and matriarchs have
very large IRAs and 401K balances. And my question is, is how in the world did
this person get $50 million, $60 million, $70 million in a Roth IRA? There's no way
they did that through contributing $7 ,000 a year. So naturally, I started
investigating and I started figuring out how they were doing that. And so what we
focus on in terms of being a trustee custodian is working with partners,
many of whom are within this network in this community, that have IRA and 401K
investors that are interested in self -directing into alternatives. So real estate
syndicators, investment sponsors, smaller hedge funds, the big firms and the big funds
out there, they can go to a Schwab or a Fidelity or Morgan Stanley, one of the
big wirehouses, because they will custody alternatives. We're dealing with the $50,
$500 million funds. And it even goes more granular than that.
You know, for example, yesterday I just made an offer and signed a contract for a
$205 ,000 $15 .5 acre property that I'm going to buy with my self -directed Roth and
HSA account. And so I'm talking to the seller, who's a local wholesaler and real
estate investor, and he starts asking questions about the investor. Well,
what's this here? I see self -directed retirement account. So he starts asking a
question. I say, well, when I do deals like this, when I sell this property in 11
months from now, and make about a $60 ,000 profit, I'm going to pay 0 % tax. And
of course, his reaction to that was, wait a second, so do you pay taxes like later
on or do you have to do a 1031 exchange? No, I pay no tax. Never.
I never pay tax. It's in my Roth in my HSA. He couldn't believe it. So then he
starts asking questions. He said, well, wait a second. He goes, what's the name of
the company again? And I said, equity trust company. He said, well, yeah, I actually
see properties that have equity trust name on it all over the place. And that's
because our clients invest even down to that granular level of buying commercial
buildings, buying individual single family homes, lending money secured by real estate.
So it can get that granular or it can be, you know, again, within more of a
larger SPV structure or fund, hedge fund, cryptocurrency. that's what we focus on as
a custodian investing in alternative assets. And when I say as a custodian investing
in alternative assets, that's not us deploying capital. We're not a distribution
entity. What we do is we go out and educate. We help deal sponsors,
syndicators, investment sponsors, educate their clients on using IRAs and 401Ks to
invest in real estate. With just a few minutes left, I'll mention this. At the
beginning of August, there was an executive order.
invested in alternatives in retirement accounts for many, many years. It's just most
financial institutions don't do it. But I think what's interesting about this
executive order, regardless of what the Department of Labor comes back with, is
alternatives in IRAs and 401Ks and other retirement accounts are more mainstream than
they've ever been. Our business has grown. I've been there for close to 20 years. I
started when we had about 75 employees. We now have over 600 and over 72 billion
in assets under custody administration. So retail investors are looking for non
-correlated alternative assets in self -directed accounts, and more particularly,
how to do it most tax efficiently. For myself and my family, and as I serve the
family office that owns equity trust, we try to do as many deals as we can with
our Roth accounts, Roth 401ks, Roth IRAs. I'll leave you on that. I'll pass to the
next person. Thank you.
Excellent. That's great advice. My Roth IRA money is all in crypto. I may be doing
some real estate and other alternative investments as well, but I'm definitely a
proponent of that, and it's something that is not well advertised because there
aren't a lot of custodians who will do it, but very important information to share
today. Thank you for doing that.
That was episode three of Inside the Family Office, Live Investor panel, tax -free
compounding, self -directed IRAs, Roths, and Alternatives. John showed us now how
pairing alternative assets with the right tax wrappers can change of families after
-tax outcome for generations and why more family offices are pushing deals through
lots, 401ks, and HSAs. If you want more conversations like this,
follow the show, share it with your tax advisor or estate planner, and be sure to
come back for episode four, where we shift into student housing, multifamily, and
philanthropy at scale.