Hi {{first_name}},

I remember the exact moment a new investing door opened to me. 

Several years ago, I sat across from a mobile home park magnate at a mastermind in Cabo. We were drinking wine, admiring the sunset and the conversation turned to tax drag. I made a comment I'd been thinking for years: I wish I could deploy alternative assets inside my Roth.

He looked at me with a smile.

"You can, Walker. It's called a self-directed IRA."

“A self-directed IRA?” 

Months later, I had deployed IRA funds into real estate and private equity syndications, including the 007 private equity position that became BuildInteractive II (details in the P.S. below). 

That position remains inside the wrapper today, compounding tax-free toward distribution.

IRAs were invented in 1975. No rule ever existed to prevent you from investing these funds in the private markets. The federal tax code has permitted nearly any asset class inside an IRA wrapper for half a century. Real estate. Private credit. Private equity. Energy. The IRS publishes a short prohibited list (life insurance, collectibles, S-corp stock, certain self-dealing transactions) and permits everything else.

Fifty years of compounding advantage, available to anyone who knew to ask. The institutions holding ninety-six percent of America's retirement capital have no incentive to mention it. Today, that Cabo conversation will be worth millions in saved taxes over the decades ahead. One question, one answer, one wrapper.

Inside this issue:

P.S. Join me this Thursday at 5 pm EST / 2 pm PST. I'll share how I've been investing in IP since 2013, and the new opportunity I just launched in the largest, fastest-growing market in entertainment. The portfolio already has 007 and FIFA licensed. 

(I invested through my self-directed IRA. You can too.)

Register here

— Walker Deibel
WSJ & USA Today Bestselling Author of Buy Then Build
Founder, Build Wealth

Most investors already have every account they need. They have a taxable brokerage account, a traditional or rollover IRA, and they have a Roth IRA. 

The taxable account is what often gets the most attention. We put new investments in and evaluate new opportunities.  We think retirement accounts are for prudent saving. They go unnoticed for the most part, aside from ensuring you are maxing out contributions each year. Maybe we have one we forgot to roll over. They’re a bit like tumbleweeds, holding a mix of funds that carry over from old plans and are carried by the winds of the market. 

So what’s compounding exactly?

Compounding is the engine of long-term wealth. Time, rate of return, patience. The math is simple.

There are only two ways to compound faster: better returns and less drag.  Drag can come from time, deployment inefficiency, volatility, but often the biggest drag comes from taxes. Taxable, tax advantaged, and tax free are all different compounding wrappers. The same capital, earning the same return, over the same horizon, produces wildly different outcomes depending on what wrapper holds it. Wrappers are a multiplier on compounding.

Self-directing your tax-advantaged IRA wrapper is one of the most underused strategies of the federal tax code. 

Understanding the power of the self-directed IRA requires separating two institutions that like to masquerade as one. 

Large brokerage firms offer a narrow set of easy-to-scale investments—mutual funds, ETFs, and bonds for your IRA. If Fidelity, Schwab, and Vanguard hold your IRA, they probably charge you nothing to do it and sell you the investments inside. They manufacture the proprietary funds, like target date funds, inside your account and collect expense ratios on every dollar invested. At scale, this turns basis points into billions. 

Brokerages also earn net interest income on your uninvested cash. Some even generate revenue from securities lending. But it’s the limited menu that is the primary engine of their business model. 

On the other side of the planet, self-directed IRA custodians follow the same rules but allow a wider range of assets, including private markets and alternatives within IRS guidelines. The list of what the IRS says is legally allowed is broad.

Self-directed custodians charge an annual fee to administer the account. In exchange, they open the full universe of IRS-permitted assets including real estate, private credit, private equity, promissory notes, LLC interests, precious metals, tax liens, private placements. 

The IRA wrapper is identical. The federal rules are identical. Your custodian determines the menu.

Think of your account set-up as three-layers:

The taxable brokerage holds liquidity, growth equity, and ABLOC collateral. It is the operating account of the wealth stack: accessible, margin-able, and designed to fund short-term needs.

The traditional or rollover IRA holds long-duration tax-deferred compounding. With a self-directed structure, this can include income-producing assets that benefit from deferral.

The Roth IRA holds the highest-yielding, highest-conviction positions. In a self-directed format, it can house private investments where tax-free compounding has the most impact.

Changes to the Secure Act 2.0 made it easier for self-employed investors to put more capital into Roth accounts too. For the first time, meaningful amounts of capital can move into a tax-free wrapper via the SEP IRA and be deployed into private investments.

To put this wrapper math into practice, consider this: 

A $500,000 Roth SDIRA deployed into a 12% private credit position compounds to roughly $8.5 million over twenty-five years, distributed tax-free. The same $500,000 in a taxable account at the same return drops to approximately $4.6 million after federal tax drag at ordinary income rates.

The tax drag gap is $3.9 million. Same investment. Same return. Same time horizon. Two different wrappers.

The IRA wrapper has been available since 1975. The math is clean. The architecture is established among investors who maintain it. So why has almost no one heard of it?

That answer lives inside an industry that built itself in the shadow of Wall Street.

“No kid says, ‘Someday, I want to run a self-directed IRA company.’,” says Kaaren Hall, laughing, “It’s always a fun conversation at parties when people discover what I do.”

Kaaren spent 17 years in radio before she ever worked in finance. She jokes about those radio days now, but she knows the power of using her voice and speaking up. 

Today, she’s a vocal advocate for self-directed IRAs, shaped by a career that kept circling capital in different forms: real estate, property management, and eventually mortgage loan origination during the height of the housing boom.

Loan origination, in her words, was a “boiler room.” Deals moved fast, pricing changed by an eighth of a point, and relationships could be replaced in a day.

Then the financial crisis froze lending. At the same time, Kaaren was going through a divorce. Suddenly, she was a single mother of two children with a mortgage, and no clear next move for her career.

An Accidental Entry Into SDIRAs

A friend introduced her to a small self-directed IRA firm. Her initial quota was fifty self-directed IRA accounts per quarter. She opened fifty per MONTH. 

In the midst of the great recession, Kaaren went all in. She created networking events, attended real estate conferences, and helped sponsors unlock capital. 

For two years, she outperformed the role. When she was unexpectedly let go, she quickly saw this exit as a new point of entry. 

Kaaren rented an executive suite and started fresh again. She knew the world of self-directed IRAs now, so she called banks and trust companies until one agreed to partner with her. Kaaren had a negative net worth when she signed the paperwork.

Her company became uDirect IRA Services, LLC. Today it administers $1.3 billion in assets.

The Wrapper You Already Know And Love

Self-directed IRAs are just the existing IRA wrapper that have been sitting alongside the traditional retirement system. But it’s still relatively unfamiliar to even financial circles. 

“We are a piece of the pie, but a small piece,” explains Kaaren, “We typically say we’re around 4% of market share.” 

The other 96% sits inside large brokerage ecosystems such as Fidelity, Schwab, and Vanguard, where investment menus are standardized. Traditional custodians earn revenue through the investment products inside those menus. 

Self-directed custodians operate on administrative fees tied to account maintenance.

Direct charges a $50 setup fee and a $275 flat annual administration fee. No asset-based fee. The account holding $50,000 pays the same as the account holding $5 million. The investor wants the asset to perform, the custodian wants the account to exist. The investor benefits when the assets perform, and the custodian benefits when the account remains active.

Kaaren explains her model like this, "We keep it simple. We charge a flat fee. Because we make the bulk of our money on the float like any bank. But unlike Wall Street, we're not participating in your actual asset. It’s only the cash you don’t invest." 

The Department of Labor's most recent move toward allowing alternative assets inside 401(k) plans is, on the surface, a partial victory for retirement investors. Kaaren sees more to the story.

"It's going to cause Washington to look at alternative assets differently. They're not creepy weird things, they're normal now. And when people go to roll their money out of their employer plans, they'll already be familiar with alternatives. It should be really good for our industry."

The investor who watches their 401(k) hold a sleeve of alternative mutual funds for five years, who reads quarterly statements showing private credit and private real estate as line items, will not flinch when their advisor suggests rolling their old 401(k) into a self-directed IRA and deploying it directly. As private credit and real estate appear inside retirement statements, they move from unfamiliar categories into standard allocations.

After her recent trip to meet with lawmakers in DC, Kaaren is seeing positive momentum: “It's a big bipartisan issue. Both sides of the house want people to afford to retire.” 

Today, self-directed IRAs represent a small slice of the market, but they sit inside the same retirement framework you’re already familiar with. 

And beyond that, Kaaren believes there’s immense potential for impact: “IRAs are powerful. You can invest according to your values and beliefs. Think about what we can do as investors to raise Main Street, if we self-direct.”

You have been able to self-direct your IRA for over 50 years, since Gerald Ford introduced the IRA in 1975. 

But if you’re just learning about self-directing today, it’s better late than never. 

So how do you get started? 

Kaaren Hall explains the ideal SDIRA investor is a mid-career professional, someone who has accumulated enough wealth to be accredited, but still with decades of runway to compound and a willingness to purposefully allocate holdings. 

If that’s you, read on for the 4 steps on how to set one up.  

Step 1. Inventory Your Wrappers.

Start by listing out every retirement account you have ever opened:

Most investors uncover accounts they haven’t looked at in years. Then you can split them into two categories:

The second group is your activation pool. These are the accounts where capital is already yours, already deferred, and sitting in a default structure. If you’re married, this process happens twice. Two households, two sets of accounts, two parallel opportunity sets.

Step 2. Open the Self-Directed Account.

A self-directed custodian administers the account, ensures compliance and records transactions, but the investment decisions sit with the account holder.

Choose a self-directed custodian based on fees, reputation for customer service, and the features you might need.

Sliding fees penalize compounding (the better your account performs, the more you pay). Per-asset fees penalize diversification (the more positions you hold, the more you pay). The flat-fee model is the only structure that aligns the custodian's economics with the architecture you are building.

Customer service and features matter too. When timing matters, you don’t want to be chasing your custodian for updates. Some SDIRAs offer public equities too, which can be a nice feature if you want to hold positions between deployments. Others include a marketplace where you can review open deals.

Once the account is open, the rollover process is the same as if you were moving between any other brokerage. You move capital from the legacy custodian into the new one. No tax event is triggered. The capital simply changes its operating environment.

Step 3. Match the Asset to the Wrapper.

It’s easy to get this step wrong.

Each account does a different job. 

The Roth SDIRA should get the highest-yielding, longest-duration position you are willing to commit to. Tax-free compounding amplifies yield more than it amplifies anything else. A 12% return inside a Roth produces nearly twice the long-term outcome of the same return in a taxable account at ordinary income rates. The longer the holding period, the wider the gap. Do not use this wrapper on an index fund you could buy at Schwab. Use it on positions whose tax-free outcome would change the shape of your retirement.

The traditional or rollover SDIRA gets the assets that throw off ordinary income: real estate funds with cash distributions, energy positions with royalty income, private credit. Deferring ordinary income is more valuable than deferring capital gains by the spread between marginal rates.

The taxable brokerage holds liquidity, growth equity, and ABLOC collateral. It stays liquid because the rest of the architecture is illiquid by design. The taxable account is the operating account of the architecture, and the wrappers around it do work it cannot do.

SDIRAs are ideal for holding illiquid positions because the wrapper's holding period is multi-decade by design. The lockup is the asset behaving as it was designed. The investor who holds liquid assets in the IRA and illiquid assets in the taxable account has the architecture inverted.

Step 4. Know the Tax Traps.

Two specific traps catch unprepared investors. Both are avoidable.

The first is prohibited transactions. Under IRS Section 4975, the IRA cannot transact with disqualified persons or entities. The penalty is severe: the entire account can be treated as distributed in the year of violation. IRS Publication 590-A outlines the structure in detail.

The second is tax on specific activity types.

Unrelated Business Income Tax (UBIT) applies when an IRA invests in an active business. Unrelated Debt-Financed Income (UDFI) applies when returns are partially generated through leverage in the capital structure.

Kaaren explains that investors can solve this by asking to adjust position type. Equity exposure becomes note exposure. Equity upside becomes contractual yield. The structure determines the tax outcome before the investment even begins.

Self-directed IRAs are not a new IRA category. Each type of IRA has a function, and that function changes how returns behave over time.

It’s time to use the tax code like it’s 1975.

Curious about what I hold in my self-directed IRA? I’m breaking down an investment I’ve made four times over since 2020. It’s live this Thursday. 

Tune in to learn about the company behind the first James Bond videogame in over a decade with a pipeline of equally killer IP in development. Currently a $300m valuation, they’re poised to hit $5B by 2030. Register to join.

"He who pays the piper calls the tune." — English proverb

For fifty years, custodians set the menu. The investor followed it diligently.

The self-directed menu changes who makes the order.

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