Self-Directed IRAs & UBIT Tax with Leigh Cowden
On this episode of Next Level American Dream, Abigail and Sean are joined by Leigh Cowden. Leigh is the Founder and Principal of Sparks Blackthorn Capital LLC, she is a United States Air Force veteran, author, real estate broker affiliate, and attorney. We will be exploring how IRAs can be used for passive investing outside of stocks, bonds, and mutual funds.
Key Topics
What is a Self-directed IRA (SDIRA)?
What is the UBIT tax?
What is its impact on a SDIRA with investing in real estate?
Connect with Leigh:
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SUMMARY KEYWORDS
Self-Directed IRA, income, people, solo, 401k, invest, business, IRA, Multifamily, American Dream, money, IRS, investments, real estate, account, pay, real estate investments, tax, form, taxes
SPEAKERS
Sean Thomson, Abigail Thomson, Leigh Cowden
Abigail Thomson 00:01
Welcome to the Next Level American Dream Podcast brought to you by Thomson Multifamily Group. Your hosts, Abigail and Sean, will discuss how you can take your American Dream to the next level through real estate investing, business practices, and personal development. Join us as we share our experiences as a father daughter duo who are trying to accomplish our goal of financial freedom. We hope you learn more about how to define and achieve your American Dream. Here's another episode of Next Level American Dream. On today's episode of Next Level American Dream, we will be exploring how IRAs can be used for passive investing outside of stocks, bonds, and mutual funds. To give us more insight on this topic, we will be joined by a friend of ours Leigh Cowden. Leigh is the Founder and Principal of Sparks Blackthorn Capital LLC. She is a United States Air Force Veteran, author, real estate broker affiliate, and attorney. She embodies the entrepreneurial spirit, having built several successful businesses from the ground up in various industries including Orthopedic Medical devices, transportation, logistics, publishing, hospitality, security transactions, legal, and insurance. We are so happy to share her depth of knowledge with you.
Sean Thomson 01:19
Hi, Leigh, how are you doing?
Leigh Cowden 01:21
I'm doing great. How are you all doing?
Sean Thomson 01:23
I'm doing good. So, I want to just jump right in. So, Leigh, you have a very diverse portfolio of experiences, and jobs in the past, what drew you to real estate?
Leigh Cowden 01:39
Well, first I want to say thanks for having me on! We've talked about it for a while. I'm super excited to be here with you guys. With respect to my background, I have done a lot of things. I'm a licensed attorney in Florida and Tennessee, but for the last 10 years or so I've been writing novels and living overseas. Writing novels is a lot like writing music in that you put a lot of work and effort into something one time, and then you keep getting paid on it for the rest of your life through royalties. I created a stream of royalties for myself that has supported myself and my family, for writing over a decade. That income continues for the rest of my life and my children's lives, which is wonderful. Except that in today's day and age, there's really one vendor of books that most people get their income from, and that's Amazon. If you've ever sold anything on Amazon, I'm sure you've experienced this, but if you buy things on Amazon, you may kind of see it happening. Amazon will change its algorithms to increase profits or to adjust for new advertising revenue that they're putting into the stream. It will affect your income instantaneously. Amazon does not share their plans with anyone. It's kind of a scary situation to be in when all of your income is coming from the source that can just change the rules in a minute and really affect your life. What I was looking for was another evergreen stream of income, much like my royalties, but one that I would have more control over. So, I researched a lot of different avenues and I came up with real estate because I know real estate investors already and some of the wealthiest people I know are commercial real estate investors. So, I said, "alright, let me look into this more." I probably spent a year and a half educating myself and learning about it. I ended up getting my license in Tennessee as a real estate broker, and as an attorney, and attending lots of conferences like I'm sure you have. I joined a mentorship group that you and I are part of, Mastermind Group. That is kind of the long answer as to why it's real estate for me, and it's a great way to earn passive income similar to royalties, we put a lot of work in upfront and then once you own the property and you get it stabilized and leased up, it just keeps producing income for you. You just have to monitor the asset and the business plan. It just made a lot of sense for me financially and it also incorporates all the things I love. I do love underwriting, I love looking at numbers, I do like designing a business plan, and executing your own business plan. I have been a small business owner most of my life in one form or another, so it appeals to my entrepreneurial spirit. I like working with people and this is something you can't really do alone. You do it as part of a team, and I like that also.
Sean Thomson 04:42
In your research and learning of all these things you sort of landed on Multifamily apartments. Do you think that is, at least for you, the most appealing, to produce that the income that you're looking for and the results that you're looking for?
Leigh Cowden 04:56
I would say Multifamily and then I also like Self Storage, although I would say I have more experience with Multifamily. Self Storage is newer to me. I started out looking at single family homes and I have done flips of single-family homes, but that is not an evergreen stream of income. That's an income you have to keep returning over and over and over again, just like you would do at a W2 job if you don't show up, you don't make money. I started looking at duplexes and triplexes. I thought well, that's more interesting to me. The economies of scale weren't there. So, for example, if you have a triplex and you have to replace the roof, you know that there's only three tenants paying for that roof. It's quite expensive. That could get rid of an entire year or two worth of income. If one tenant leaves suddenly, you've lost 33% of your income stream. So, when I started looking at hundred plus unit complexes, 1, 2, 3, or even 10 people leaving does not affect your income, like it wasn't a smaller property. It just makes sense financially for economies of scale, more than anything, to go Multifamily, and a larger project versus a smaller project.
Sean Thomson 06:09
That's true. So, let's talk about your book. You just wrote a book about the self-directed IRA, and how people can use their self-directed IRA to create passive income for themselves. If you can, let's sort of dive into that a little bit, if it's okay.
Leigh Cowden 06:25
Yeah.
Sean Thomson 06:27
Do you mind defining what a self-directed IRA is?
Leigh Cowden 06:31
Yeah, and I'm going to clarify, the title of the book is "The Passive Investors Guide to Investing in Real Estate Through an IRA, Avoid Taxes and Maximize Your Returns." I specifically advise against using a self-directed IRA for investing in real estate, and instead, encourage people to do a solo 401k. My book is essentially explaining the difference between investing using a self-directed IRA versus investing in a solo 401k, and why you want to avoid the self-directed IRA route, if possible. Then it's also a short primer on how to open a solo 401k plan and what you'll need and where you can do it, and how you can do it for yourself for free.
Sean Thomson 07:15
I think most people are familiar with the traditional 401k that they have at their corporate job. Explain the self-directed IRA concept and how people can control their own money in their in their IRA. Then we'll talk about the difference in why you're saying to do the solo 401k. How is a self-directed IRA different than what people are used to in their 401k's that they're getting from their corporate jobs now?
Leigh Cowden 07:49
So, your 401k that you get at work, and in places where I've worked, had a 401k. You can put a certain amount of your salary into this. A lot of times the employer will match up to a certain percentage, maybe they'll match 3%, or maybe they'll match 100% of what you put in. If you put in 10,000, they'll put in 10,000, and you have 20,000. In this investment fund, a lot of them have a set group of investments you can put the money in, usually it's mutual funds. So, they will have some growth mutual funds, and they'll have some income mutual funds. Depending on your risk tolerance, you can go for a more aggressive type fund with a higher annual return, historically speaking, than others, or if you're getting closer track to retirement, you can move them into more income producing, less risky investments inside the 401k plan. I have not been a part of a 401k plan in a company where I could invest in anything I wanted. It was always like, "here's six funds to choose from put them in any one of those." The self-directed IRA is an individual retirement account that you control yourself. It can be funded through rolling over money out of a 401k that you had with a previous employer, or you can contribute to it every year, a certain amount of money. Every year that amount changes and so let's say you put in $5,000 this year and then you can host this IRA account at say TD Ameritrade or Charles Schwab, any of these brokerages, Vanguard even. You can invest in whatever that company has. If you're at Schwab or TD Ameritrade you can invest in anything mutual funds, stocks, bonds, calls, puts, anything you want. The only thing you can invest in there are things like precious metals, real estate, and oil and gas. It's really just securities that you can invest in like TD Ameritrade or Charles Schwab. With this self-directed IRA, or just a regular IRA, you're limited with how much money you can put in every year and it's a smaller amount than what you can put in with a 401k. That's what an IRA is just in general. Now a Self-Directed IRA is where you move your retirement account funds into a special type of what they call an "IRA LLC." A custodian will help you create this LLC. You'll put your money in there, and they'll give you a checkbook. Then you can use that checkbook to invest in real estate, you can be a part of a syndication that's investing in a multifamily property, for example. You're a syndicator, you've got this 150 unit apartment community that you're going to purchase. You're raising investor funds to fund the down payment and the rehabilitation of the units that need upgrading. Somebody could take a check from their checkbook, out of that self-directed IRA and write you a check for $100,000. Then they become an investor in that property. That entitles them usually to some sort of return, maybe paid quarterly or maybe paid at the end of the project, I don't know how you are going to do your deals in the future. Anyway, the problem with investing in that way through a self-directed IRA account is that the IRS taxes the profits and the income that come off of that investment. At this point, I can stop and tell you how the solo 401k is different. I can tell you about all these acronyms that explain all these taxes that the IRS will start subjecting your investment to. So, you tell me, which direction I should go?
Sean Thomson 11:39
So, let me review really quickly. The traditional 401k plans are managed by an organization and most of the time you're limited to what that organization will sell you or let you participate in. You're very limited in what your options are. A lot of people think that means that they can't invest in things like real estate and nontraditional investments, precious metals, things like that. That's not the case. With a self-directed IRA, it opens up some of those additional investments depending on the custodian that you're with. You can invest in some of those nontraditional investments, right?
Leigh Cowden 12:24
Yeah! If you have a self-directed IRA that has checkbook control, you can write your check to anybody you want to invest in. Now, you have to be careful because there are some things you cannot invest in through any retirement account. For example, collector cars, you can't buy that 68 Stingray that you've always wanted to have and call that an investment. That will be considered you taking a distribution from your retirement account, and you'll pay that 10% penalty plus income tax.
Sean Thomson 12:56
The reason I bring that up is that a lot of times I'll talk to people about their IRAs, and they had this really restricted view of what they're about to invest in. They actually think that it's against IRS policy, or the law, in some way to invest in these other nontraditional things, but it's essentially just company policies that they're with, in terms of who holds their IRA. I always like to bring that up and say, there's a whole world of things you can invest in with your IRA and get the tax benefits. It's not necessarily about what the products are that your fund manager is telling you.
Leigh Cowden 13:34
That's because if they tell you "yes, you can invest in real estate," and they don't offer real estate as an investment, they're going to say goodbye to those funds. Most people invest a minimum of $50,000 in real estate and some of them, it's $100,000. That's a big chunk of money. They no longer earn fees on it, they no longer earn commissions on it, and they no longer get to sell you their product on it. They do not align anymore. Your interest as an investor and their interest as a person, as your custodian, are not aligned in that case.
Sean Thomson 14:03
Yeah, exactly. That's the point I was hoping to make there. Let's do a dive into a little bit more. You brought up what the self-directed IRA is and what it can do, and then you said that you don't recommend people use that for Multifamily or for syndication deals because a project that is secured by debt, which most Multifamily properties are going to be. In terms of syndication, there's a tax result from the IRS, right? So yes, there is a way for people to invest in those debt secured properties and still get all the benefits that you would want to get out of that. So, it's kind of a run through. You've got the traditional IRAs, like TD Ameritrade, and like you said, you've got self-directed IRAs. This is sort of next level for setting this up. Do you want to get into larger Multifamily investments as a passive investor to get the full benefit? Let's talk about you now. Talk about the acronyms you mentioned, as well.
Leigh Cowden 15:13
Yeah, I got some alphabet soup for you here!
Sean Thomson 15:15
Yeah. Run through those for us!
Leigh Cowden 15:19
First, I'm going to give you all the acronyms, if anybody's watching this and taking notes. You can write these acronyms down and then my quick explanation of what they mean. Okay, so the first one is "UDFI." That's "Unrelated Debt Financed Income." Then, there's "UBTI." That's "Unrelated Business Taxable Income." Then, there's "UBIT," which is "Unrelated Business Income Tax."
Sean Thomson 15:56
Okay, awesome.
Leigh Cowden 15:57
You mentioned earlier that when we purchase Multifamily properties, or even Self Storage, or retail, whatever it is, you're buying commercially. Generally, it's leveraged, meaning we get a loan on it, we'll put down 20-25 percent, and the rest comes from the bank. That's where these taxes kick in. So, the IRS says, "if you're leveraging these properties, you are now going to be under this umbrella of Unrelated Debt Financed Income." So, that's the "UDFI." Whenever you're thinking of debt or leverage, you're thinking of that acronym. So, this next one is an Unrelated Business Taxable income. So, if you're in the self-directed IRA, and you're investing in real estate, it's considered an unrelated business. That means any income that you receive from the leveraged portion becomes taxable. If you've leveraged 80% of the purchase of that building, that means 80% of that value is taxable. So, 80% of the income that comes in is taxable. I just tried to simplify it in a tiny sentence for each one. UBTI is what is taxed in general, UDFI is the actual income being taxed, and UBIT is the tax on that income. For example, you've invested $100,000 into a Multifamily property, and you're receiving income in the form of dividends from the sponsors that are running that syndicated deal. Every year, your accountant is going to have to do a calculation on 80% of that income. Then, it's going to divided by the adjusted basis and multiplied by the income. I actually have the calculation in my book, if you want to see the actual calculation and how it works. You can be taxed up to 37% on that income you receive. Now, a lot of times as an investor, you get the benefit of depreciation, which can offset some or all of those taxes. But why would you use your depreciation to offset those taxes when you can just not have the taxes at all in the first place, and use that depreciation to offset other income that you might have from your 9-5 job or from other investments that are kicking off income?
Sean Thomson 18:25
Right.
Leigh Cowden 18:25
So, my philosophy is to avoid taxes if at all possible, and only when legal. In this case, moving your money from a self-directed IRA into a solo 401k is 100% legal. The solo 401k is mentioned many times in the IRS regulations, it's something that they have provided for. There are just a couple caveats in order for a person like you or me to open one up and have one in place. So, if you want, I can tell you what those are.
Sean Thomson 18:59
Yes, let's go back. Let me just review this. There's a lot of details in what you're talking about. So, I want to just kind of summarize after you go through everything, if you don't mind.
Leigh Cowden 19:07
Sure.
Sean Thomson 19:07
If a passive investor is interested in getting into a syndication, and they want to invest their hundred thousand dollars, or whatever it is, if that project has 80% debt against it, 80% of that income made for the year is going to be subject to taxable income. Also, up to 37% of that income will be what's assessed as the tax, right?
Leigh Cowden 19:38
Yeah, it works just like your income tax rate. If you're in a 37% tax bracket, and your income is going to be multiplied by that 37%. Then, that's your taxes. So, yes, you said it exactly right. 80% of the income, that's the leveraged portion coming off of that investment for the year, that's going to be subject to income taxes.
Sean Thomson 20:01
Just to use simple math, if they make $10,000 off the project, $8,000 of that is the taxable income, and then whatever their tax bracket is, will be the amount of tax that they'll need to pay on that? That is, if they're using a traditional self-directed IRA to invest in those in those projects, right?
Leigh Cowden 20:18
Yes, but I'm not an accountant. So, I always tell people to talk to your accountant about any of these calculations, I'm sure they're used to doing them, especially if they're Real Estate Accountants. So, not all accountants specialize in real estate investments. For sure, if you're contemplating investing in a Multifamily project, you should be using an accountant who regularly works with Real Estate Investors. They'll be able to show you exactly even in a pinch, just like you said. Say, for instance, I invest this much, they'll be able to tell you exactly how much based on your tax bracket, and what you will owe the IRS on those real estate investments.
Sean Thomson 20:57
Yeah, exactly. Let's talk about how someone can still use self-directed IRA type accounts or self-directed IRA money and set it up so they're not subject to that tax. What were calling it, a solo 401k?
Leigh Cowden 21:13
Yes.
Sean Thomson 21:14
How would someone that has an IRA now, transition their money into that project, so that they were able to take more advantage of these properties, like real estate investments?
Leigh Cowden 21:26
First, I'll tell you what the parameters are in order to qualify for a solo 401k. Then I will tell you mechanically how they move their money from one type of account into the other.
Sean Thomson 21:35
Okay, great.
Leigh Cowden 21:36
In order to qualify to have a solo 401k, you have to own some sort of business. I'm not talking about a brick and mortar, like an auto body shop or a restaurant, it can be just a simple consultancy. If you have a 9-5 job as an IT person, you could quite easily have a consultancy business where you go and occasionally help people with their computer issues, and they pay you a fee for that consulting work. That qualifies you as a business owner. The other issue with owning a business is that you have to have a solo 401k, and there cannot be employees other than yourself and your spouse. If you do own a business already, but you have employees, you hire three people to admin other people, and another person in the field, you don't qualify for that solo 401k. Whenever you have employees, you have to invite them into the plan. So, this strategy only works for people who can open a business with just them in it, or just them and their spouse inside it. That's most people who have a 9-5 job, right? Or people like a therapist or a doctor, I don't know. Doctors usually still have employees underneath their own business. Unless it's a contract physician who doesn't have their own employees, they could do that. Or, if all their employees were independent contractors and not actual employees, they could qualify. So, those are the parameters there. You have to own a business and it has to only have you and/or a spouse involved as employees, no other employees. So, if you can fit that, then you qualify to open this account. Now some people say well, I can't be consultant. Well, for example, my mom makes quilts. Occasionally, she'll sell a quilt to somebody, maybe one a year, that's a qualified business. Okay, so any form of earned income from something that you do if you bake cakes, and you sell a birthday cake. That is a business, so you don't have to make a certain minimum amount of money. You just have to have some earned income in that year. So, this business can be a sole proprietorship, so you don't have to do any legalities, like opening an account, you know, at the Secretary of State or anything like that. Or, if there's some legal risk involved in your work, you could open an LLC, you could do it as an S Corp, you could also do it as a C Corp. Really, any entity is allowed. You are now able to have the solo 401k, so if you want, I can tell you the process to opening one. Or, did you want to review what I've already said about qualifying for one?
Sean Thomson 24:20
No, that was pretty clear. That explanation worked really well. The main reason I went back over the other stuff is that I wanted to make sure I got it right.
Leigh Cowden 24:33
Yeah, well that was all that UBID and UBTI. That's confusing for even somebody that looks at it every day.
Sean Thomson 24:41
Let's just run through it. In terms of doing a solo 401k, really any type of business entity, even if it's just a DBA that you have, that would be a sole proprietorship. Everybody has a side hustle now and there's so many solo entrepreneurs out there that probably don't even know this stuff exists that they could take advantage of and preserve some of their income from the burdens that they have every year. So yeah, let's go. Let's talk about the next steps. How would someone go about getting started to put this together for themselves?
Leigh Cowden 25:23
Well, mechanically, you need two documents. You need an adoption agreement, which is pretty short, two to three pages. I have templates of all of these documents available. If somebody comes to my website and signs up to be an investor client, or just to learn more about me, they can get those things from me for free. I think you can give them to your clients for free, as well. I've given you copies of what I have. When an employee comes on, which would just be you and your spouse, when they are vested for any employer contributions, basically checking boxes and filling in some blanks. That's super basic. Then the other document is the basic plan document, which addresses all the IRS requirements for a 401K plan. It's maybe 15 pages, single spaced, tiny letters, all the legal ease, and it just says this is the type of plan and how it works. These are the type of investments permitted in here, just making sure that the plan adheres to the IRS rules. So, when you go to a financial institution, the one that I talk about most often is Vanguard, and you use their custom solo 401k. So, not their little prototype plan, but the one that you're going to do real estate investments, and they're going to want those two documents from you. Then they're going to have an application to open an account there. So, there's essentially three documents to start with, opening an account at the financial institution, whatever their document is, the adoption agreement, and then the basic plan document. All those items are free. They're all available for you or me, or whoever helps their clients set up these accounts. Once you filled up that documentation, you've opened up an account, let's say, Vanguard, you have this account sitting there and it's empty. So, the question is, how do you move your IRA money into the solo 401k without incurring taxes, without it being considered a distribution, and in time for you to do the investing you want to do?
Sean Thomson 27:26
Right.
Leigh Cowden 27:27
Essentially, you're going to fill out what's called a "Rollover Form." Vanguard will have a rollover form that they use in house, you'll fill out your name, the information about where your account is currently sitting, where the money is that you want to move into the solo 401k, and you'll fill out the account number. You'll fill out the information about your new account at Vanguard, then you will transmit that form, or Vanguard will transmit that form, to your current IRA custodian, whether it's a regular IRA account or self-directed IRA account. Then they are required to transmit that money for those assets into your new account your new solo 401k. Another way you can get money into that account is by doing annual contributions, the contributions permitted into a solo 401k. The maximum is about $50,000 a year, but I can't remember what it is for 2020. If you're over 50, they allow you to give even more. They're called "catch up contributions." If you haven't been saving all your life, and you're 50 or over, and you want to try to catch up and get more money into your account as if you had been saving when you were younger, they do allow for you to make additional contributions. The important thing to remember is that you can have a 401k with your current employer at the same time as you have a solo 401k. However, your annual maximum contributions do not double if you have two 401k's. It's just a single maximum contribution that you can put part in your work 401k and in part in your solo 401k. If the maximum for the year is $57,000, and you've put $7000 in your work, your W2 job's 401k plan, you can only put 50 in your solo 401k plan so that you don't exceed the maximum because there is a penalty for putting in too much. That's basically how it works to set up a solo 401k account and then move money into it.
Sean Thomson 29:34
I'm sure there's a lot of people out there that are going to make them pause. You know, there are there are services out there that you can hire and pay for the way that we just described, a free route that you can do it yourself and set everything up on your own. Financially, that's the best way to do it because it doesn't cost you anything, but there are services out there already. Custodians, self-directed IRA's, custodians that can help you set up a solo 401k, and so on. Of course, for a fee. Most of the time, I think a solo 401k the rates, I've kind of heard of, you know, $1500 or up to $4,000 just to set up these accounts.
Leigh Cowden 30:15
Usually, it's a company that only does solo 401k. So, self-directed IRA companies do not want you to move your money into a solo 401k because then they can't charge you these annual custodial fees. They can't charge you transactional fees because you're basically all on your own now. There are companies, consultants, and companies that will set up the solo 401k for you, but they don't generally come out and tell you that's what they're doing. So, for example, there's a consultant who says, he'll set you up with an EQRP, which has become known in the industry as a product, as if it's an IRS type product. It's just a trademark name for a solo 401k. If you go that route, this person will take all your information, you have to choose the financial institution where you want to have your solo 401k. That person will assist you in filling out the paperwork and then charge, you know, like you said, up to $4,000 to do that. There is no such thing as an EQRP outside of just a trademarked product that a particular consultant has put together to make the process easier for people by just helping with the paperwork. If you search solo 401k on Google, you will see pages and pages of consultants and companies that will set one up for you.
Sean Thomson 31:43
Yeah, exactly. It's all going to be based on fairly sizable fees, considering what all is involved.
Leigh Cowden 31:49
Some of them are even annual. Even though there's one reporting requirement with a solo 401k, once you have more than $250,000 in the account, there's a single form. You fill it out, reporting it to the IRS, and your CPA will do that for you. If you're with a company that is providing the service for you, I assume they will help you with that form, but they will also charge you a fee for doing it. So, if you do the solo 401k on your own, it's free to do, and it's free forever. If you hire a consultant to do it for you, you'll pay to have it set up and then you're going to pay some maintenance fees every year. It just depends on whether you're interested in saving the money or not.
Sean Thomson 32:36
Right. The work that you're doing is a little bit front loaded, but it's not. It's not terrible in terms of what you have to do by filling out forms and getting the money transfer. Once it's done, it doesn't exactly just cruise along. I mean, you had to monitor everything, and maintain everything, and then you have to report their taxes annually, but it's not like someone needs to maintain it for you. There's no real management of the money, other than what you want to do with it. Everything that's going to be invested in is something that you're going to tell your custodian to invest in anyway. It's really up to you to come up with those things.
Leigh Cowden 33:12
Yeah. It's a real estate CPA, you're going to tell them that you have a solo 401k. They’re going to say, "okay, how much did you contribute this year?" That is tax deductible, any contributions into a solo 401k are tax deductible, just like they are with your regular company's big 401k plan.
Sean Thomson 33:32
Once someone has all of this set up, explain the fact that the IRS has a distinction between this account and other accounts. Do you know why this account is exempt from that UBIT requirement?
Leigh Cowden 33:47
Well, there is a UBIT test, which is not a word that the IRS uses, but there's three things they look at to determine whether the SDI, IRA, or the solo 401k fails to get a yes to number one, number two, and number three. If it's a yes to all those three things, that then becomes the UBTI situation and UBIT situation. The SD & IRA meets all of the requirements for that UBIT test. It does fall under that taxable income, and the solo 401k does not, and I can look in my book and read you that three-part test, but it's probably not going to be clear. Even if I explain to you the exact wording from the IRS, so you can talk to your accountant and maybe they can make it clearer for you than I can. Essentially, self-directed IRA is subject to the taxes, and a solo 401k is not.
Sean Thomson 34:56
Just so everybody knows, we're going to put links to your book and how people can get a hold of a copy that from you, and all those sorts of things. So, if someone wants more information, how to get in touch with you, and dive into this deeper, we'll be sure to have in the show notes how to reach out to you and get the book from you. Leigh, you know, the podcast is called Next Level American Dream. So, for me, I think the American Dream is something that all of us want in life. I think in America today, it's very tough to live out that traditional American Dream. I think those people are struggling all the time. You know, the American Dream is not what it used to be, and I think it's up to all of us to level up to the next level, so that the American Dream can be a reality for us, right? So, tell us, I like to ask everybody, what is it for you that encompasses the American Dream in your mind?
Leigh Cowden 35:57
Well, I have two thoughts on the American Dream. One is what it is in general, and then what it means for me. So, in general, to me, the American Dream means that anyone can arrive on the shores of the United States and be a success at whatever they want to be a success. That they can create the life that they want to live, and I've seen it happen for people from all walks of life from all different countries. So, the American Dream is alive and well for many, many people. You mentioned you had on your show, Shawn Winslow?
Sean Thomson 36:27
Yeah.
Leigh Cowden 36:28
He's big on mindset. The American Dream to me is absolutely dependent on your mindset. If you believe you can achieve something, and you can envision yourself achieving it, and you're willing to work hard to put all the pieces together, then I believe it's absolutely achievable. We see it happening. I mean, if you walk into any store around your town, you are going to walk into an immigrant owned store at some point, or a family owned store where there's mom and dad and kids working in the store together. To me, that's the American Dream. It's wanting something, being able to go after it and get it because there are a lot of countries that you cannot do that. What it means for me is being financially independent, so that I have the flexibility and freedom in my days to do what I want to do to enjoy my work and not have it feel like drudgery to be able to contribute to charities that are doing good work, particularly in the areas of children, animals and civil liberties. Those are my pet projects. To be able to have people that I love to work with, who are also friends, I consider you guys to be people like that! So, that to me, that's my American Dream.
Sean Thomson 37:37
Oh, great. Awesome! Thanks, Leigh. That's a good definition, too. So, tell us how people can get more information from you. Where should people go to get your website? You mentioned the book, is there like a place they can get that?
Leigh Cowden 37:55
Yeah, my website is probably the best place to hook up with me, read articles that I've written, get links to the book, and I give the book away free to people who join my little investor club! That does not mean they have to invest with me, it just means we get to know each other a little bit and they get to be made aware of deals I have going on. So, I give the book away for free to anybody that does that through my website. So that's sparksblackthorncapital.com
Sean Thomson 38:31
Yeah, we'll put that in the show notes as well. Well, thanks so much. I really appreciate you coming on and running through this! It's a very complex topic. So, I appreciate you coming on and sort of clarifying a little bit for everybody.
Leigh Cowden 39:02
Well, you know, some people are detail driven people, they want to know everything about an operation, and some people just like, tell me what to do. So, I think your podcast did a good job of covering both of those groups of people.
Sean Thomson 39:13
Oh, great. Well, thanks for coming on. And hopefully people will benefit from this!
Leigh Cowden 39:24
All right. Thanks so much, bye!
Abigail Thomson 39:28
Thanks for joining us for another episode of Next Level American Dream. If you would like to learn more about what we talked about today, want to contact a team directly, or interested in passively investing and being a part of our deal room, head over to our website at www.thomsonmultifamilygroup.com. Before you go, please leave a review! Your comments help us create more episodes for you to enjoy.