Ep 32: Advantages of Self Directed Retirement Accounts with Dmitriy Fomichenko
Updated: Feb 19
The problem with custodian-held retirement accounts is that they don’t give account holders much room to direct the way their money gets invested. Self-directed retirement accounts, on the other hand, offer a host of benefits in this regard. They allow account holders to move from a stocks/bonds model into all types of other investments, such as real estate! Today’s guest is Dmitriy Fomichenko from Sense Financial, and he joins us on the show to speak about how he helps his clients start self-directed retirement accounts with checkbook control at his firm. After emigrating to the US in 1996, Dmitriy pursued careers in electromagnetic engineering, finance, and real estate too.
In this episode, Dmitriy tells us about how he got introduced to real estate investing after buying a fixer-upper forecloser property and enjoying huge yields due to the market cycle at the time. After riding out the rental equity model and learning a few lessons along the way, Dmitriy switched to a more hands-off private lending strategy. In this episode, you’ll hear Dmitriy talk about the benefits of self-directed 401(k) and IRA accounts, how to convert to a self-directed model through his firm, and also some of the prohibited investment types that pertain to the models he offers. Retirement money can be utilized and leveraged to achieve some pretty amazing returns so tune in to hear how Dmitriy can guide you through the process!
Key Points From This Episode:
Dmitriy’s transition from electromechanical engineering to starting Sense Financial.
How Dmitriy’s fixer-upper foreclosure and home skyrocketed in value from 2001-2005.
Why Dmitriy shifted from rental equity to private lending: the work management took.
The service Sense Financial provides: self-directed retirement accounts.
How retirement account custodians limit investments accountholders can make.
Benefits of solo 401(k) plans that allow account holders full control over investments.
Lower risks to self-directed accountholders where service providers go bankrupt.
Converting 401(k)s to IRAs depending on eligibility factors such as being self-employed.
The role LLCs play in converting 401(k)s to IRAs for people who aren’t self-employed.
Side activities that quality as self-employment such as part-time real estate broker work.
Rules around converting to 401(k)s depending on whether an employer is current or not.
Advantages of 401(k)s over IRAs in regards to penalization for prohibited transactions.
Prohibited 401(k) or IRA investment types: collectibles and life insurance contracts.
Legalities around vertical versus horizontal familial connections and 401(k)/IRA investments.
Typical concerns IRA holders have: issues of diversifying their portfolios.
Investment types that go well with retirement account investing: private lending.
High IRA UBIT (tax) charged off UDFI (income from a leveraged portion of an investment).
A benefit of a Solo 401(k): no UBIT.
How to invest an IRA into syndication without getting UBIT tax.
“Our niche is self-directed retirement accounts with checkbook control.” — @dfomichenko [0:11:35]
“The best way to avoid a prohibited transaction is ask before you do it.” — @dfomichenko [0:29:30]
“To achieve true diversification you need different asset classes.” — @dfomichenko [0:29:30]
Links Mentioned in Today’s Episode:
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