Directed IRA Podcast

#CryptoTaxFreePledge (The Secret to Keeping All Your Crypto Gains)

• Mat Sorensen and Mark Kohler

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In this episode of The Directed IRA Podcast, tax attorneys Matt Sorensen and Mark J. Kohler reveal one of the most powerful strategies for crypto investors, how to grow and withdraw your crypto profits completely tax free using a Crypto Roth IRA.

They break down three key scenarios every crypto holder needs to understand:

Getting started, how to buy crypto in a Roth IRA even if you are new to retirement accounts.

Converting existing IRAs or 401(k)s, how to roll over or convert funds into Roth dollars to start investing in crypto.

High net worth or business owners, how to use Roth Solo 401(k)s, HSAs, and Coverdells to expand your tax free crypto empire.

You will also learn the “No More Taxes on My Crypto Pledge,” why it is never too late to start, and how strategic planning can protect your wealth while maximizing long term gains.

Matt and Mark share real examples from clients, explain the difference between traditional and Roth accounts, and highlight the unique advantages Directed IRA offers for crypto investors, including low fees, easy app based trading, and full IRS compliance.

If you believe in the future of crypto and want to keep every penny of your gains, this episode is your roadmap to doing it the smart, legal, and tax free way.

Chapters: 

00:06 - Why a Crypto Roth Exists

02:50 - Three Paths to a Crypto Roth

05:00 - Rolling Over Old IRAs and 401(k)s

07:20 - Converting Traditional to Roth Strategically

08:56 - Solo 401k Power for Business Owners

10:53 - The “No More Taxes” Pledge for New Buys

13:13 - Using Family, HSA, and Coverdell Buckets

16:01 - Costs, Providers, and Getting Help

19:35 - Disclaimers and Final Takeaways



Take the pledge. Stop paying taxes on your crypto. Start building your future tax free with Directed IRA.

Directed IRA Homepage: https://directedira.com/

Directed IRA Explore (Linktree): https://linktr.ee/SelfDirectedIRA

Book a Call: https://directedira.com/appointment/


Other:
Mat Sorensen: https://matsorensen.com & https://linktr.ee/MatSorensen
KKOS: https://kkoslawyers.com
Main Street Business https://mainstreetbusiness.com



SPEAKER_01:

Welcome everyone to the Directed IRA podcast. This is Matt Sornson, joined by the incredible Mark J. Kohler. We're two tax lawyers here teaching you how to not only make money in crypto, but keep it all, maybe tax-free?

SPEAKER_00:

Yeah, I want it all tax-free. And we've been debating hard for the last hour on a whiteboard trying to bring you a cutting-edge tip. And I think we've got it. We we I know many of you out there might have even millions. I talked to someone today that had$84 million sitting in multiple wallets. It's been a great year for them. But they're like, how do I get that crypto into my Roth IRA or my Roth 401k? Because over there I don't pay tax, but I build up all this wealth in a crypto wallet that I own personally. That is the golden question. And today we are going to break down the issues, options, possibilities of how to get your freaking crypto Roth funded so you don't pay tax ever again on those trades. That's the goal.

SPEAKER_01:

Yeah, and we want to talk about three different scenarios here. Someone that's new to this, that's like, guys, I can buy crypto in a Roth IRA. What even is of that? Isn't that for stocks and bonds? Yes, we're gonna talk about that for you if you're new to this topic. Maybe it's just new contributions into a Roth IRA. We'll even talk about the backdoor Roth IRA. Maybe you've got some existing Roth money we can transfer over. Or an old employer 401k. You can do Roth dollars and buy new crypto. Or that third category Mark's talking about here, you're someone that owns a lot of crypto right now, and you want to get it into more of a tax-free growth vehicle. We're gonna talk about that category too. So that's our job today. We want to hit those three categories and make sure you understand what it is. Let me explain the Roth IRA quickly here for everyone. The government said there's one account you can have, and when you invest it and you make money in it, you don't have to send us any money. You don't have to send taxes into us. You're selling crypto, you're selling stock, you're selling real estate, whatever's in this account, this Roth IRA, don't send us any money. You keep it all. And you know what? As long as you keep it until you're 59 and a half, you can pull out entirely tax-free too. Okay, that's the Roth IRA. It's like in broad daylight sitting in front of us, and Wall Street's been selling it to you to go buy stocks, bonds, and mutual funds, which they which is what they sell. But you can also own crypto in this as an asset. And that's what we've been doing in our company directed IRA for years. I bought Bitcoin in 2017 with my retirement account. Okay, and I know Mark's bought XRP.

SPEAKER_00:

I'm doing a I'm running a crypto mine in my Roth IRA right now. Every three hours, I'm getting a payout through nice hash in Bitcoin. And here's some of the myths. Anyone can have a Roth. You can if someone's telling you you make too much money to put money in a Roth, they're wrong. It's called a backdoor Roth. You can have a Roth when you're 80 years old. You can have a Roth when you're eight years old. You just have to have earned income, very doable. And you can invest this Roth and keep it with you for the rest of your life. Take it anywhere you want. You don't have to have an employer to do it. It's an individual IRA that has this Roth categorization. And you can buy crypto Roth. And in fact, at Directed IRA, we give you an app on your phone with your crypto, with your Roth IRA money to immediately start trading crypto. And I don't need to show you what's in my XRP right now. Woo! I'm up, I'm up 300% in the last year, tax-free in my crypto Roth. But with all that said, that's what it is. You guys are like, ah, I want to learn more. We got podcasts on what a Roth IRA is. But here's the thing many of you are gonna go, but I don't have my crypto in my Roth IRA. How the hell do I get that money in there so I don't have this problem in the future? Well, my friends, we are here to serve. We are gonna figure this out with you. So you know what a crypto Roth is, you want to have crypto in a Roth IRA, and you know enough to be dangerous. Matt, you said topic number two, or I guess that type of person, is someone that might have some IRA money. It's just not in crypto. That's almost the easiest situation.

SPEAKER_01:

Yeah, and I think that person, you have a couple of options, which is you might be the average American that has$160,000 in an IRA already. Okay. Well, that's most likely a TD Ameritra trade or a broker dealer, right? It's not, and then you're buying stocks, bonds, and mutual funds. Well, if you're a crypto investor and you love crypto and you think the value is gonna go up, why are you using your retirement account to buy mutual funds or stocks? Like, why aren't you using that tax-advantaged vehicle? And the Roth IRA is tax-free, by the way. Why aren't we using that vehicle to go buy the asset we believe is gonna have the best appreciation? Because the whole goal of a retirement account is to have the biggest account possible when you hit 59 and a half. That's an important point here. When we're talking about these this Roth IRA account and a retirement account, this is long-term wealth building. I'm not talking about you're 30 years old and you want to use the money tomorrow. That's your other crypto you might have. But if you're like, guys, I want to build long-term wealth in the most tax-advantaged way possible. That's the crypto Roth IRA. And it's also asset protected, too. Like you can have a lawsuit against you, you can file bankruptcy and keep the assets in your retirement account.

SPEAKER_00:

Well, Matt keeps getting you guys all, you know, hot and bothered with the how cool the Roth is, which I love. They are awesome. So I'm gonna restate it this way, too. If you have an old IRA laying around with who the hell knows what's in it? Some mutual fund or whatever, or you have a job you worked out years ago, and you still have an account somewhere. Sometimes you don't even know where it's at. An old 401k that's just languishing with stock in it, and you haven't looked at the value for months. Those are perfect to say, you know what? Stop the insanity. I'm gonna open a Crypto Roth IRA, and you could roll all that money over. There's no limit. I mean, you could roll a million dollars over, a hundred grand over. Any of those old accounts that are just cob, you know, collecting cobwebs, get them into a new Crypto Roth account and start buying what you know. That's the first avatar, if you will. Kind of they've got money sitting over here. Let's roll it in. You want to add anything to that avatar?

SPEAKER_01:

Yeah, and the the thing, the other thing I'll say is if you have traditional dollars, like let's say it's an old employer 401k that's traditional, or you got a traditional IRA, but you're like, guys, doesn't the traditional account I grow it and it I pay taxes, I pull the money out. I don't I don't want to have a$100,000 traditional account that turns into a million dollar crypto IRA and I got to pay tax on the million coming out. What do I do? Well, we can convert that$100K to Roth. Okay. So that$100,000 will get converted from traditional to Roth, and you'll pay tax on that$100K now. But the the benefit, of course, is now it's Roth dollars. And if it$x's, 10Xs, now you got$500K a million coming out totally tax free, okay, rather than having to pay tax on the way out later. So a lot of our clients, when they're setting up their crypto Roth IRA, they're actually moving over traditional dollars and doing a Roth conversion. All right. So that's just a quick update. And again, the Roth grows, comes out entirely tax free.

SPEAKER_00:

I love it. And that would be, I'm gonna call them avatar number two, is that they don't have Roth money to roll over. They have traditional money that needs to get converted to rollover. Now, Matt and I held a crypto tax summit three hours long, super fun. We were giving away stuff, people loved it. We went fast and hard on nine different topics, and we talked about how to offset that conversion. So if you're gonna convert money to Roth, what how could I offset that with some other tax strategies out there in real estate, small business, oil and gas, and other ways so that we're being smart with our money. If we're gonna convert, let's be smart on how we could create a tax write-off to offset it. So those recordings are available. You can go over to any of our family of companies' websites, marchjkohler.com, directed IRA, and we're gonna have that recording of the Crypto Tax Summit for free that you can watch at your leisure. Okay, now I think there's a third avatar. And we're gonna come to you guys that just have a crap ton of crypto and no Roth IRA at all. But I think the third avatar is the business owner. If you're a business owner or you are one of the 40 million Americans that have a side hustle, you can actually do some cool things with what's called a solo 401k. It's like a Roth times four. You can really put more money in on top of your Roth IRA and get really creative with contributions so that you can get more money into that bucket. So your snowball is getting more and more snow as it goes down the hill. And I think that's an important option for the business owner.

SPEAKER_01:

Yeah, so that's the one if you're self-employed, no other employees, you're the solopreneur, you got a side hustle. And this is even if you have a day job with the 401k, but you got your own business or side hustle, you can do this solo 401k and do$70,000 a year of new contributions in. Because a lot of self-employed people, we run across them, are like, well, I don't have this 401k, this big company that matched me for 20 years. Like I have no retirement account. What do I do? Well, you do the solo K. It's awesome. You put$70,000 in Roth dollars. And now rather than taking that$70K and just going and buying crypto, why wouldn't you do that? If that's$70K 10X's and now it's$700,000, you pull that, you're gonna pay tax to right when you sell that$630,000 of gain, right? Yeah. If you just bought it personally. Instead, take that same$70K you've already made, you already paid taxes on it, contribute it in as Roth dollars into the Roth solo 401k, and buy$70,000 worth of crypto. Now, when it goes 10x to$700,000, you can pull that out at retirement. You gotta have$59.5. Totally tax-free. You keep every penny. You don't pay the IRS anything, nothing's going to the state. You keep every penny of your crypto gains entirely tax free. Okay.

SPEAKER_00:

Now, our fourth and final avatar that I know is many of you are vexed as, and that is you've got a million dollars in your individual name. Maybe it's a hundred grand, maybe it's ten million. I don't know how many zeros are involved, but you've got a crap ton of crypto that's got a built-in gain in it, and it's sitting there, and you're like, ugh, I don't have a small business right now that I could fund a new retirement account. I don't have old retirement money laying around that I can roll over. How in the what in the heck do I do with this? So we've got two things we want to say. First, keep investing it. And if you're gonna harvest some profit, we have strategies. We've talked about this in the crypto tax summit. You might sell some of that crypto to diversify a little bit. We might take that money and go buy a short-term rental property and take some depreciation write-offs, fund a new business, take some depreciation write-offs, buy oil and gas. We even love the charitable remainder trust. Awesome way to keep investing your crypto, pay zero tax, and start getting asset protected distributions. So the point being is if you're gonna sell any crypto, we want to offset that capital gain. But here's what we want to challenge you to do. From now on, there's a new rule in town. And that is you are if you see some crypto you want to buy, you've been buying crypto. Don't don't lie to us. You've been you got money somewhere because you didn't end up with all that crypto without putting money into your wallet to begin with. Where in the hell did that money come from? And you may say, well, I sell crypto once in a while to go buy a new token that I really like. Okay, you're gonna pay tax when you do that. You know that, right? If I trade Bitcoin for Solana, I'm paying tax when I do that, whatever the market rate is. Just take an extra step. Stop doing that. If you're gonna sell anything in your wallet to go buy a new token you love, or you're gonna take money from your day job or whatever it is that helped you build that wallet in the first place, take one extra step and put the money in your Roth IRA first. So you're already paying tax. You're already gonna pay the tax on the conversion, or you pay tax on your W-2 day job. Take that money, and the rule is no more crypto purchases in your own name. Create a wallet owned by your Roth. And you can easily do seven grand right now before the end of the year, another seven grand in January, and maybe you do have a side hustle. We could start a solo 401k. But I think, Matt, we've got to have everybody sign a contract. No more purchases in your individual life.

SPEAKER_01:

What do you think? Yeah. Yeah, this is like the no more taxes pledge, you know, that politicians have to sign, but it's for you. How do you pledge to not pay more taxes with your crypto? You start buying it in your Roth IRA. That's how you solve that, okay? I like that. And I want to think of uh another scenario because this is some of our clients that I've seen is you know, with our crypto Roth IRA, we are uh associated with Gemini. So you can buy anything on the Gemini Exchange with our Roth IRA. It's qualified. You get all the, you know, it's legit for IRS purposes. We're a regulated trust company, audited by CPAs. Mark and I are tax lawyers, been doing this for 20 plus years as tax lawyers. Well, we've been buying crypto, we we eat our own cooking, okay, guys. Like we've done this with our own accounts personally. And you can go watch all the other videos about how we've done that. But let's say that you're someone that's like, hey, I've got a lot of Bitcoin. I was pretty early on that, but I think Solana is the next thing, and I think that's got a lot of room ahead of it. Okay, maybe sell some of that Bitcoin personally. You will pay some tax. But if you think Solana is where it's at, don't rebuy that personally. Let's take that money, drop it in as a new contribution for rough dollars,$7,000 a year. Starting January 1st in just a few months, you can do another seven grand. That's$14,000 there. Oh, you got a spouse? They can do seven grand now, plus another seven grand on January 1st of 2026, around the corner, guys. Um and but now I'm buying that new crypto in these tax-free buckets, and we can keep outlining more of those buckets, by the way. And and that's the crypto I believe is gonna appreciate and go up in value. And and now we're building this tax-free bucket of wealth that we're building. That again, I mentioned asset protected, and when the money comes out later on, long-term wealth building, 59 and a half, totally tax-free.

SPEAKER_00:

Okay, now this I love this. I'm gonna take the pledge and put it up on my social media. No more taxes on my crypto pledge, and I am not gonna buy any more crypto in my individual name. Now you go, well, Mark, I want to buy a lot more. Oh, really? Do you have kids? Open up a crypto Roth for them. You just paid for their college. Oh, you're married? Great, double down. It's marital asset anyway. You're gonna split it if you get divorced. Number three. Oh, Mark, my mom and dad, they're facing Medicare, Medicaid. They're they need some extra money for retirement. Great. Open a crypto Roth in their names. Oh, I do have a college kid that I need to save money for. Open a Coverdale crypto account. You can open a crypto Coverdale for two grand and invest in any token you want. You just paid for their college. So, guys, quit buying crypto in your own name for these reasons. You can do it tax-free.

SPEAKER_01:

Did you say that health savings account too? What about your medical expenses? All right. Oh, I mean, that's one of the number one expenses, especially in retirement, is medical expenses. And so um using that money, contributing to an HSA, which by the way, you get a tax deduction for, investing that HSA money into buying crypto, don't spend it out, don't take reimbursements out. We'll we'll draw on that HSA later when I have when we have medical. But instead, let's let's start building that and growing it, and your HSA can own crypto. So we have a crypto HSA as well, which grows, no taxes on the growth, and comes out tax-free for qualifying medical, by the way, at any age. So we want to use these buckets of money in a more strategic way to minimize your tax burden, but use the the crypto as the vehicle and the wealth building that you already know it is. And by the way, Mark and I have no idea where crypto is going to go. We've invested in it and believed in it. But this is not meant to be investment advice. We're trying to talk to you that already have decided you know and believe in you love crypto and you have a perspective on its growth. And if you do, what's the most strategic way for me to do it? Let's use these tax-free vehicles that are available to us in the tax code. That's what we want you to get excited about. Um, and they also, like I said, have some asset protection benefits to it as well. So that that's really, I think, the the key message here is it keeps more money in your pocket. You can use that money to have a better quality of life, to better faster go and scale your business, whatever it is. That's the outcome we're trying to get for you.

SPEAKER_00:

Yeah. And get over, here's the bottom line for me get over complaining the yeah, guys, the crypto roth's nice, but I don't have any money in the crypto Roth. It's too late. No, it is never too late to stop buying any new crypto in your own name. Start a new snowball. You've got a big hill here. You've rolled this big snowball down the hill. It's got your name on it, and it's got a bunch of crypto in it. I love it. But let's start a new snowball. From now on, you're not gonna add personal snow to that. You're just gonna let that snowball keep going down the hill. You're gonna start a new snowball, and you're gonna start investing in your crypto HSA, your crypto coverdale for your kids' college, your crypto Roth, and you're gonna start putting new money in those from maybe you do sell some crypto. Maybe you've got again income from another source that you were using to buy crypto anyway. Stop the insanity. Take the pledge. Take the pledge and say no to more any more taxes on my crypto. And you can do that pledge with the hashtag down below. Take that video, post it, and tell people I'm gonna open an account and stop the insanity because the crypto market is gonna be going great. I'm sorry, because we can't predict what the crypto market's gonna do, but I know you're watching because you believe in it, and it's time to change your old ways and see the light. We've shown you the light. Come to the light, people. You can come to the light. Amen, brother.

SPEAKER_01:

That was so good. I love it. Um, you know, we we get excited about this, and we do love helping our clients and um trying to show them the strategies that are out there and available to them. I know sometimes it can seem confusing. We try to distill it, make it simple. Also, just you know, our crypto IRA, it's an annual fee of 295, and then there's a half a percent trade fee. Okay, there's other providers out there that are 1% trade fee. All right, our trade fee is half a percent, annual fee of 295. That was one of your questions about this and how much it costs. Also, if you're someone like Mark said that has a lot of crypto, you're gonna want to think about how do I reposition my wealth to get more money over here into these Roth accounts for that new crypto I'm buying, um, do it in a tax-advantage way or look at some creative ways to make sure I've got asset protection and tax planning on the existing crypto and wealth I've built. Our law firm, KQS Lawyers, can help you there. So you can get over to kqoslawyers.com for that as well. So uh we're here for you. Hopefully, you found this helpful. Um, the links are below where you can take action. We're here for you. And thanks everyone. We'll see you next week on another amazing episode of the Directed RA podcast. Until then, stay calm, self-direct all.

SPEAKER_00:

And thank you everyone for listening. And a quick disclaimer and reminder this presentation does not constitute an attorney or CPA client relationship, and it is always in your best interest to competent legal and tax professionals when conducting your own personal transactions.

SPEAKER_01:

We also want to make sure you know this is not investment advice or financial advice. We're just trying to education, ideas, and strategies you can take to your professionals or conduct your own research on it. We'll see you next time.