How to Access Your Retirement Accounts Penalty and Tax-Free with Daniel Blue: An EOFire Classic from 2021

0:01Light that spark fire nation JLD here and welcome to entrepreneurs on fire brought to you by the HubSpot Podcast Network, the audio destination for business professionals with great shows like inclusion and marketing. Today, we're pulling a classic episode from the archives, and we'll be breaking down how to access your retirement account penalty and tax-free. To drop these value bombs, I brought Daniel Blue into EO Fire Studios. Daniel is a Forbes contributor and author and owner of Quest Education. And today, for a nation, we talk about how what's more important than being successful is having discipline, consistency, in work ethics.

0:34And also surround yourself with people who are smarter than you because you are the average of the five people you spend the most time with and owe so much more. And a big thank you for sponsoring today's episode goes to Daniel and our sponsors. The Next Wave, your chief AI officer hosted by Matt Wolf and Nathan Lance is brought to you by the HubSpot Podcast Network, the audio destination for business professionals. AI technology is transforming the way we do business and the media landscape is fragmented. The Next Wave strives to be the leading podcast on AI technology and how you can apply it to growing your business.

1:06Listen to The Next Wave wherever you get your podcasts. If you've ever considered launching a show on YouTube, I may have the solution for you after launching a very successful show on YouTube in 2024, MicroStrategy Today. I've learned a lot on what it takes to create a successful show and have launched a one-on-one mentorship program called YouTube 100. If you wanna jump on a call and learn more about this program, shoot me an email, john at eofire.com. This is the year of YouTube. Let's go. Daniel, say what's up to Fire Nation and share something that you believe about becoming successful that most people disagree with.

1:47What is up Fire Nation? So for me, when I was thinking about that question, what came to my mind is my own bias. I feel like you don't have to be smart to be successful. And I know that sounds silly and there's going to be a lot of people that disagree with me, but I believe what's more important is discipline, consistency, work ethic. You've got to be an excellent decision maker. And you do have to be smart enough to know you got to surround yourself with other people who are smarter than you. So you don't have to be a straight A student and excel in your SAT scores to be successful. I'm going to add enthusiasm to that list that you rattled off.

2:23There was a great Kevin Kelly article where he made the comment, enthusiasm is worth 25 IQ points. And that's always stuck with me. And if I'm not a super high IQ guy, I at least try to be enthusiastic. So think about it, Fire Nation. Think about it. Now, as I mentioned during the introduction, we're talking about how to access your retirement accounts penalty and tax free. Because Fire Nation, it takes money to make money. money. And when you have money just sitting there, it could be opportunity lost. So let's jump right into the juiciness of today's focus. How can we fund our ideas, our business with a retirement account?

3:05Yeah, I think the best way to answer that question, JLD, is to paint a picture. And there's always one of our customers that comes to mind. She came from corporate. She wanted to start an online business. She needed about$20 ,000 for product inventory. And she had money in an IRA and she called her financial advisor. She wanted to withdraw the money out and her financial advisor was like, no, you can't do that. You can only use your retirement account to invest into stocks. And that frustrated her. We ended up talking to her and helped her understand that she actually could take her IRA and move it into what's called a solo 401k.

3:41From there, she was able to take out the 20 ,000 penalty and tax-free by using what's called the loan feature on the solo 401k. And she used that 20 ,000 to invest in her business. And from there, she was able to grow her business. She actually paid her retirement account back because it is a five-year loan where you're paying yourself back plus interest. The interest is fixed prime plus 2%, sometimes 1%. So we're telling people it's about 5.25%. But the interest goes right back to your retirement account. So she's just being her own bank. So she replenished her retirement account. And then she grew her business to the point where she quit her corporate job and now runs her business from home full time, makes enough money doing that.

4:27And a big reason why is she was able to access the money in a retirement account penalty and tax free to start her business. Now, unfortunately, all we seem to ever hear in the news and from other individuals is how much we'll get penalized up the wazoo, literally, if we try to access our retirement accounts early. So Daniel, pray tell, how can we access our 401k and our IRAs penalty free? Let's get detailed. Yeah. So if you have a 401k from an old job or an IRA, you can convert that into a self-directed retirement account. And I know there's a lot of you that are listening that probably have heard of a self-directed IRA.

5:11And a self-directed IRA allows you to invest into some of the things that JLD, I know you love, crypto, angel investments, startups, private companies, private equity, precious metals, real estate, things of that nature, right? So you could do all those cool things with a self-directed retirement account. But what I want to spend a little bit of time talking about with people here educating is what's called a solo 401k. And this account is unique because the solo 401k can invest into crypto. It can own precious metals. It can own a piece of a small startup and that investment can grow and it can grow tax deferred or tax free.

5:50But what makes the solo 401k unique is it has a loan feature where you can actually withdraw 50 % of the account value or 50 ,000, whichever number is less, take that money out penalty and tax free and then use that money however you want. We had a client the other day where they owed a bunch of money in credit card debt. They were paying 20 % interest. They want to get a loan from the bank, but we all know it's hard to get money from the bank when your credit score stinks and you've got a lot of personal debt. So she used a solo 401k to pay off her 20 % interest rate credit card debt. So she's saving a lot of money from the interest.

6:26And then her credit score goes way up the roof, right? So now she can go get that line of credit or that cheap loan from the bank. So the Solo 401k, it's almost like a Swiss army knife. You can either use it to own the asset and it is owned without triggering penalties and taxes, or you can just take the money out as a loan and then not be restricted on what you can and can't do. And you can use the money however you like. As long as you pay the money back, there's no penalties and taxes. I mean, Fire Nation, I hope you're realizing what opportunities you have with what is truly your money. So again, of course, we don't want you to be penalized.

7:04We don't want you to have to spend money just to get money. But these are definite specific tactics that are proven that Daniel has had clients go through where they're not able to access this capital and use it for right now, for the present, for opportunities that aren't going to be here in 10, 20, 30 years, whenever that timeframe is when you're gonna be able to actually get into this stuff according to the quote unquote government law. So we have so much to talk about when we get back from thanking our sponsors. Ever feel like your job description just keeps getting bigger? But we all know there's only 24 hours in a day causing marketers everywhere to feel spread thin between creating content, launching campaigns, generating leads and more.

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8:32Visit hubspot.com slash marketers to learn more. Let's talk YouTube. Have you ever considered launching a show on YouTube or do you currently have one that's struggling to gain traction? I may have the solution for you. After focusing on audio for 13 years, I launched my first YouTube show in late 2024 and have seen fantastic results. Over 12 ,000 subscribers, every show getting well over 10 ,000 views, all 100 % organic,$0 spent on promotion or advertising. That is the beauty of YouTube. If you create the right content with the right cadence, YouTube will make sure it gets in front of the right people.

9:12My show is called MicroStrategy today and I'm having a blast creating content on a daily basis because it's on a topic I love about a company that I truly admire. What excites you? What fires you up? If you want to launch a show around that passion or improve your current one, I'm launching an exclusive coaching program called YouTube 100, where in 100 days, I will mentor you one-on-one and together we will create a show that you love and that's successful. I hired the best mentors when I first started and have learned so much along the way. I'm ready to help you ignite your show and let YouTube do the heavy lifting of building a meaningful audience that will allow you to grow and monetize your show in ways you might not currently think possible.

9:52If you want to jump on a call and learn more about this program, shoot me an email, john at eofire.com. Put YouTube 100 in the subject line and we'll schedule a time to chat, j-o-h-n at eofire.com. This is the year of YouTube. Let's go. Daniel, I heard you mention the solo 401k when we were talking about 401ks and IRAs and all this stuff. Can we dive a little bit more into that? Because that was even kind of a new phrase for me. And I kind of semi-consider myself financially savvy, at least I used to be. And I try to keep up with things. As you did mention, I've now been dedicating most of my focus on crypto and NFTs and that stuff.

10:31So I haven't really kept up with the traditional financial market so much, but what the heck really is a solo 401k? It's a good old fashioned 401k. So it's not like it's some new account, JLD, that just came out. It's been around for decades. the difference is it's a 401k for the employer, for the business owner. So if you're listening to this right now and you have an online business or you're a freelancer consultant, you get 1099 income as a real estate agent. Basically, if you have some kind of business activity going on and you don't have any W-2 employees, then you qualify for a solo 401k.

11:08And 401ks, they get a bad rep. And I understand why a lot of people think 401ks are trash. And I get it, right? Like a 401k you get from your nine to five day job, you're so limited, right? You can only invest in a couple different mutual funds. You're not calling the shots. Your employer is, your company that you work for is. So you're really limited. Whereas the solo 401k is going to be tied to your own LLC, your S corp, your sole proprietorship. Like it's tied to you being the entrepreneur, you being the employer. So now you get to call the shots. So you're able to have a lot more flexibility.

11:44And keep in mind, if you're working a day job right now, maybe you work a nine-to-five job, but you've got this side hustle and this business activity you have going on on the side doesn't involve any W-2 employees, then you still do qualify for a solo 401k. And then I'm just going to be very real with people. I might ruffle some feathers here. Ultimately, Wall Street doesn't want people to know about a solo 401k because as you guys are listening, it allows you a lot of freedom, a lot of flexibility to take money out of the plan penalty and tax-free. It allows you to use the money to invest outside of mutual funds or Tesla stock.

12:23Think about that. That's taking money away from Fidelity, from TD Ameritrade, from Wall Street. Why would they want to bring this kind of information to the public? But it's out there. I mean, you can Google all this stuff and it is IRS approved, legitimate plans. It's just not talked about a lot from CPAs and financial advisors. And that's why I love our mission and what we do. Well, I love ruffling feathers. So I'm really glad you're doing that on Entrepreneurs on Fire because that's what we're here to do, Fire Nation. Look out for you, not look out for the man or the woman. We're looking out for you, our listeners.

12:58And speaking of which, Fire Nation is listening today, Daniel, because they want financial freedom. They want wealth creation. So we've been talking about it all episode, but we want your best stuff. How can we create wealth tax-free? One of my favorite parts about the solo 401k is it has a Roth contribution bucket. And let me make sure that I'm super clear here. So basically, when you put money in an IRA or 401k, you're taxed one of two ways. It's either pre-tax, where the money you put in, it's a tax write-off, and the money grows tax-deferred. And down the road, you're going to have to pay taxes on that money.

13:38You're just kicking the can down the road. Eventually, you're going to be taxed on the money when you take it out. Until then, it grows tax-free. That's one way. The other way to put money into a retirement account like an IRA or 401k is a Roth contribution. And this works the opposite way. The money you put in, you're taxed. However, the money that grows from that contribution, it grows 100 % tax-free and it stays 100 % tax-free. So with a Roth solo 401k, the contribution limit, you can put up to$58 ,000 per year into the plan, depending on how much business, how much income comes through your business.

14:17And to kind of give some perspective, a Roth IRA only allows about$6 ,000, maybe$7 ,000 a year, depending on your age. So there's a big difference between$6 ,000 a year and$58 ,000 a year, right? So if you put$58 ,000 into a Roth solo 401k and you invest that into crypto, let's just say, hypothetical, and that$58 ,000 grew to$200 ,000 over a period of time, now that$200 ,000 is 100 % tax-free. And your ears are probably perking up right now. You're like, what the heck? How is that even possible? Well, that's what makes the solo 401k so powerful. and one thing to keep in mind is a Roth IRA, like JLD, I know you make too much money to get a Roth IRA.

15:02You're really transparent with your website and your income. IRS ain't going to let you get a Roth IRA, bro, but you can get a Roth solo 401k. It doesn't matter how much money you make, there's no income restriction. So, you know, a lot to unpack there, but if you like to pay taxes on the seed, but you want to see the harvest grow tax-free, then a Roth IRA or a Roth Solo 401k is a good place to start. So much value here, Fire Nation. And you need to realize you're working hard for your money. Now let your money work hard for you. And these are some ways to do just that. So Daniel, you've been creating a lot of stuff over time.

15:40I know you have some really cool things that have been coming out in 2021 and you've got some big plans for 2022. to. Talk to us about books, projects. What do you really want to make sure Fire Nation is aware that you're creating on a content product and service level so that we can continue our education in this area from you? If you go to danielblue.me, that is my website. And on there, I've got my book. It hit Amazon bestseller. It's called Blueprint to Your Best Retirement. and that's a book that I wrote where the intention behind it, JLD, was, you know, I know the financial world can get kind of boring, right?

16:18Like how many times have we gone to an event and someone starts talking about insurance or wealth management and investments and like they're spitting fire, like it's good information, but five, 10 minutes into it, you're like, man, this guy is dry. Like what time is lunch? Let's get out of here. So I know I'm not in the sexiest of industries and a A lot of times these terms go over people's heads. So my book, Blueprint to Your Best Retirement, it dives deep into the solo 401k and self-directed retirement accounts and accessing your money penalty and tax-free and some of the things that we touched on.

16:52But I intentionally wrote the book where it's simple, short, sweet, to the point. I dumbed it down. I wanted people to read it in an afternoon, read it in a day, and then walk away with tactical information that they can immediately move forward with and start seeing results. So where can Fire Nation go to get all of this good stuff? I want to hear your website one more time. Let's make it happen. Yeah. So it's danielblue.me is my website. And then there's a link for the book. If you go to Amazon and just type in blueprint to your best retirement, That's where you can get the book, paperback or Kindle.

17:28And then I do have something special for the Fire Nation here. It is yourquest.com backslash fire. So yourquest.com with fire at the end. And that is going to be a place where if you have a 401k from an old job or an IRA, and the idea of accessing that money penalty and tax-free appeals to you, Maybe you want to use that money to fund your business so you can leave your corporate nine to five job or you want to use that money to invest into crypto or pay off high interest rate credit card debt. Click that link and there's a way for you to get in touch with us. And then also, I know, JLD, that you've got some people listening.

18:10Maybe the person I'm talking to right now has some kind of offer where they teach people how to make money online, for example. Maybe they help people with Shopify stores or FBA stores, Amazon stores, and they're selling services to teach these people how to make money online. And maybe your clients, they need capital. They need funding for inventory. They need funding for your mastermind. They need funding for your coaching. Well, people can invest with you using a credit card or cash. But as you mentioned earlier, JLD, the retirement account side of things and what I'm talking about is a great way to unlock some other money.

18:47So this could just be another tool in your tool belt to help your clients unlock more money so they can be set up for more success in working with you. So we do have an option on the yourquest.com forward slash fire that says if you want to be an affiliate, click here. And we do have an affiliate program where, you know, we have the ability to make it a win-win for all of the referrals that come our way. So we can just help everyone win. I love all of this Fire Nation because you are the average. Of the five people you spend the most time with, you've been hanging out with DB and JLD today. So keep up the heat and head over to eofire.com.

19:26Type Daniel in the search bar and the show notes page will pop up with everything that we've talked about here today. Yourquest.com slash fire. Fire Nation, take action. Go check it out. All the awesomeness is there. And Daniel, thank you, brother, for sharing your truth, your knowledge, your value with Fire Nation today. For that, we salute you and we'll catch you on the flip side. Hey, Fire Nation, today's value bomb content was brought to you by Daniel and Fire Nation successful entrepreneurs accomplish big goals. That's why I created the Freedom Journal to guide you in accomplishing your number one goal in 100 days.

20:02And we're talking step by step. Visit thefreedomjournal.com and I'll catch you there or I'll catch you on the flip side. The Next Wave, your chief AI officer, hosted by Matt Wolf and Nathan Lance, is brought to you by the HubSpot Podcast Network, the audio destination for business professionals. AI technology is transforming the way we do business and the media landscape is fragmented. The Next Wave strives to be the leading podcast on AI technology and how you can apply it to growing your business. Listen to The Next Wave wherever you get your podcasts. If you've ever considered launching a show on YouTube, I may have the solution for you after launching a very successful show on YouTube in 2024, MicroStrategy Today.

20:45I've learned a lot on what it takes to create a successful show and launched a one-on-one mentorship program called YouTube 100. If you want to jump on a call and learn more about this program, shoot me an email, john at eofire.com. This is the year of YouTube. Let's go.