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Financial Freedom Through Self-Directed 401(k)s: Dale Coldwell's Success Story
Learn how a 45-minute free consultation transformed Dale's retirement strategy, unlocking real estate investment potential and creating true financial stability.
Meet Dale Coldwell
1
Self-Employed Entrepreneur
68-year-old with decades of experience in home improvement and furniture sales industries.
2
Frustrated Investor
Had $30,000 in an old IRA but felt restricted by limited control, low contribution limits, and high tax risks.
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Real Estate Aspirations
Harbored a 10-year desire to become a real estate investor but lacked the financial structure to achieve this goal.
The Financial Roadblocks
Limited Tax Benefits
Traditional IRA only allowed $6k/year contributions, providing minimal tax advantages and causing Dale to stop contributing altogether.
Restricted Access
Dale couldn't use his funds to invest in real estate as desired, leaving him feeling "locked out" and defeated.
UBIT Tax Burden
Any leveraged real estate investments would trigger Unrelated Business Income Tax at 35-37%, severely reducing potential profits.
The Emotional Toll
I've had this burning desire for over 10 years to become a real estate investor, but I've been frustrated by the lack of control and access to my retirement funds. The self-directed 401(k) is exactly what I need to finally achieve my goals.
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Frustration
Years of watching retirement funds sit idle while real estate opportunities passed by.
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Anxiety
Concern about retirement security with limited investment options and high tax exposure.
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Determination
Persistent search for a solution that would provide both financial security and investment freedom.
The Retirement Reality Check
45%
At Risk
Of Americans risk running out of money during retirement, even among those who have invested and diversified.
$30K
Trapped Funds
Dale's retirement savings were locked in a restrictive IRA with limited growth potential.
10+
Years Waiting
Dale spent over a decade wanting to invest in real estate but lacked the right financial structure.
The Turning Point: Free Consultation
Initial Contact
Dale reached out after a referral, seeking options for his trapped retirement funds.
Situation Assessment
Our team identified Dale's self-employment status and S-Corp as key qualifiers for a self-directed 401(k).
Solution Presentation
We outlined how a self-directed 401(k) would provide the control, flexibility, and tax advantages Dale needed.
The Perfect Solution: Self-Directed 401(k)
Full Control
No approvals, no red tape, no hidden fees, and same-day access to funds for investment opportunities.
Tax Advantages
Significant tax shelter potential with higher contribution limits than traditional IRAs.
Investment Freedom
Ability to invest directly in real estate without triggering prohibitive UBIT taxes.
Maximizing Contribution Power
For couples like Dale and his wife working together, they can contribute up to $155,000 combined (since they are over 50), plus match up to 25% from their business—dramatically increasing investment potential while lowering taxable income.
Avoiding the UBIT Tax Trap
The Problem
With a traditional IRA, using leverage (loans) to purchase real estate triggers Unrelated Business Income Tax (UBIT) at rates of 35-37%.
The Solution
Self-directed 401(k)s are exempt from UBIT, allowing Dale to use leverage for real estate investments without the tax penalty.
The Impact
This single advantage preserves 35-37% more of Dale's investment returns, dramatically improving profitability and growth potential.
Flexible Access to Funds
1
Borrow From Yourself
Access up to 50% of account balance (maximum $50,000) for personal use.
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Set Your Terms
You control the interest rate, payment schedule, and terms—paying yourself back, not a bank.
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Multiple Uses
Use funds for personal needs while your retirement account continues growing.
Step 1: Qualifying for a Self-Directed 401(k)
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1
Self-Employment Status
Dale's decades as a self-employed individual immediately qualified him.
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Business Entity
His S-Corp, though not actively generating income, was eligible as a sponsoring business.
3
3
No Full-Time Employees
With only Dale and his wife involved, the business met the no-employee requirement.
Even though Dale's S-Corp was registered in Maryland while he lived in Florida, this presented no obstacles to establishing his self-directed 401(k).
Step 2: Setting Up the Structure
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2
3
1
Application Process
Simple one-time setup with minimal paperwork
2
Plan Creation
Establishing legal 401(k) plan documents
3
Bank Account Setup
Creating qualified checking account with partner bank
The entire process can be completed in as little as 48 hours, with a one-time fee of $1,550 that includes first-year maintenance. After year one, only a $195 annual fee ensures the plan remains compliant with changing regulations.
Step 3: Funding the Account
1
Contact Current Custodian
Dale reached out to Madison Trust to initiate the transfer of his $30,000.
2
Complete Transfer Forms
Provided new account details and authorized the transfer of funds.
3
Monitor Transfer
Funds typically arrive within 3-5 business days via direct transfer.
4
Verify Completion
Confirmed funds arrived in the new self-directed 401(k) checking account.
Step 4: Ready to Invest
With funds in place, Dale gained immediate checkbook control—able to write checks directly from his 401(k) for real estate investments without custodian approval or delays.
The Emotional Transformation
1
2
3
4
1
Financial Freedom
Complete control over retirement destiny
2
Investment Confidence
Ability to act quickly on opportunities
3
Reduced Anxiety
Lower tax exposure and higher contribution limits
4
Peace of Mind
Secure retirement strategy aligned with goals
Key Benefits for Dale
Full Checkbook Control
No red tape, no delays, no permissions—just the freedom to invest on his timeline.
Powerful Tax Shelter
Combined contribution potential of $155,000 annually for Dale and his wife, dramatically reducing taxable income.
Real Estate Investment Freedom
Direct investment in properties without UBIT tax penalties, maximizing returns.
Comprehensive Support Services
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Free Consultations
Expert guidance to determine if a self-directed 401(k) is right for your situation.
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2
Plan Document Resources
Sample documents, loan templates, and detailed guides for easy management.
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IRS Compliance Expertise
Navigate rules confidently without worrying about penalties or prohibited transactions.
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Ongoing Education
Learn multiple ways your self-directed 401(k) can help meet your financial goals.
Lessons From Dale's Journey
Why traditional IRAs often fail entrepreneurs
Traditional IRAs are designed for employees, not entrepreneurs. The low contribution limits ($6,000/year) severely restrict wealth-building potential, while investment options are typically limited to stocks, bonds, and mutual funds—leaving real estate investors like Dale frustrated and constrained.
The hidden cost of UBIT taxes
Many investors don't realize that using leverage (loans) within an IRA to purchase real estate triggers Unrelated Business Income Tax at rates of 35-37%. This can transform a profitable investment into a marginal one, dramatically reducing returns over time.
The power of spousal contributions
For married entrepreneurs, the ability to have both spouses contribute to the same 401(k) plan creates a powerful wealth-building vehicle. With combined contribution limits of $155,000 annually (for those over 50), couples can rapidly accelerate their retirement savings while reducing current tax burdens.
Is A Self-Directed 401(k) Right For You?
If you checked even one box above, a free 45-minute consultation could transform your retirement strategy just like it did for Dale Coldwell.
Take Control of Your Financial Future Today
Free 45-Minute Consultation
Discover if a self-directed 401(k) is right for your situation with our no-obligation consultation.
Free Retirement Planning Workbook
Download our comprehensive guide to building wealth through self-directed retirement accounts.
Fast Implementation
Get your self-directed 401(k) set up in as little as 48 hours and start investing immediately.
Don't wait another decade to pursue your investment dreams. Schedule your free consultation today and take the first step toward true financial freedom.