Peter Thiel’s Playbook — How to Use a Roth IRA to Build Tax-Free Startup Wealth | LSI USA '25

Dana Udumulla  0:05  
All righty, how are you doing? Kevin, 

Kevin Rocco  0:07  
I'm well. Dana, how are you 

Dana Udumulla  0:08  
I'm doing well. I'm doing well. Thank you everyone for coming today. We are going to be talking about a very interesting strategy today, right? Peter teal, I'm sure a lot of us are very familiar with Peter, but if you want to do a brief introduction about yourself,

Kevin Rocco  0:24  
yeah, sure. Hey everybody. My name is Kevin Rocco. I was the founder and CEO of a medical device startup called biorez. Started in 2016 came to LSI for many years, raising money and sold the company to CONMED in August of 2022 worked for CONMED for two years, helping scale our technology. I was a bio brace implant for sports medicine, and then I left in August. So now I'm doing a lot of angel investing and nerding out on some of this financial stuff.

Dana Udumulla  0:51  
I love it. My name is Don de Molo. I am the, currently the head of strategic relations at Madison Trust Company. And before that, I was the investments manager for four years, so I had a lot of time to dabble in all sorts of alternative investments by trade. I'm a financial analyst, your usual, you know, Wall Street, traditional securities. But once you get into the world of alternative investments, you fall in love, and that's how I ended up at LSI today. So welcome to our workshop today. Now we have a few objectives for the workshop today. And really, Kevin and I put this together because we really wanted to provide a little exposure on a few strategies. And the main one is we want to talk a little bit about what Peter Thiel did back in 1999 and then I love the fact that Kevin here is a success story. He really implemented the same strategy using Madison trust. And we want to give some time for Kevin to actually share his experience and how he funded his startup through his Roth IRA and the results, the amazing positive results of it. And of course, let's have a really interactive conversation about how can self directed IRAs Roth IRAs be used to invest and raise capital for startups?

Kevin Rocco  2:08  
Sounds good? Yeah. Listen, I just wanted to raise awareness that this is an option, and I think it's important for both investors and entrepreneurs to be aware of it, not only for themselves, but potential sources of capital to go raise

Dana Udumulla  2:22  
absolutely now, I'd like to pose a question to the audience here, how many of you guys, by show of hands, have self directed IRAs Wonderful. Now, how many of you guys have self directed IRAs with Lexi Charles fidelity, Merrill Lynch, one of the big the brokerage firms. Alrighty. Now are you able to invest in assets such as real estate, private equity, precious metals, cryptocurrency, or maybe even a startup at LSI, I'm seeing a little headshake. nope, nope. 

Kevin Rocco  3:01  
A little hard to do.

Dana Udumulla  3:02  
It's right. It's very difficult to do. And if you actually go to a big firm like Charles Schwab and tell them, hey, I want to buy a piece of property, they're going to be like, well, that's interesting. 

Kevin Rocco  3:11  
JP, Morgan told me, No,

Dana Udumulla  3:13  
there we go. I love that you're here with me, Kevin, this is great. So truly, do we have a self directed IRA? A lot of firms like to say self directed because they have these buckets of, you know, mutual funds and ETFs, where you're able to pick and they call that self directed. But true self directed IRAs are the IRAs where you has the IRA account holder, are able to diversify your retirement portfolio into two alternative investments. Now we're talking about investments outside of traditional securities. We are talking about a lot of other investments, including real estate, including startups, crowdfunding, precious metals, crypto, private lending. So a little oh, let's go back. Can I go back? Oh, there we go. So a little bit of a background on Madison trust. Kevin, you're very familiar with Madison trust as one of our very valued clients. Madison trust is a so one of the industry's leading self directed IR race. We have about $4.8 billion worth of alternative investments under our portfolio ranges from multiple different alternative assets. We have about 20,000 clients and 95% retention rate. We did start about 10 years ago. And really funny story, the reason Madison trust started is because our CEO had a self directed IRA at another firm, and the process was too cumbersome. It was too complex, and that's one of the pain points I always get. And he thought to himself, I could do this better. And that's exactly what he did. He set up a firm where customer service and flexibility and easy processes, easy, efficient processes were created so investors can actually truly diversify their. Our portfolios. Kevin, what other assets do you think you can invest using your Madison trust account?

Kevin Rocco  5:09  
Well, I learned a lot preparing for this panel. It's a lot more than I anticipated. Obviously. Spoiler alert, I invested in my own company using a self directed ROS IRA, but I was really surprised to see what you could do and what actually, what I find the most interesting is what other people are doing. You know, what are people actually doing out there? And you obviously have that

Dana Udumulla  5:28  
data absolutely so right on the screen, we have some of our most common, most in demand, alternative investments. And it can go from real estate, we have, you know, people investing in tangible property, multi family. We have a lot of people doing commercial real estate fix and slips, office buildings. We also have a lot of private equity people getting into different types of private equity funds, precious metals. Whenever inflation goes up, that's where everyone tries to go. They want to try to get some precious metals into their retirement accounts. When the cryptocurrency craze was going on, a lot of people invested in cryptocurrency through their IRAs as well, and, of course, startups crowdfunding. But I think Kevin and I told this to you a little bit before, when we met, my favorite investments have been the most creative and fascinating ones. There has been Arabian resources. There has been yachts, marinas, airplane hangars, Broadway production. So a lot of people have invested into alternative investments, projects that they're passionate about. And it's so much easier to talk about the things you can't invest in. And there's only three things you can't invest in, using your IRA that is S corporations, collectibles, like fine art, antiques and life insurance. Other than that, anything can be really made into an alternative investment. So what's your next investment now? Kevin, oh,

Kevin Rocco  6:55  
I'm here meeting with companies. I'm gonna stick with Medtech no Arabian horses. For

Dana Udumulla  7:00  
now, for now. So we wanted to talk about a bit about the Peter Thiel strategy, which is what you actually implemented. How many of us here are familiar with what Peter Thiel did back in 1999 

Kevin Rocco  7:13  
I didn't know this, by the way. That's true.

Dana Udumulla  7:18  
Perfect. I saw one hand up there too. So it's really a fascinating story. Pctel is one of the founders of PayPal. Back in 1999 he actually invested less than $2,000 using his Roth IRA initial shares of PayPal at 0.00 $1 per share. He bought about 1.7 million shares. Fast forward to 2002 eBay acquires Babel, and he gets a $55 million exit. What's important to remember here is he did this using his Roth IRA. Roth IRAs, essentially, when you meet certain qualifying factors, which is, you have the IRA for five years, and by the time you are taking the funds of 59 and a half like, say, age, it's tax free. But Peter didn't stop there. What he did is he then took that $55 million and proceeded to reinvest in multiple other high growth startups, Facebook being one of them. Now fast forward to 2019 Peter teal had a massive Roth IRA of $5 billion tax free. When this actually ProPublica was the first organization that actually brought this delight, there was a lot of commotion. Congress was trying to get involved. Personally, when Congress writes to get involved with Roth IRAs, I'm, I'm not a fan like that's, that's the that's our business. We want to keep the Roth IRAs, but it seems like Peter Thiel found that loophole in the IRS. How can you actually utilize an account to invest and then reinvest and actually have those appreciations completely tax free. Who wouldn't like an account at the time of retirement, you're able to pull $5 billion out and not pay one penny of taxes. And that really is the Peter Thiel strategy, which Kevin without even knowing you did it yourself. Just Google,

Kevin Rocco  9:25  
just Google, just Googling it. It was it was sketchy. And that was part of why, that's part of why I wanted to get this, to do this talk. Obviously, I had a very small Roth IRA. I had put some money in when I was in grad school. I just happened to be lucky and invest some of that into Tesla. And so from 2019 to 2020, Tesla really took off a lot. And I remember thinking I was doing a financing. I was kind of cash poor, but I had maybe $60,000 in a Roth IRA, most of it. Was in Tesla shares, and Tesla cross like $800 billion market cap. They were combined worth more than the nine next auto manufacturers. And I'm all for technology, but they were knocking on the door of Apple. You know, it's like, this just seems insane to me. And at the same time, the financing for bio, res, I think we were doing a seed round, and our valuation was probably about $10 million Michael, hang on a second, I'm holding like, basically nothing of Tesla worth $800 billion or I have my own company that I truly believe so much in, and I spent all my time at, you know, is there some way to maybe actually take that money and invest it in, in bio, res at $10 million and I felt like it was like it was like an arbitrage, you know, like, obviously we had conviction, and that's what it takes, I think, to be an early stage entrepreneur. But it's important to note that I didn't do this at the beginning. I founded the company in 2016 so I had actually done two prior seed rounds, you know, we had patents, we had de risked, we had animal data. It's like, oh, this thing actually works. So it was kind of the right inflection point for me where I would just personally rather own bio Ray shares at $10 million than Tesla at 800 billion. And that's actually what I did. I sold, I sold most of my position in Tesla Open to open an account with Madison trust. Wired the money. I'd never heard of Madison trust. Nobody I knew actually had done anything. So I was like, you know, there's a chance I don't get that back, you know, send it all away. And sure enough, it was actually very easy to do, set up the account, wired it over to them, you know, they looked at the paperwork, verified it was legitimate, and they became my custodian for my Roth IRA. And then they basically wire it back to the company. They're now holding the paper for biores shares within the Madison account. And then kind of, fast forward, I did it again in a subsequent financing. So I ended up with basically my entire Roth IRA in bioris. And then fast forward to the end on acquisition. You know, the the the upfront payment proceeds go to the Madison account. I've since pulled some of that money out, put it into other things, kind of more conservative, but I am keeping an account at Madison to potentially do more. I don't think I'm going to go as aggressive as Peter Thiel did, but he clearly created a venture capital kind of family office for himself within his Roth which is pretty crazy. And I thought it was important to share that story, not only because it's something that entrepreneurs should consider doing for themselves, but also because I meet a lot of doctors in particular that do a lot of angel investing, and a lot of times I think they're cash poor, but maybe retirement rich, and they don't necessarily need their IRA or Roth IRA to begin with. So I've had a lot of surgery, and I put up a thing on LinkedIn that I was coming out here and doing this. Coming out here and doing this. I had a number of surgeons call me and say, How do I do that? So I guess public service announcement here, obviously, is this exists. It works. You can do it with Madison trust and spread the word.

Dana Udumulla  12:56  
Thank you so much. I really do hope you are able to continue to reinvest using your Roth IRA at Madison trust and and that's why we really want to have a conversation about this topic. Right? Being here at LSI, we've we got here on Sunday, and we've been having some conversations. And the conversation I'm always hearing is, this is a this is a thing, this it's you can do this. So you're telling me, as a CEO, a founder investor, I can use my IRA to invest in startups. And then the other side of the coin is you're telling me, startups can raise capital using retirement money. Did we just unlock a whole new funding source for startups who are here to really look for capital?

Kevin Rocco  13:38  
Yeah, it was a shocking number. There's $14 trillion in IRAs in the United States, $14 trillion 

Dana Udumulla  13:42  
14 trillion 

Kevin Rocco  13:45  
it's I forgot what I put up. It was like 80 times more, 2050, times more than the entire venture deals done last year. So there's a lot of money out there that is probably mostly parked in Target Date retirement accounts and S p5 100 and other things. And if you've been following s and p5 100 recently, I mean, it's, you know, it's not risk free. And I think that there's a case to be made for alternative investments to have, you know, 10% of your portfolio. So even if you took 10% of 14 trillion, there's $1.4 trillion out there source suitable for alternative investment. And obviously for alternative investment, it makes sense to put it into a tax protected account, like a Roth or a regular IRA,

Dana Udumulla  14:22  
absolutely. Now the 14 trillion is just the IRAs. It's actually $42 trillion of retirement funds across different retirement plans. We're talking about 401 Ks, 403 Bs. We are talking about IRA. So IRAs, that 14 trillion is just individual retirement accounts and those other qualified retirement plans can be rolled into an IRA, a self directed IRA to invest into alternative investment. So really, you're looking at a huge pool of untapped capital.

Kevin Rocco  14:54  
Yeah, yeah. And most people, I think, know this, but I'll share it anyways. I recently did this. You know, I had a four. 1k It wasn't very large. Only worked for a couple of years with that company. I had a 401 K kind of out there. So I converted that, rolled that into an IRA, and then recently I converted that into a Roth. So you can go for 1k into IRA. IRA into Roth. You just pay the taxes on up front, but if you're going to invest in it for 10 plus years, it's probably worth taking your medicine, doing that and having the long term benefit. Absolutely, I'm obviously not a retirement professional. Don't sue me. You know, please don't sue me. I don't. I don't. I'm not a Roth or IRA expert. These are just things that I did, and I think makes sense.

Dana Udumulla  15:32  
I'm glad you put the disclaimer there for all of us. So I think it's also very important to differentiate between a traditional IRA and a Roth IRA, right? Because one the traditional IRA is what we call a pre tax IRA, versus a Roth IRA is what we call a post tax IRA. And when getting into self directed IRAs, knowing the type of Ira you're getting into is very important. So with a traditional you basically are deferring the taxes. You can utilize your traditional, self directed IRA to get into multiple different investments. But the caveat here is, when you do retire and you are taking funds out, we call that distributions. Whenever we decide to retire, like, say, 60, you are paying your income tax bracket at that time when you're taking the distributions out, because the only thing you did is you did is you defer your taxes up until retirement. But up until that point, everything within your IRA continues to grow, tax deferred, so there is no capital gains tax. There's no taxes in that growth period. It only comes up at the end. Versus the Roth IRA. The beauty of it is Kevin, you mentioned it beautifully, right? If you don't have Roc money, you don't have post tax money, you're able to convert your traditional, that is, your pre tax money, into post tax money. Pay the taxes right now up front. So like, say, you have $100,000 you are doing a rock conversion. You pay the taxes on the $100,000 up front. Right now. That 100,000 now became post tax money. You invest that $100,000 into a startup, and if you're lucky, like B to teal, like say, you get a $500,000 make no appreciation in your investment. That $400,000 the difference is completely now tax free, so you do not have to pay the taxes on that $400,000 of profit you got into initial principal investment of $100,000 and that's why a lot of people, they like to start early, especially with the Roth IRA.

Kevin Rocco  17:35  
There were two other things that were attractive to me. Number one is you don't have to take required minimum distributions, right? So you don't have to take it. You can kind of hang on to hang on to it. That's important, because if you your IRA, you have to take it, and you have to pay taxes. And I don't know what my tax rate is going to be when I'm 60, so who knows or what the government will do. And then the second is the inheritance. You know, if this is not your primary source of retirement, to have that available, potentially tax free for inheritance, so no requirement, minimum distributions and potentially pass it on

Dana Udumulla  18:08  
absolutely now, those very key, key important parts, right? With a traditional IRA, you're required to start taking RMD, so distributions out, beginning age 73 with a Roth IRA, you do not have that R, M, D requirement. If you have your Roth IRA for five years, at the time you're 59 and a half, you're able to essentially withdraw funds from your Roth IRA completely tax free. And to your point, Kevin, the inheritance tax is a very important part, right? Because sometimes these IRAs, you don't end up using the entire IRA to your lifespan, you will be having beneficiaries that will inherit these IRAs. And inheritance tax depends on every state. Every state is very different for inheritance tax, but with a Roth IRA, the beneficiary does not get the inheritance tax either. So essentially, you're able to pass down this, this valuable retirement tool, to your beneficiaries, your to your kids, to your grandchildren, without that tax component. Another thing I always get asked is, well done, I earn too much, because that is another situation. If you are a high income earner, you're not able to set up a Roth IRA directly and contribute to it. And that's where back door Roth conversions come in. You're able to set up a traditional IRA. Anyone can set up a traditional IRA, do the conversion. That is, convert the pre tax money into post tax money, pay the taxes up front, right now on the traditional money, and then have a Roth IRA. So there's a lot of I like to call them IRS loopholes that is out there that a lot of people aren't aware of that actually helps us increase our retirement nest egg. I like to even call it like generational wealth, because truly, a Roth IRA is that

Kevin Rocco  19:56  
these are the rules. I mean, so you know, playing by the rules. It is interesting that it was, I think it was during the Bush era, right, that they allowed the back door that wasn't a feature, and then they they made a essentially, because everybody who converts pays taxes on that money. It's actually creating a tax even though it's really a tax break.

Dana Udumulla  20:17  
So it was back in 2010 that used to be a lot of regulations. If you are earning over $100,000 you are limited in doing a ROP conversion as well. So in that era, actually, they took that off, they took that completely out, and now you are able to a back door ROP conversion at any income level. The contributions are the things where a lot of people get confused, because the contribution limits technically are $7,000 if you're 50, and under $8,000 if you're 50, if you're 50 and older. But if you have retirement money elsewhere, if you have another IRA, a, 401 K or 403 B, you're able to roll that over into a Roth IRA, essentially making your limit to put into a Roth IRA, unlimited. If you have, like, say, $100,000 somewhere else, you're able to roll that into a Roth IRA, so you're not stuck with those 7000 $8,000 contribution limits, which a lot of people have issues with. What I really would like to talk to you, Kevin about is, how can this be used for founders, investors, entrepreneurs at LSI, yeah. So

Kevin Rocco  21:20  
I guess also a part of the story I left out is I had a couple of angel investors that popped up on the cap table with not their name. You know, it was like, What the heck is going on here? And it was, in fact, people taking advantage of this. So maybe folks in there. I'm curious, has anybody actually done this? Have they invested in within, within a Roth or within a self directed Yeah, fantastic. And for the entrepreneurs, does anybody have angel investors that have done that? Yeah, yeah. So, okay, the word, the word, is out. People are doing it. I just No one ever actually explained it to me. So when I saw that happening, that's good. And then I think, in particular, as I said earlier, you know, clinicians that just don't have the time, you know, they're just so focused on medicine, usually, that they want to invest. They don't necessarily know how. They don't think they can present this as an option if you are still doing Angel rounds, absolutely.

Dana Udumulla  22:09  
So really, the two sides of the coin, right? So you has an investor, has a founder, you're able to fund your own startup through a Roth IRA. But on the other side, when you are having conversations with your investors, sometimes giving them an option that, hey, not only can you use your non qualified money, your taxable money, you have the option of investing with us, getting into this at an early stage, using your Roth IRA as a game changer. Retirement money is what I call patient capital, because no one invests using their retirement money to get it out in six months or a year or even five years. When an individual makes an investment through a retirement money, they keep it for the long term, because that's their retirement money. It's 10 years, 20 years, 30 years, even, right? So it is the perfect source of funding for a lot of the startups I'm been talking to at LSI, really, to just go over real quickly about the process of setting up an IRA like Kevin said. You explain it really well, Kevin, give Dana a call that too. Give me a call for sure, but you can set up an account really easy online, and then get it funded, roll funds over from another qualified retirement plan into your Roth IRA, and then work with our team. Like Kevin said, take a look at the documents. We don't conduct a due diligence or a risk analysis to confirm if this startup is going to be the next big thing, right? We do conduct a due diligence to ensure your retirement money is protected in the start up. Because sometimes there are, there are companies that do certain things, like say that includes cannabis, federally, it's still illegal, so your retirement money cannot be invested into a company that deals with cannabis. So we will ensure, when we do our due diligence, we are making sure your retirement money is not going to get penalized. But other than that, it is self directed. So you do have that freedom and that power to make that investment decision and let us know, instruct us and we will invest. Typically, we are able to do open fund invest two weeks or under. That's pretty quick. So really, the lessons that we would if there's a few things you guys can take away today, really, is for CEOs, investors, entrepreneurs, getting in early at the early low, low valuation stages are really the it's the game changer, right? Especially when there is a huge exponential opportunity for growth, but also having the conversation, especially if you have your own startup, with your investors, letting them know that, hey, we have multiple options of funding, investing into this. That's the other thing. I travel a lot, Kevin, just like you, I know you're a traveler yourself, and a lot of the times when I have conversations with people, what they tell me. Don I never knew. I'm like, Well, the question is always easy, we can accept your retirement money. You have the option of using your retirement money. Doctors, for instance, a lot of surgeons. They actually, we actually have a lot of medical professionals utilize Madison trust to get into alternative investments because they are cash BURL like you said, right? Which means they have a high net worth. But no person who is really savvy with their finances will have 100,000 just lying in on savings account. They are going to be having that in multiple other things. And retirement funds is one of those huge nest eggs that they always have, especially in the West Coast. I feel like Silicon Valley, there's a lot of retirement accounts here, and people want to get into different types of alternative investments. Very important to remember how to structure your investment. It's all fun and games, right for us to be able to create a Roth IRA $55 million tax rate. However, just like there are all these amazing tools that the IRS has provided us, it's very important we are mindful when dealing with retirement money that we understand some of the consequences if you can't, if you don't know what you can and cannot do. Yeah, I

Kevin Rocco  26:16  
think most people in this room are pretty well versed in setting this up, and they're, you know, they're not going to necessarily create the round just for them. Round just for themselves, so it's their existing rounds. And obviously, when in doubt, talk to a lawyer, talk to an accountant,

Dana Udumulla  26:28  
absolutely. So something that you might want to keep in mind is something called prohibited transactions. So there are certain individuals, and the IRA account holder is considered a disqualified individual to the IRA investments themselves, according to the IRS, disqualified individuals can't get personal benefit from their IRAs investments. So I can actually give you a real life example, Kevin, we talked about this. I actually had a fund manager a real estate investment firm. He had his clients investing their retirement funds through us. He himself actually invested through his Madison trust account into the fund too, and that's completely legal. You are able to invest even though you are a controlling person, because, again, it's not that you can't do it. The only issue was the IRA, because the documentation that was created, it was all a blank, blank of documents, right? Everyone uses the same documents. It was a management fee that the IRA paid the fund manager. So now the fund managers, IRA investment paid a management fee to the fund manager personally, which in turn caused a prohibited transaction unknown to him, because, again, prohibited transactions are not it's not sexy, it's not the things we talk about, right? And also, he was unaware that this was a thing in especially during the subscription period. The documents have the management fees, so it was not something that came up. So what was the consequence? The consequence was his Ira lost his tax advantage, has of the first of January of that year because it was considered a probate of transaction. So this is why we need to be a little careful when we are structuring these things to ensure that personally, you are not getting benefit from the IRAs investments. And the best example is that the IRA cannot pay a management fee to the IRA account holder. Personally, you cannot get compensated from your IRA funds. But like Kevin said, When in doubt, it is best that you consult your legal counsel. And I always like to tell some of my investment sponsors, private groups we work with, if you are not sure, it's not a black and white situation, and it's great. And when it comes to retirement money and IRS, a lot of things can be great. Get an attorney to bless this mess, because that letter is going to be your Savior. And opinion letters with the IRS, even if it's the same situation, they have different verdicts, but knowing that you are already protected with an Attorney Letter, that really is the game changer, a little bit about raising capital, but some time for questions, exactly. So I think we covered a lot of things, and I'm sure a lot of you guys understand what this concept of raising money using self directed IRAs for startups, I think we should open up for questions, right? Kevin, I think that'd

Kevin Rocco  29:21  
be great. And obviously one thing that obviously one thing that we didn't talk about here is q, SBS. I'm sure everybody's familiar another option, you know, and we're not gonna talk about it here, but make sure you know what that is and look into that so that you don't have to unnecessarily do this. But do both. Actually,

Dana Udumulla  29:35  
I was gonna say that is what's recommended. Do both. Yeah, to both. But let's actually open up for some questions and answers. The mic is right here, so if anyone wants to come and ask a question here, I'll just just

Kevin Rocco  29:46  
shout it out, yeah.

Audience Question  29:48  
So what could that fund manager have done?

Dana Udumulla  29:53  
So what he could have done before it went like, hit the bank. So. Is first, of course, legal counsel always consult legal counsel. We have had situations where legal counsel would send the wire back to us, provide a letter signed off by the legal counsel, informing that that happened by mistake, given that the fund manager is personally the fund manager of the investment, they are not taking any management fees, because the IRA's investment is separate from the fund managers compensation. So we have had that where it was reversed and a letter was placed on file to confirm an attorney reviewed this. This was a mistake. It was not intentional. The fund manager did not receive the management fee. So that would have mitigated that situation. But unfortunately, when the audit did happen, it was too late, and it was actually found out through an audit. Great question, yes, what about secondaries?

Audience Question 2  30:49  
I know, obviously a lot of us are earlier. JD, we're not a sector as yet, but if you're investing through the Roth IRA, does that change? Then whether or not you can subsequently do secondaries on those pretty much,

Dana Udumulla  31:00  
we actually have a lot of clients doing secondaries because we don't really have restrictions. Now, that's actually another restriction with, I think, qualified Small Business stocks, you can't actually invest in secondaries. It actually has to be at the initial stages. Sorry.

Audience Question 2  31:14  
The question is whether or not, if the founder is getting secondaries out right, if you're actually taking a percentage out then is that make it now for him to

Dana Udumulla  31:24  
turn as long as it's not because of the investment of the IRA so it has to be separate. So because sometimes founders also have investments personally outside of the IR if they're getting secondaries because of that their personal investment, that's fine that they cannot get secondaries because of the Roth IRAs investment. Very separate.

Audience Question 3  31:41  
Yes, can friends and family who invest, who are safe, take that safe, park it into an IRA, and then just leave it there until the company gets its first price, rye, and then it converts to preferred share. Awesome.

Dana Udumulla  31:58  
Yes, has long has the initial investment into the safe happens through the IRA. That means your friend cannot purchase like invest in the safe personally and then transfer it to the IRA. He will need to invest into the safe using his Ira has the investor, and then it'll stay in the IRA until it become becomes preferred equity.

Audience Question 3  32:18  
So the funds have to be in the IRA, and those funds need the purchase

Dana Udumulla  32:23  
Correct. That's a great point you bring up if you have personal investments, like, you know, shares already, because you have already invested in them, personally, you cannot transfer that into an IRA because that transfer is considered a prohibited transaction. So you always have to get into the investment directly from your IRA has the investor initially? Yes,

Audience Question 4  32:46  
does control, either through operations in the entity that's being invested in, or ownership with that entity? That'd be very

Dana Udumulla  32:56  
so lemme just rephrase the question a little bit so you were asking if, like, say, the investor personally has controlling of controlling position.

Audience Question 4  33:04  
Yeah, like, let's say, in in our cases as entrepreneurs, right? And does our ownership have any bear on whether we can make that investment, whether it could be prohibited or not, or in case, where we own all of it, maybe. Or, you know, where is it? Only Is there a line?

Dana Udumulla  33:19  
The line really is 50% or more. If you own that entity 50% or more, it's considered the entity itself is considered a disqualified entity to your IRA. So if you are 51% owner of this entity, your IRA will not be able to invest into that entity. However, I always recommend anyone when you're teetering between that 40 to 50% get an Attorney Letter, because you know what, an attorney will review the structure and let you know. Like, even though you have a majority ownership in this entity because of x, y and z, this is not considered a Pro bit of transaction if you're a controlling person but do not have any ownership in the entity. So, for instance, a fund manager, right, they might not have any ownership and investments manager in the company itself, but they're the investments manager. They are making the decisions that will drive performance. I would definitely recommend getting an Attorney Letter, just because the position holds so much power and the IRS opinion letters are different. They review every situation very differently, and you never want to be in a situation where they're like, well, they had too much power. They were too controlling, and they did, indirectly, personally benefit from the IRS investment. Cool

Kevin Rocco  34:31  
any other questions. Well, thank you guys. Hopefully that was interesting,

Dana Udumulla  34:36  
absolutely. And here's my contact information, as well as our teams. We will be here for the next few days as well. Definitely stop by, because everyone's situation is different, and I'm sure we can definitely find ways how you can utilize self directed IRAs. But thank you so much for coming today.