Kaaren Hall is the founder and CEO of uDirect IRA Services, LLC, a leading provider of self-directed IRA accounts since 2009. With over 20 years of experience in real estate, mortgage lending, and self-directed retirement accounts, she has helped thousands take control of their retirement funds by investing in alternative assets like real estate, private lending, and precious metals. A sought-after speaker, Kaaren has shared her expertise at top industry conferences, including BiggerPockets’ BPCON22, 23 & 24.
In addition to leading uDirect IRA Services, Kaaren founded the Orange County Real Estate Investors Association (OCREIA) in 2012, fostering education and networking among investors. She is also the author of Self-Directed IRA Investing: A BiggerPockets Guide, a comprehensive resource for investors looking to build wealth through self-directed IRAs. Passionate about financial education and advocacy, she serves on the boards of The Council on Aging Southern California and the Retirement Industry Trust Association (RITA), promoting transparency in the retirement industry.
Take control of your future and discover a powerful retirement secret for real estate investors: Self- directed IRAs
Self-Directed IRA Investing: A BiggerPockets Guide with Kaaren Hall. Get it HERE
In this episode:
- How Self-Directed IRAs empower investors beyond traditional retirement accounts.
- Self-Directed IRAs vs. 401(k): Key Differences – What sets them apart and which is best for your financial goals.
- Managing Real Estate in a Self-Directed IRA – Strategies, tax advantages, and potential pitfalls.
- The Legal Framework for Self-Directed IRAs – What assets qualify and how to stay compliant.
- Mistakes Investors Make with Self-Directed IRAs.
- How the SECURE Act 1.0 & 2.0 Affects Retirement Accounts.
Episode:
Narrator  Welcome to The Norris Group real estate podcast, a show committed to bringing you insights from thought leaders shaping the real estate industry. In each episode, we’ll dive into conversations with industry experts and local insiders, all aimed at helping you thrive in an ever-changing real estate market. continuing the legacy that Bruce Norris created, sharing valuable knowledge, and empowering you on your real estate journey. Whether you’re a seasoned pro or a newcomer, this is your go-to source for insider tips, market trends and success strategies. Here’s your host, Craig Evans.
Joey Romero  Welcome back and thank you for tuning in for part two of our interview with Karen Hall, CEO of uDirect IRA Services. Hope you enjoy.
Craig Evans  Can anyone set up an IRA?
Kaaren Hall  Right. Yeah, you can. I mean, the barrier to entry to a self directed IRA is to have earned income. But you know, when you we were just talking, you remind me of something like, when I was younger. That’s how I felt, the same way, like, how can I ever do this? And then you just one step at a time, take little, tiny leaps of faith. And I think the first thing I did, I just want to throw out there, is got a real estate license and really learned about this asset class and so I, and then, little by little, worked my way into it. So and, you know, just because you can’t do it now doesn’t mean you can’t learn and grow and change and expand, because that’s what we do as humans, you know. And you’ll be able to do all those things. So just want to offer some courage.
Craig Evans  Compared to traditional IRAs, whether it’s Roth, any simple IRAs setups, anything, what do you see as the biggest benefit of a Self Directed IRA?
Kaaren Hall  Expanding the choice of asset classes. Sometimes we see the stock market take a dive, and we see all asset classes take a dive, let’s be fair. You know they all take a dive, but it offers you more diversity so you can, you know, you can diversify more in your portfolio, so you can weather a storm better, but also with self directed IRAs and alternative assets, you have more control over the asset. So if you’re investing, say, in an index fund or a mutual fund, there’s some manager managing that you don’t even know that person, and they’re making the decisions, hopefully doing a good job, but they’re making the decisions that affect your portfolio. Well, if you’re a do it yourselfer and you like to make your own decisions, I have a feeling you’re that man, Craig and so, you know, you want to do it yourself. You know you know what you’re doing. You know, you understand an asset class, and that’s what you want to do. So your IRA can invest in a fund. You know, your IRA can invest in a syndication, and then you can, then if you’re investing with somebody else’s deal, then you’ve got more control. You could talk to that person, we probably don’t, pick up the phone and call the manager of your mutual fund and, you know, pick their brain, or even have access to them, or even know their name for that.
Craig Evans  Right. How different is a 401(k)? What is the difference between that and a self directed?Kaaren Hall  I have all company about it, but with the 401(k), I think that’s it done. I mean, that’s where we become investors, isn’t it?
Craig Evans  Right.
Kaaren Hall  We get a job and, oh, the company happens to have a 401(k). We don’t even realize, hey, I’m an investor now. I have a 401(k), and some of my income went into this pot of money.,I’m an investor. That’s how you become an investor. You just get a job, doing your thing, and the company you work for offers you this opportunity, boom, you’re an investor. That’s how that happens.
Craig Evans  Yep.
Kaaren Hall  So, a 401(k) or an employer plan. It’s, we call them ERISA plans, even though ERISA covers really all retirement plans. But we call those ERISA plan, could be a 401(k), a 403(b), a 457, a TSP, different names for employer accounts. Now, traditionally, those accounts have not allowed alternative assets, and in fact, they just don’t, you know for the most part. Now, you can go to the next layer, to a defined benefit plan, and defined benefit plans do, that’s going into another world. But here’s something really interesting. We’re in a new world. We’ve got a new president or, you know, 2.0 you know.
Craig Evans  Yep.
Kaaren Hall  Well, one of the things that he’s talking about is allowing alternative assets in your employer plan, huh?
Craig Evans  Really?
Kaaren Hall  Yeah. And let’s see if that happens. Wouldn’t that be fine, like syndications in your employer plan?
Craig Evans  Yeah.
Kaaren Hall  So, that may happen. That is something that could be on the horizon. Early days, you know, I think what are we not even a month into it by the time we’re broadcasting right now.
Craig Evans  Right.
Kaaren Hall  But we’ll see what happens. I mean, if you can, you know, self direct or invest in alternative assets, personally, why not with your employer account? Now, the reason before, the reasoning is that, well, you’re not a sophisticated investor. If you, you know, if you are working for a company, you’re, what you’re sophisticated in is doing your job. You haven’t become a sophisticated investor yet. And so alternative assets, I mean, you really do want to know what you’re talking about here. You want to understand the asset class. It’s not just a one size fits all. So I kind of diverted off your question. So let me know if I that properly.
Craig Evans  Yeah, no, no, and that’s why I was letting you go, because I will you were answering a lot of things. These are all things that I want our people to hear. So, for that person that’s had their job for 10, 15, 20 years, whatever it is, right? And they’ve got a great 401(k), they got cash stacked away in that, it’s turning it’s in, you know, in the market, doing things, can they turn a 401(k) into a self directed IRA?
Kaaren Hall  Absolutely, right. You can. Now, if you still work for that employer, you may not be able to move that money, but with the 401(k), you can go to your plan administrator, which isn’t your HR company, you know, your HR department. It’s the like fidelity. It’s whoever’s running the plan, the company that the custodian of that plan.
Craig Evans  Sure.
Kaaren Hall  Ask, ‘Hey, can I get an in service transfer?’
Craig Evans  Okay.
Kaaren Hall  Yeah, yeah. And then if they say, yes, you can move that money.
Craig Evans  And so then, you know, like in that situation, they reach out to you, you guys help them set up a self directed account, and they’re moving that money to you now, correct?
Kaaren Hall  That’s right, and they’re moving it into their account. And when they do, they’re, you know, we’ve got a really robust platform, and it’s very easy to understand things are digital. We didn’t start that way, but we’re digital now, and I love it.Really is helpful. And then they can choose the asset classes that they wish to invest. That’s what we call ourselves uDirect. You know, we’re not telling them what to invest in. The account holders choosing like you u-Haul, you know, they’re not moving, they’re not moving your furniture, and you’re holding it. But they give you the vehicle to move, you know, to move your your furniture. Well, we give you the vehicle to move your retirement into different asset classes.
Craig Evans  If you’ve got real estate inside of a self directed I mean, you know, let’s face it, most of everybody that’s watching this is really probably focusing on this from a real estate perspective. If you got real estate in it, whether you own it wholly, or whether you have some debt service on it, what can the real estate do within the IRA, within that self directed IRA?
Kaaren Hall  Right. Real Estate, I think it well, I know, is the foundation of almost all the assets that people invest in, there are a few exceptions, like cryptocurrency or precious metals, but almost all the other assets have real estate as underlying. You know, underlying, like a note. A lot of times notes are on real estate syndications are created so that someone can build a piece of commercial real estate, you know, so real estate. But say, if you have a house and, you know, like, what can you do to manage that? Is that what you’re asking?
Craig Evans  Well, yeah, I mean, as I’m looking through that, you know, what are the options once that the asset is in that class and is in that account. You know, what are the options you can do with that? I mean, can you sell? Can you hold? Can you, you know, can you 1031 inside that? I mean, so many things I was thinking about is, what can happen inside that, inside that account?
Kaaren Hall  Yeah, you wouldn’t 1031, 1031 is, obviously refers to tax code. You know, that’s the tax code 1031 like all these numbers do, but with 1031 it’s a way to avoid paying tax on the sale. Well, in a self directed IRA, it’s already in the tax protected kind of little bubble.
Craig Evans  Right.
Kaaren Hall  So, not really 1031 with the self directed IRA, but yeah, you can, you know, buy, sell, you can, but what you can’t do is offer services to the plan, which means you can’t go swinging the hammers. You can offer sweat equity. So, if your IRA owns a house, you’re not going to, you know, replace that water heater. You’re not going to do things like that. You can hire third parties to do it.
Craig Evans  Right.
Kaaren Hall  But you’re not going to be doing that yourself. But there are just so many different ways to invest with, again, with real estate being the underlying asset, whether it’s somebody else managing it in syndication, or with you having a separate property, hiring third party vendors, hiring maybe a property manager, but you can still screen the tenants, pick up and collect their rent checks, send it to the IRA, right? You can have other people fix things and select the tenants. You can screen the tenants, but just make sure that all of, this is a big thing. This is like a common mistake, when you have a self directed IRA real estate or whatever, make sure that the proceeds go back in the IRA that owns the asset. And sometimes syndicators will write the check to you and send it to you personally. Do not cash that check. Prohibited transaction blows the tax protected bubble of your IRA. So, if you get a check made payable to you for an asset that your IRA owns, call them up or whatever, mail the check back. Say, Please recut this check, make it payable to my IRA, because they you do not want to commit a prohibited transaction by, you know, taking the proceeds from an IRA owned asset.
Craig Evans  It was interesting, you mentioned notes. So, can you do, can you use hard money out of that and invest in notes for real estate, that type of process?
Kaaren Hall  Yeah, absolutely, yeah. And, it’s super popular to be the bank with an IRA, and people love securing secured loans, because, isn’t it to the best of all worlds? I mean, for, especially for a retirement account, it’s passive. It’s, of course you want to, you’ve got to do loan servicing, and you can hire a third party loan servicer if you need to go and, like, collect on a loan. But your IRA is like a bank. And I think that’s one of the things that really got self directed. IRAs started or rekindled in 2009 as you remember, you couldn’t borrow money if you already had, like, X number of properties, you couldn’t get a loan. And that’s when savvy investors, real estate investors, realize, ‘hey, I can borrow money from someone’s IRA.’ And this is a big pot, like, right now, it’s something like $40 trillion worth of capital. I can tap into this capital, get money for my deal, borrow money from people’s IRAs, and, you know, build my commercial building, you know, invest in my single family home. I can get a loan. And it doesn’t even have to be for real estate. It could be maybe you’re starting a business and you need to raise capital. A lot of people lost their businesses in the recession and with COVID, and you’re rebuilding, and you need capital to rebuild your business. Well, hey, if somebody has an IRA or a 401(k) from a previous employer boom, they could invest in your business. And so that is something you can approach people about. ‘Hey, do you have an IRA? Do you have a 401(k)?,’ if you do, you can invest in my business. You can invest in my deal. So, notes and lending are a very, very powerful part of self directed.
Craig Evans  Okay, well, then you know that’s obviously with The Norris Group, we do hard money lending, right? We have trusted investors that invest in that. So, that’s interesting. I mean, literally, I’m learning stuff from you, as much as I hope our audience is. I’m loving that I get to pick up nuggets from you, you know. So, I know we’ve done some deals, and you’ve answered a little bit of this with the syndication aspect. But so just to clarify, someone that has self directed accounts, they can invest in private equity or syndications of certain deals, correct? There’s nothing legally that would borrow them from that, correct?
Kaaren Hall  That’s right, because, again, the ERISA laws were passed 50 years ago. It’s the 50th anniversary of the IRA, Happy anniversary. But they, when it would have passed, they just said an IRA can’t invest in life insurance contracts and collectibles. So, all these asset classes are okay, you know? And it’s a lot of it is what a custodian will custody. For example, your IRA could invest in a racehorse, because that’s an investment, but it’s like for us, it’s an asset that we choose not to custody. It doesn’t mean you couldn’t find someone out there, pay something, play a different company, enough money to hold that asset, you know, or to allow that asset class.
Craig Evans  Sure.
Kaaren Hall  But, but, yeah. But anyway, as long as it’s not life insurance contracts and collectibles, you can pretty much do it.
Craig Evans  What do you see is probably the biggest mistake that investors make with their self directed IRA?
Kaaren Hall  I think the most, yeah, I it has to do with acquiring property and thinking that the IRA is the down payment on the house, but thinking of it from the traditional residential real estate mindset. And I come from that mindset, you know, I, like I said, I was in mortgage a long time, and residential real estate a long time. But when we personally buy a house, yeah, we have a down payment, and then we go to a bank, we get a Fannie, Freddie, FHA, VA, conventional, conforming kind of a loan. But the retirement world is similar, but different. So, if your IRA is going to buy a single family, house first, it has to be non owner occupied. You can never occupy or have personal use of an asset that an IRA owns. So, it’s definitely going to be non owner occupied first, and then your IRA is going to get a non recourse loan. And that non recourse loan is going to be some percentage. Now, these non recourse lenders are going to ask for more skin in the game, not like when we buy a house. Maybe you put 5% down. A non recourse lender is going to want to put maybe 50% comes from the IRA, 50% comes from the law. So that’s something you want to discuss with a non recourse lender. And by the way, I’ll mention that if any of the listeners would like a list of non recourse lenders, because it’s kind of hard to find them, we’ve put together a list. I mean, not a people that we necessarily endorse, but just for the convenience of you know of your audience. And so you can hit me up at info@udirectira.com, and I’ll shoot you that list.
Craig Evans  Yeah, finding, finding non recourse for certain situations, is not the easiest task sometimes, so. You know, every year we’ve got changes or potential changes to regulation in this space. What do you see as the biggest item that you guys as a brand, as a company, are focused on right now?
Kaaren Hall  Yeah, well, we went through a lot of change since 2019 when we had the SECURE Act 1.0 come out. And one of the big things that changed is RMD age went from 70 and a half to 72 I think, or 71, anyway, it changed because of the SECURE Act 2.0 that was passed at the end of 2022. Now, the RMD required minimum distribution, that age is 73 so that’s something to change. There are other things that changed. But because there was so much change between SECURE Act 1.0, 2.0, Washington’s going to pretty much leave the retirement account alone. Yay. For a little while. I’ve been in the industry 17 years, and there hasn’t been a lot of change and then, you know, these two secure acts really rocked our world in creating some change, because it’s been so placid and unchangeable. But one of the big, big changes with SECURE 2.0 that really impacts us is that, you’ll love this, with a step in a simple IRA, now you can make Roth contributions to these accounts, that just, you know, we think of a SIMPLE lower SEP IRA being like a traditional IRA, where you’re making, you know, pre tax contributions. In other words, like you make a contribution to a SEP and you can take a deduction, as opposed to Roth contributions, where you make a contribution, it’s after tax. But then that investment, or any all those proceeds, grow tax free for life. So, you can make a Roth contribution now to a SEP or a SIMPLE IRA. Now I’ll tell you what the IRS hasn’t been super quick on, or Department of Treasury, which you know the IRS is under, haven’t been super quick and providing us a whole lot of guidance on that, even though it’s like what, you know, to at least sell it two years later. We’re still waiting on some guidance on this, but that’s one of the big changes that occurred in the space.
Craig Evans  Well, you know, it’s probably because maybe they don’t have enough agents yet to be able to do all that. Is that, right?
Kaaren Hall  We talked to the Department of Treasury. I’m on the board for RITA, the Retirement Industry Trust Association. So we have an event in DC. It’s coming up on here pretty quick. We go every spring, and the Department of Treasury comes to the meeting. We sit down, and they talk to us on a panel, and then we ask them questions, ‘when are we going to get more guidance on the Roth contributions to the SEPs & SIMPLEs, and they’re like, this isn’t like, it’s top of mind for us. It’s not necessarily top of mind for them. So, we’ve said that’s really going to move the needle for a lot of people. So we would love some guidance, son, and so that it’s nice to be able to actually talk to the Department of Treasury.
Craig Evans  Can you move money from a from a Roth into a Self-Directed?
Kaaren Hall  Yeah, absolutely so. So, like a typical Roth that’s invested in stocks, then you’ve got a self directed Roth. A Roth is a Roth the same rules about, you know, contributions, the way the money comes in, the way it goes out, but self directed just means it’s a different asset class in the plan.
Craig Evans  Okay.
Kaaren Hall  You can move money from a Roth IRA to a Roth self directed IRA, just a straight transfer.
Craig Evans  You’ve been doing this for a while, you know, a day or two. What do you see as probably the most meaningful change in this industry since you began? Good or bad.
Kaaren Hall  Yeah, the changes have been good, because, as I mentioned earlier, the the bipartisan support for retirement savings. So, what I the changes I’ve seen have all supported retirement savings. So like, for example, contribution limits have increased over the years. That’s positive. And as my company, one of the best things that’s happened for us is going from pretty analog to digital. That’s been a huge change. A few years ago, we had a giant change in our platform, making things just so much more streamlined and easy for our account holders. Just as technology develops, we’ve been able to grow with that and make things simpler and more efficient, and it makes the process run a lot smoother. So, you know, like the year over year, we’ve doubled the number of accounts are that we open like from the previous year to the, you know, to the following year. But we haven’t had to hire extra staff because of the digital nature of our system. So that’s been a huge breakthrough for us as a company.
Craig Evans  So, I want to jump into something, hopefully you won’t get too uncomfortable about it. But I want to give you a little bit of chance to brag on you a little bit, right? So you just wrote and published your book, walk me through…
Kaaren Hall  I just happen to have a copy with me, let me brag about it, okay.
Craig Evans  You just happen to have a copy there. So, yeah, I saw those stacked on the bookshelves back there. How did that come about for you? And what was your passion? Because, listen, that’s not a quick process, and you’ve already got a full plate. So, what was your passion that drove you to say, ‘Man, I want to write a book, but I wanted to mean something other than just having my name on a paper.’
Kaaren Hall  Well, yes, yeah, and I want my peers to read it and say, ‘Oh, wait, yeah, that’s meaningful,’ yeah.
Craig Evans  Yeah.
Kaaren Hall  Well, it started about 10 years ago, you know. I don’t know if you know Gene Trowbridge. He is a well known securities attorney.
Craig Evans  Right.
Kaaren Hall  And said, ‘Hey, Karen, I’m writing a book. I want you to write the chapter.’ And, ‘hey, why don’t you write?’ So, Gene was super encouraging and inspirational, inspired me to start this. So, there have been four or five iterations of this book, and then about 2020, Bigger Pocket said, ‘hey, we’d really like for you to write a book for us’. I said, ‘Oh, that’s great’. So, I at that time, I already had a beautiful manuscript, like formatted everything, pretty much ready to go. I mean, it still needed some tweaking, but so I gave them that manuscript, and then they looked at it for a while, and then, you know, back and forth, and it didn’t happen instantaneously. And then they said, ‘Yeah, we’re not going to publish this book.’ I go, well, you know, that’s showbiz, right? So now, today is February 2025, it was September 2024 when they called me and said, ‘Hey, Karen, we want to do that book now.’ We already have your manuscript. It’s ready to go. Let’s go and like, ‘Okay, we need it by November’ it’s like two months to, because a lot has happened since 2020, right.
Craig Evans  Oh yeah.
Kaaren Hall  SECURE 1.0, 2.0, and then rewrite it. Plus we collaborated on it. So, it wasn’t just me writing it. It was writing it from the perspective of a real estate investor. So, to totally rewrite the book, they were lovely to work with. Their editing process was genius. They would read, read and say, Hey, why don’t you write? You know, ‘you say this, but, tell me why?’ Like things that like, I know in my head, I already know the why, but maybe I’m not thinking of the reader. So, they would say ‘the reader is going to want to know why, or just elaborate on this.’ So the editing process was really wonderful, just working with some lovely people over there, and we got the whole thing put together. And I just thought, oh, is this really going to happen? Because, you know, delays and things, but, I mean, I’m holding this book in my hand. I can’t believe, it was a long road. Super grateful to the wonderful people at Bigger Pockets who published the book.
Craig Evans  So, alright, so be so Bigger Pockets published. Where, where can we get it? How do you get this book?
Kaaren Hall  You can go on Amazon. Yeah, yeah. Amazon.com. Is where you can find it, and you can get it there. You could also get it at Bigger Pockets, biggerpockets.com/sdira, self directed IRA, SDIRA. So, you could find it on the Bigger Pocketswebsite or on Amazon, and please write a review. Yay. That’s, I guess we need these reviews. It’s a thing in publishing, you have to have a review.
Craig Evans  So, last thing you know, from a local perspective for you, I want people to hear, okay, you’ve got OCREIA. How do they get involved with you? How do they find you? How to get involved and be able to learn from you on a regular basis?
Kaaren Hall  Right. So, being in the self directed IRA seat and knowing so many asset sponsors, I’m able to cultivate this and bring in people who can teach others about real estate investing. I think early on in this interview, you were asking me about, like, how does someone start? Like, where do you even start this thing? And this is one thing about OCREIA. So, you it’s O-C,-R-E-I-A.com, go to our website. We have a meeting at the second Thursday of every month, and we’ll maybe they’re on Zoom or in person. But, you know, join the meeting, listen, because someone’s going to be teaching you likewhen Bruce, he and Bruce has spoken on Zoom and in person, he’s going to talk about, first off, his brilliant history of real estate investing, which is so inspiring, or maybe like someone’s going to talk tonight about multi family investing, Keystone, CPA, Matt and Amanda, come on. They talk about, once you’ve invested and you’ve got this money, what do you do with it? How do you keep it? How do you not lose it to taxes? We’ll have 1031 exchange people come in and talk about how to do the 1031 you know. And so, I saw you that you interviewed Bill Exeter. So he, you know, Bill, could, you know, talk to you about that. And so we had bring different people on so you can learn all the different aspects of this giant thing called real estate investing.
Craig Evans  I know it said, you know, OCREIA is the last one, but it’s not. I got one more to ask, so.
Kaaren Hall  Okay.
Craig Evans  The biggest one, how do people get in touch with you? Get involved with uDirect, you know. How do we start changing their life by getting to know you guys and learn how you can help them affect their future.
Kaaren Hall  Right. Well, call us, you know, we are. We have a toll free number, which I haven’t memorized, but hit us up with an email. That’s really the best way info@udirectira.com and that’s the best way, because my whole staff gets that email, and we’ll be able to answer you straight away. You know, email your questions to us. You know, tell us your scenario, or just go to our website udirectira.com, hit, you know, contact us, and then that’s where our calendar schedule and appointment, and then you’ll have an appointment at your convenience, where we’ll call you. And let’s talk about what you want to do. Is it a prohibited transaction? How do you do it? What kind of account do you have? Can you move it? Can’t you move it? And answer all your questions.
Craig Evans  Well, Kaaren, it has been a pleasure to have you on. It’s always so good to see you. Thank you for all you’ve done for me over the last year since I’ve taken over The Norris Group. You being a part of our event last year, in July or June rather, and looking forward to do a lot more with you. Hopefully, maybe and get out and do some stuff with you and OCREIA sometime, would love to, but it is a pleasure having you on today. Thank you for pouring your knowledge into everybody that listens to us.
Kaaren Hall  Thank you.
Craig Evans  Thanks so much. Listen, everybody thanks so much for having, being on today, and we will see you next time.
Narrator  For more information on hard money loans, trust deed investing, and upcoming events with The Norris group. Check out thenorrisgroup.com. For more information on passive investing through the DBL Capital Real Estate Investment Fund, please visit dblapital.com.
Joey Romero  The Norris Group originates and services loans in California and Florida under California DRE license 01219911. Florida mortgage lender license 1577 and NMLS license 1623669. For more information on hard money lending go to thenorrisgroup.com and click the hard money tab.