This podcast features Jamie Raskulinecz
Jamie is the founder and CEO of Next Generation Trust Company, and discusses the self-directed retirement plan industry and the founding of her company. She also explains how Next Generation Trust Company helps investors invest in non-publicly traded alternatives using their retirement plans.
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Starting a Self-Directed Retirement Plan [00:00:00]
The Difference Between Servicing and Trust Companies [00:02:29]
Importance of Customer Experience [00:06:45]
The Importance of Self-Directed Retirement Plans [00:08:00]
Marketing to Self-Directed Account Holders [00:09:33]
Prohibited Transactions in Self-Directed IRAs [00:12:42]
Prohibited transactions [00:16:28]
Types of accounts: Solo 401k vs IRA [00:17:37]
Deploying small balance IRAs [00:23:03]
Investing in Personal Loans [00:23:59]
Investing in Startups [00:25:19]
Contacting Next Generation Trust Company [00:25:48]
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Connect with Jamie:
Facebook: https://www.facebook.com/NextGenerationTrust/
LinkedIn:https://www.linkedin.com/company/next-generation-trust-company/mycompany/?viewAsMember=true
Web: https://nextgenerationtrust.com
Connect with Sam:
I love helping others place money outside of traditional investments that both diversify a strategy and provide solid predictable returns.
Facebook: https://www.facebook.com/HowtoscaleCRE/
LinkedIn: https://www.linkedin.com/in/samwilsonhowtoscalecre/
Email me → sam@brickeninvestmentgroup.com
SUBSCRIBE and LEAVE A RATING. Listen to How To Scale Commercial Real Estate Investing with Sam Wilson
Apple Podcasts: https://podcasts.apple.com/us/podcast/how-to-scale-commercial-real-estate/id1539979234
Spotify: https://open.spotify.com/show/4m0NWYzSvznEIjRBFtCgEL?si=e10d8e039b99475f
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Want to read the full show notes of the episode? Check it out below:
Jaime Raskulinecz ([00:00:00]) – . So when you’re looking for investors, one of the objections you might get is, you know, all of my money is tied up in the stock market and things are really bad right now, and I can’t really liquidate anything because, you know, everything has lost a lot of money, so I gotta stay there and make up for it. So the answer to that objection that I like to tell sponsors to give is, that’s really great, and I, I absolutely understand that, but did you know that you’re able to use your retirement plan, which, whatever kind you have to make these same investments into non-publicly traded alternatives?
Intro ([00:00:37]) – Welcome to the How to Scale commercial real Estate Show. Whether you are an active or passive investor, we’ll teach you how to scale your real estate investing business into something big.
Sam Wilson ([00:00:50]) – Jamie Rascal Linens is the founder and CEO o of Next Generation Trust Company. They are custodians for sale directed retirement plans, specializing in the custody and administration of non-publicly traded alternative assets. Jamie, I got all that out in one sentence without messing it up. Thank you so much for coming on the show today.
Jaime Raskulinecz ([00:01:07]) – Thank you so much for having me. That was a mouthful, wasn’t it? Betwe, between my name, pronunciation, and the, and the intro. Wow. ,
Sam Wilson ([00:01:15]) – It’s a lot of big words all crammed into one. Thank you very much. I appreciate that. I’ve got three questions that I ask every guest who comes on the show in 90 seconds or less. Can you tell me where did you start? Where are you now, and how did you get there?
Jaime Raskulinecz ([00:01:28]) – Interesting. Um, yes, I can tell you. So, uh, my, my prior business to this was a property management company and I was looking for an additional revenue stream, and I happened to meet someone in this business who, uh, introduced me to it. I thought it was one of the greatest things I had ever heard, because I was also interested in putting real estate in my retirement plan. And so, kind of the rest is history. We started, uh, the servicing company in 2004, the Trust company, um, about seven years ago. And here we are today with, uh, almost 700 million in assets under custody, and, um, you know, still going strong working with real estate investors, fund managers.
Sam Wilson ([00:02:16]) – That’s awesome. That’s awesome. You, it, it’s keeping you busy. You mentioned a couple of things there. Uh, you, you said, you mentioned you that you had started a servicing company in 2004 and then seven years ago started the trust company. I don’t even know what the difference is
Jaime Raskulinecz ([00:02:29]) – . So, um, back in 2004, next Generation Services was formed. We have two companies, next Generation Services and Next Generation Trust company. And so the services company all by itself, always needed to have a licensed, uh, or chartered financial institution to act as custodian for all the assets. Okay. And without me having that partnership, next Generation Services would be unable to do business. Hmm. So you can only imagine that that was the nightmare that kept me up every night. And I was looking for ways to have both sides of that equation so that we had control of both sides. And so about seven years ago, we formed, the Trust company was chartered in South Dakota, and so the trust company is the custodian for all the assets, and the servicing company is in North Jersey and still does all of the sales, uh, transaction report and other types of reporting. And, uh, the trust company is really the chartered custodian for all of the assets.
Sam Wilson ([00:03:38]) – So yeah, I mean, that, that’s is are all self-directed custodian set up in a similar, uh, kind of arrangement there?
Jaime Raskulinecz ([00:03:45]) – A lot of them are okay, but, uh, a lot of them are, but some of them use the trust company completely for both sides of that business. And so for me, because the servicing company came first, and because we’re located in two different states and the regulations vary, it made more sense to keep them both separate for, um, you know, uh, trust company regulation purposes and other business considerations.
Sam Wilson ([00:04:17]) – It sounds, I mean, it sounds like this is, uh, is just not obstacles, but just kind of overcoming the legal hurdles required to do business the way you guys wanna do business.
Jaime Raskulinecz ([00:04:28]) – Yeah, there’s, there’s a lot of, as you can imagine, there’s a lot of regulation, uh, governing these types of businesses and plans, right? So we have to worry about the division of banking in South Dakota because we have an office in New Jersey. We also have to register with the banking commission in New Jersey. We’ve got i r s and Department of Labor Regulation. So it’s really, uh, it’s really a lot of fun.
Sam Wilson ([00:04:55]) – Yeah, I guess so. I guess, so how did, what, what gave you the confidence to enter this space? Knowing all of the regulatory hurdles? And I know some of those may be, maybe they have, maybe they haven’t lessened here in the last 10 years, but, um, how did, how did you have the confidence to move forward in that? I mean, that’s, that’s a lot to swallow all at once, even just thinking about it.
Jaime Raskulinecz ([00:05:16]) – Well, um, one of the biggest reasons is I think that, um, ignorance is bliss in the beginning. So you really, uh, you know, I didn’t have any idea about a lot of what was gonna happen with this, especially the trust company didn’t come until many years later. Yeah. So, and, and that’s sort of been the story of my life, right? One of my other businesses is property management and we specialize in affordable housing and talk about regulations, right? Right. And so there’s that, and my, uh, my prior life, my career was healthcare. So I’ve been in a heavily regulated environment, uh, pretty much since birth.
Sam Wilson ([00:06:01]) – Wow. Yeah, I guess, I guess, uh, if you’re used to it, you know, and in its own right, you know, those regulations, uh, prevent competition, which I’m not gonna say is a good thing, but, um, they certainly, once you understand it, it’s like, well, it’s confusing and it’s hard and lots of paperwork. So, you know, in its own right. Once you, once you kind of have the inside know-how it’s probably, uh, it’s probably okay, just getting through that initial hurdle I think would be, would be a little bit challenging. What do you feel like when you formed this company, and you guys have been, I guess now around it’s 2023, so that’s 19 years, like, what do you feel like you do differently or that was missing in the space? Because I think you saw opportunity there. What was that opportunity?
Jaime Raskulinecz ([00:06:45]) – Well, for me, regardless of whatever business I was in, what was always top of mind for me was the customer or the client experience. Hmm. And whether that was way back when in healthcare or in property management with tenants, or I’ve owned rental real estate myself. Yeah. You, you want to provide the best experience to people that you can. And in my industry, as you know, there are small boutique firms like mine, and then there are those giant companies that have been around since the seventies. And really our goal was not to become a giant company, like the ones that have been around since the seventies. I liked being a boutique firm because we can pivot easily and we can make accommodations for our referral sources and for our clients easily. And it was also easy for me to instill that, um, you know, that feeling with all of our staff members. We’ve done Ritz Carlton training. So, um, you know, that’s kind of the level of service that I want us to be known for, and we are actually known for our customer experience in the industry.
Sam Wilson ([00:08:00]) – No, I think that’s great. That’s absolutely great. And yeah, I mean, as a, as a deal sponsor, I have, uh, interacted with all of the different, you know, uh, I guess variations of the types of firms out there. And certainly the smaller the firms and the more personalized that experience is, the easier it is for us as sponsors to bring our investors on that have self-directed accounts. And the larger the companies get, the, uh, the more cumbersome and less responsive it tends to be. So I certainly, sure.
Jaime Raskulinecz ([00:08:30]) – And, and what’s our job? It’s to make life easier for our client when they wanna make investments. Right. And on the other side, you know, of course, you know, we’re not allowed to partner or directly refer, but we wanna make it a seamless process for all the parties concerned in the transaction, otherwise why would they come to me? Right,
Sam Wilson ([00:08:49]) – Right. Absolutely. Absolutely. I understand there’s statistics that are out there and, and I’m not gonna butcher whichever ones they are. Uh, but in short, and I’m guilty of this too, so tell me what the opportunity is and maybe, maybe we could even talk about how deal sponsors can be effectively marketing to the self-directed account holder crowd. Because what I understand is that there’s a lot, a lot, a lot of money in self-directed accounts, and again, myself included, especially small balance accounts that is doing absolutely nothing other than sitting in a trust account. How, how, how do we get in front of self-directed account holders and let them know what opportunities we have?
Jaime Raskulinecz ([00:09:33]) – That is such a great question. So let me, let me start at the beginning. There’s almost 12 trillion in IRAs in the United States right now. Uh, it’s really boomed because of much more contributions and a lot more gain in the investment. Yeah. Uh, in the last year that may not be so the canon investment, but about 12 trillion. And so we get this question a lot from fund managers and other people who are looking to raise those funds. And you know, my answer to them is because I know some of the objections that you get. So when you’re looking for investors, one of the objections you might get is, you know, all of my money is tied up in the stock market and things are really bad right now, and I can’t really liquidate anything because, you know, everything has lost a lot of money, so I gotta stay there and make up for it.
Jaime Raskulinecz ([00:10:29]) – So the answer to that objection that I like to tell sponsors to give is, that’s really great, and I, I absolutely understand that, but did you know that you’re able to use your retirement plan, which whatever kind you have to make these same investments into non-publicly traded alternatives? And one of the best things to ask, especially now with, um, the layoffs that there have been in the last couple years, is they’re an old employer 401K somewhere that you can roll over. Uh, I am not allowed to give people advice, but personally I like to tell people that I can think of only one real specific reason to ever keep your old employer 401K active. And that’s if you have stock in that company, you may wanna keep it in that old 401k, but anything other than that, you wanna really roll it over so that you have more control over the investments that you can make and the fees that are involved because 401ks have higher fees, uh, with employers. So that’s one strategy to even start talking about, do you have old employer 401ks? What, what are your IRAs doing? Uh, you can also self-direct education savings accounts and HSAs, and a lot of people take advantage of those contributions and use those to self-direct as well.
Sam Wilson ([00:11:57]) – I think that’s, that, that’s really cool. Um, and, and most people don’t, most people don’t know even about self-directed IRAs. Even inside of my own family, I’ve had to educate a lot of my own siblings like, Hey, you know, you can move this into an accountant and tell, tell ’em what to do with it. Like that, that’s, that’s, and, and, and so if they don’t know about that in the self-directed IRA space, then you start getting, you know, further down the rabbit hole into self-directed HSAs and things like that. And that’s, that’s mind blowing I think for a lot of people. Let’s talk a little bit about maybe the transaction types, prohibited transactions, things like that, that go into self-directed IRAs. I know there’s all kinds of confusion on this, and so I’m hoping maybe you can kind of just boil this down so a simpleton like me can understand
Jaime Raskulinecz ([00:12:42]) – Well, it took a simpleton like me to figure it out and figure it out quickly too when I first started the business. Right. Okay. So the easiest thing to remember is not what type of investments am I allowed to do within a self-directed ira because they’re, you know, it’s a huge number. What is best to remember is what am I not allowed to do? And the only things that are not allowed investment in self-directed IRAs are life insurance policies and collectibles. And so, uh, that means that if somebody says to you, gee, I wanna invest in a racehorse, can I do that? You absolutely can. So, and we’ve had people do that. Um, you know, I wanna invest in oil and gas interest or lease rights for mineral rights. Can I do that? Absolutely, you can. Uh, another interesting one was several years ago they purchased licenses to, uh, purchase feet at national sports stadium games. I never even knew that was a thing.
Sam Wilson ([00:13:50]) – Oh. So,
Jaime Raskulinecz ([00:13:52]) – Um, so the possibilities really are endless. You may invest in, you know, anything except for those two things. Um, I have people, you know, real estate investors are mostly creative thinkers, right? So real estate investors are, uh, a real fun and interesting group for me to work with because I’m always getting calls with creative ideas to try to do something that’s not allowed. So, , how about if I structure it this way? Yeah, no, it’s still not good. You can’t, you know, you can’t get around the rules, right? But, you know, we, we have great discussions with people, but the structure, as you say is important. If you have family members or if you have business partners that you are associated with, you’re unable to really do transactions between you and them. So a great example, you and your wife own property personally, and you wanna get it into your ira.
Jaime Raskulinecz ([00:14:54]) – You can’t sell it into either one of your IRAs because it’s self-dealing. You can’t purchase or sell anything that you already owned personally. If you and your wife had separate IRAs and you wanted to invest in a property together, uh, this requires some thought about this. You may invest in a property together and you may partner together, but the percentages that you start out investing must remain the same throughout the entire investment. So if you purchase a property, 50, 50, 50% of the investment money must come from each ira and all of the income must come back to the IRAs in those same percentages. So 50% of the rent, 50% of expenses from either ira, and those percentages can never change because then that’s actually doing transactions with disqualified people. That’s why the percentages must stay the same, but there is a lot of flexibility to partner with others, even though they may ordinarily be disqualified from doing a transaction between you.
Sam Wilson ([00:16:05]) – Right. The way I’ve, I, the way I’ve understood disqualified, uh, uh, people, it would be more of a, a linearal, no linearal, gosh, can’t even speak today, but just direct descendants. Like, my mom can invest with me in a deal that I am a general partner on, but my siblings can. Is that right? Correct.
Jaime Raskulinecz ([00:16:28]) – Yeah. But you have to be careful. If your siblings invest, then you have to be sure that it’s a market rate transaction and that your siblings IRAs are not getting special treatment because of the relation, right. Or your fund, or your deal isn’t getting special consideration. Like if they’re giving you a loan, maybe they’re giving you half of the normal interest rate that’s market that’s wouldn’t be allowable. So you also have to keep some good records to prove that everything was market rate.
Sam Wilson ([00:17:02]) – Right. Right. Yeah. Which, I mean, market rate four years ago might, might have been three to 5% market rate today might be 10 or 15. So , right,
Jaime Raskulinecz ([00:17:12]) – You’re
Sam Wilson ([00:17:13]) – Gonna, you’re gonna need the, uh, need that good record keeping there. Okay. Awesome. So we’ve talked a little bit about prohibited transactions. We’ve talked about how to market to, uh, self-directed account holders. What, and we’ve talked a little bit about the types of accounts. I think we mentioned self-directed IRAs, we mentioned, uh, self-directed HSAs and self-directed. What was the other one you threw in there that was a
Jaime Raskulinecz ([00:17:36]) – Little bit? Education savings, account
Sam Wilson ([00:17:37]) – Education savings account. One that I don’t hear a lot of press coverage on, because I think everybody, I think IRAs for whatever reason tend to be more, just more people know about ’em. But solo 401ks, what is to walk us through that benefits, maybe if you’re considering opening accounts, why one versus the other? I don’t even, not even sure. I understand why one is better than the other. So maybe you can kind of talk to us about those.
Jaime Raskulinecz ([00:18:04]) – Well, on a solo k there, there can be no common law employees of the company if you have a solo K but you can have partners or spouses that can, uh, be included in the plan. And so why some people see benefits to using a solo K first thing is the contribution limits to a solo K are much higher than you could put into an ira. So for 2023, and I have some cheat notes for myself cause uh, my memory is bad, but for 2023 and a solo, okay, you can, um, you can contribute up to 25% of your compensation to a maximum of about, uh, 22,500. And if you’re 50 and above this year, there’s a $7,500 catch up contribution. So the contribution limits are a lot higher. If you mortgage a property in a solo k, it’s a little bit, it’s, it’s a little bit easier to mortgage a property in a solo k um, there are some benefits to that, but the disadvantages to a solo K or that most people don’t really understand them, uh, there are companies that specialize in self-directed solo Ks, and that might be all they do is qualified plans for non-publicly traded alternatives.
Jaime Raskulinecz ([00:19:38]) – We offer solo Ks as well, but we require folk to have a third party administrator to advise them on the setup of the plan, the ongoing reporting and maintenance of the plan, because that’s, that’s a whole separate field, uh, qualified plan administration, and that’s really not our thing. So en to, to enable somebody to do it, they really have to have someone to advise them.
Sam Wilson ([00:20:03]) – Right. Yeah. It sound, it sounds like there’s, there’s, uh, maybe some flexibility benefits that come with it, but then also some reporting and, um, just some rules to that game maybe that are sounds really nuanced.
Jaime Raskulinecz ([00:20:19]) – Yeah, and a little more of an expense too, right? Because you actually need to have somebody advise you on that. So, uh, it it’s a little more expensive to do if you think you’re gonna make all of those. Uh, if you’re gonna maximize the contributions and perhaps you have an old employer 401K that you wanna roll into this plan, so you have a lot of funds, then it kind of makes sense, right? You’ve got a lot of money in there and you wanna be able to put it to maximum use for your investments, and then it pays to pay all of those professionals to advise you, right? If, if you, if you have $10,000 in that plan, um, you know, why would you wanna spend money on the advisors, you know, makes more sense to use an IRA simpler,
Sam Wilson ([00:21:01]) – Right? Yeah, absolutely. Are there things that we should be doing on the IRA side of things to, I mean, are there, are there advantages or, or, uh, is there any capability of putting in more than maybe what the contribution limits that are published? Are there, are there kind of some catch up provisions or anything like that that we should be thinking about?
Jaime Raskulinecz ([00:21:21]) – Yeah, there are, uh, catch up contributions for, uh, traditional and Ross, although not as generous as, uh, the 401k. So it’s only a thousand dollars catch up contribution for both of those, and the contribution limits are 6,500 for this year. But you know, what people don’t realize is with those old employer 401ks, um, you know, as I keep saying, there’s not too many reasons to keep all your money over there. You can roll those into an IRA and have a nice balance to enable you to do some creative investing.
Sam Wilson ([00:21:58]) – Yeah, no, that’s cool that I didn’t realize that, that you could roll old 401K funds into an ira. What, what do you advise? This is a personal question because I see, I see both in my investor pool and me personally inside of my self-directed ira, you get distributions. Maybe they’re monthly, maybe they’re quarterly, but you know, so let’s say we put 50 grand in a deal and you know, it’s throwing off 8% a year, whatever that comes out to be, what is that? 4,000 bucks a year? Yeah, it’s really hard, especially when that 4,000 bucks dribble dribbles in $1,000 at a time throughout the year to do anything meaningful with that. What do, what do you see some people doing to kind of overcome that hurdle of small accounts, especially investments that produce cash flow, but then, I mean, it’s gonna take 12 years to have another $48,000 to invest into anything at 4,000 bucks a year. If that’s all that account had was 50 grand, then I’m not saying that’s what it is, but if that were the case, so what are people doing right now to kind of deploy small balance IRAs in a meaningful way?
Jaime Raskulinecz ([00:23:03]) – Uh, good question. And so don’t forget, even though you have a small balance, um, IRA, you probably can make contributions every year to boost up that balance, right? So you have to watch your income limits and, and what other contributions you’re making. Yeah. But you can add to it that way. But a favorite method, uh, or a favorite investment in our office of small balance accounts, especially with some young people who might just be starting out, they may look at their balance and say, especially in this interest rate environment, I have a friend who has credit card bills or whatever, and they’re paying, what is it now, 30%? I’m afraid to look at my statement. So I don’t even know what credit card interest is these days, but it’s, it’s, you know, really high. Sure. So, um, they’re paying this off and maybe it’s 30% interest.
Jaime Raskulinecz ([00:23:59]) – I can get maybe four and a half percent in a treasury fund right now because interest rates are going up so much. But if I offer that person a personal loan, and it could be collateralized by something, it doesn’t have to be an unsecured note, but I’m gonna lend this person $5,000 to pay off some credit card debt, and instead of them paying 30% and me getting four and a half, maybe I’ll get 10, right? Or 12 if it’s not collateralized by anything, maybe even 15, because there’s no collateral, right? You have to look at what your user, uh, laws are in each state, but I’m going to get a much higher interest rate, you’re gonna get a much lower interest rate, and I still have recourse against you if you don’t pay me, uh, or if you don’t pay my ira. So that’s a good way to do it. There are some other companies that take smaller investments into some startups, so I don’t, there’s so many out there crowdfunding sites and startups, but you can use your IRA or other money to do smaller investments in some of these platforms that do investments in startup companies, and they’re small minimums, right? So those are two of the most popular ones that I see.
Sam Wilson ([00:25:19]) – Yeah, I would, I would, I would think a reggae fund of some sort where you could, especially if you can, you know, continuously invest those distributions that are coming to your account, would be a good way to, a good way to deploy that as well. I hadn’t, hadn’t, uh, considered that, uh, on that front. So, no, those are, those are great. Two very great suggestions there. Jamie. I know we’re over time. I certainly appreciate you coming on the show today. This was a blast. Learned a ton from you. If our listeners want to get in touch with you or your company, what is the best way to do that?
Jaime Raskulinecz ([00:25:48]) – Well, we, our website is next generation trust.com. That’s probably the best way. There are several ways to reach us there. We have, uh, a chat spot on that website. We have a form on the website to contact us. There’s a ton of educational resources there. We have, uh, pre-recorded webinars and other videos. We have white papers that they can download to see the different investment types. And there’s also, uh, a listing of our staff and ways to contact them if you want to talk to a live person. Fantastic. We have a live, live person answering the phone during business hours, so you, you will always get a person at my office.
Sam Wilson ([00:26:30]) – Awesome. Awesome. Thank you Jamie, so much for that. I do appreciate it. Thanks so much for coming on the show. Have a great rest
Jaime Raskulinecz ([00:26:35]) – Of your day. Thanks so much for having me.
Sam Wilson ([00:26:37]) – Hey, thanks for listening to the How to Scale Commercial Real Estate Podcast. If you can, do me a favor and subscribe and leave us a review on Apple Podcast, Spotify, Google Podcast, whatever platform it is you use to listen. If you can do that for us, that would be a fantastic help to the show. It helps us both attract new listeners as well as rank hire on those directories. So appreciate you listening. Thanks so much and hope to catch you on the next episode.
