Yes…the title of the article is true. This is not a tricky way to get in the back door and talk about protecting the rich. Please keep reading whether you are a Republican or Democrat…this does not have to be political!

First, don’t listen to the media, or the soundbites that state “the new House or Senate Bill only attacks the super-rich and the 1%.” That’s wrong. Dead wrong.

Next, this Bill is not all bad. Of course, there are some good things in it, and some provisions to tax more of the wealthy. That’s fine. In fact, there are some provisions to limit the value of IRAs, and to prevent the back-door IRA for the rich…that’s not what I’m talking about!

However, there are some problems in the Bill that will affect our IRAs no matter how wealthy you are.

Self-Directed IRA:

There is a strategy used by the poor, middle-class, and the wealthy called “self-directing” that allows you to invest your IRA in what you know best. This strategy allows the average American to get greater returns, not be forced back into Wallstreet investment products like ‘sheep’, and to actually ‘catch-up’ to the super-rich.

Frankly, I don’t think our legislators in Congress know what they are doing with this and how bad it is. That’s why we need to inform them AND we can! Let’s break it down.

Why we’re here (if you care to know)

Let’s ‘call a spade a spade’. There is a movement or push to curtail the tax benefits of the wealthy…that’s fine. No problem. I’m not trying to argue politics on that position in this article.

But, when the public discovered earlier this year that Peter Theil, investor in Facebook and PayPal, had a $5B Roth IRA (thanks to ProPublica…a topic for another day – I think we all want our tax returns private) there was a public outcry for reform.

Therefore, Congress wants to respond by putting provisions into the tax code preventing this from ever happening again. But they are going too far and catching you and me in a far too big ‘net’ of provisions.

Maybe Congress should limit the value of IRAs to some degree. But don’t prevent the method of building a large IRA!

So here is the heart of the matter:

If you want to curtail the ‘value’ of an IRA- that’s fine…But don’t eliminate the method to build a high value IRA preventing the average person from doing the same thing!

The ‘method’ to build an IRA with greater returns and invest in what you know is a strategy called ‘self-directing’. Everybody can use this! You can use this! Congress is missing that point. We can inform them we all need this strategy to try and lessen the gap between the rich and the poor.

What is this new legislation?

The proposed $3.5 trillion House Tax bill is packed with thousands of provisions, good and bad depending on your perspective, and is over 880 pages. Needless to say, it’s a monster to try and digest, let alone understand.

Yet, if you can’t sleep at night or are interested in generally trying to understand what Congress is trying to accomplish, check out this House Summary of the Tax Bill.

Now, buried in this massive Bill, there are several provisions that affect IRAs, but most of them will only impact the very wealthy. For example, capping IRA account balances at $10M, penalizing those who have violated the IRA rules, and limits on contribution methods (typically called the back door Roth IRA).

The policy and political objectives on these provisions generally make sense as the bill is designed to curb abuses and raise revenue from the wealthy.

Unfortunately, two additional sections (more below) added into the Bill are going to hurt everyday IRA savers who choose to invest in small businesses, start-ups, crowdfunding offerings, crypto mining, pooling money in crypto currency, and even real estate investing with an IRA-owned LLC.

My experience after 20+ years in the industry and helping thousands of people structure their IRA to invest in what they know best is that the far majority of those who self-direct their IRA aren’t “wealthy”. They are hard-working Americans trying to catch up to the wealthy by investing in assets and companies they know and believe in.

Two ‘Problem’ Sections in the Bill affecting what you can do with your IRA

Unfortunately, the bill contains two sections that will affect everyday IRA savers who choose to self-direct their IRAs into real estate (using LLCs or private funds), small businesses, start-ups, crypto mining, and crowdfunding offerings.

These problematic provisions are going to harm hundreds of thousands of everyday IRA investors who are only trying to get an IRA to an amount they can retire on.

Section 138312 Should Be Removed from the Bill 

This section prohibits investments in IRAs when the investment is permitted based on asset or income levels of the investor. This prohibition would effectively ban crowdfunding offerings under federal and state crowdfunding laws (investment amounts under these offerings is based on income or assets, and it’s not just accredited investors).

Typically, accredited investors are only permitted to invest into private companies, private funds, start-ups, and small businesses because they qualify under securities laws based on their income or assets.

If enacted, this IRA law will state that none of these investments can be done in an IRA ‘if’ the ability to invest is ‘based on your income or assets’.

This will capture even those that aren’t wealthy that want to do invest in a crowdfund. I know, it doesn’t make sense but that’s how the law will be applied.

Most IRA savers who have saved and worked hard over decades to save up $1M in total assets will now be thrown unsuspectedly into the group of ‘wealthy investors’ and prohibited from investing their IRA into small businesses, start-ups, and private companies.

And….Section 138314 Should Be Removed from the Bill 

This section prohibits several activities but the most destructive would affect retirement savers who buy real estate with their IRA. The most common real estate investment for an IRA saver is a single-family rental property.

However, there are thousands of other everyday investors that want an IRA/LLC (a structure whereby their IRA owns an LLC 100% and the LLC, in turn, owns a business operation and the IRA owner is typically the manager of said LLC).

These LLCs can be created to pool money for cryptocurrency investment or mining, farming, note investing, small business, and a whole host of other strategies. And the IRA owner can legally act as the manager of the LLC…all without the help of Wallstreet getting their grubby hands on the money.

This section would generally prohibit the IRA/LLC or make it cost prohibited and drive all of your self-directing money back to Wallstreet. Obviously, this will increase fees and expenses, further hurting hard-working Americans and will take investment control away from the IRA saver.

Congress can limit the value of an IRA if they want, but shouldn’t limit the ‘method’ which actually helps Savers with small accounts catch up to the wealthy.

Congress needs the help of self-directed IRA investors and savers to understand that investment choices (not just Wall Street) are important to their IRA and that investing in small businesses, private companies and funds, real estate with an IRA/LLC, and crowdfunding offerings isn’t just something the ultra-wealthy do.

The scary impact to an IRA/LLC investor NOW

I truly believe most legislatures don’t understand the ‘poison pill’ these two provisions creates and how it will actually hurt the economy. I can only imagine how hard it is to comprehend and make an informed decision on an 881-page piece of legislation.

But what the self-directed IRA provisions in the Bill will do is directly force any IRA investor who is already invested into these assets (keep in mind there are millions), to sell their asset prematurely, or be forced to distribute it.

Early distribution will result in taxes and penalties for most IRA investors that aren’t yet at retirement age. This will immediately impact millions of Americans with IRAs of ANY value!

What Can I Do to Save My IRA?

The entire industry is working diligently to educate Congress on how these two sections will disproportionately harm IRA savers, 98% of whom have IRAs less than $1M, and 80% who have IRAs less than $300k.

I have spoken to multiple members of Congress, Senators, and their chief of staff, and industry groups this past week. Industry efforts will not be enough!

The only way these two sections will be removed is if Congress hears from IRA savers who will be affected. Congress needs to hear from you, their constituents, on how these two sections of the bill impact you.

This is moving fast, write and call your Senators and House members today.

Contact Your House Representative by phone, e-mail, and/or mail:

You can look up your representative at the House of Representatives link below and then will need to go to their office’s specific page to get their e-mail, phone, and mailing address.

Contact Both of Your Senators by phone, e-mail and/or mail:

If you don’t know your Senators (contact both), you can look them up at the link below and then go to their office’s specific page to get their e-mail, phone, and mailing address.

Once you select your state your two senators should pop-up and there will be a hyperlink called Contact next to each Senator that will take you to their office’s page to make contact by e-mail, web-form, or phone.

Remember, the two problematic sections of the House Tax Bill are sections 138312 and 138314.

What Should I tell my House Representative or my Senator?

Consider the following outline for your email, letter or phone call. It is critical that you let them know the following.

  • That you are their constituent in their district (Contacting a Senator from another state or Congressmen/Congresswoman form another district is typically futile). Give your address so they know they represent you (e.g. I’m Sally Jones from Glendale, AZ).
  • Tell them is a misconception in Congress that self-directed IRAs are only something the wealthy do and that this only hurts the wealthy. It’s helpful to be straightforward about who you are and about the size of your account. They need to know that this bill is going to disproportionately hurt IRA savers with IRAs less than $1M.
  • Here are some examples of how it could directly affect you, but it may help to put it into your own words and situation explaining how you’re not an ultra-wealthy person using their IRA to invest in hedge funds (that’s what they presume).
    • I’m a working American with a $X IRA just trying to get to an account balance I can retire on. This Bill will effectively kill my ability to grow a retirement account that I can retire and live on.
    • I’m a pilot, nurse, retired firefighter, realtor, etc. (insert profession or job so Congress doesn’t think this is just CEOs, doctors, lawyers, and wealthy heirs), and I have diligently contributed to my retirement account. I choose to invest some of my IRA into real estate, small businesses, start-ups, and crowdfunding offerings. These provisions will force me to sale my assets prematurely for a loss or will force me to distribute them where I will be subject to taxes and penalties.
  • Please oppose Sections 138312 and 138314 as they will cause drastic tax consequences for my IRA, and they will take away future investment choices that are important to growing my account to an amount I can retire on.
  • If you think the $10M cap is reasonable, say that so Congress doesn’t presume you’re an ultra-rich person with a $10M plus IRA (like some in Congress presume anyone opposing this bill is). We’re not opposing the $10M cap in our efforts as it effects very few account holders who self-direct.
  • Tell them thank you for their service. Don’t attack them or be mean or rude. Be smart in your comments. Remember, a kind word will go a lot farther than ranting and raving.

You must reach out today. Right now. Take the time now to call, e-mail, and/or mail your Representative and Senator. This Bill is being negotiated and voted on now. It could all be wrapped up in one to two weeks but if Congress doesn’t start hearing from self-directed IRA owners now, they won’t understand the issue and how it is going to affect their constituents.

Finally, keep in mind this bill came from the Democrats in the House, and will generally be supported by Senate Democrats. Thus, it is critical that you write and call your members who are democrats as they are the ones that will negotiate this bill in the end. Republicans have already come out in opposition to the Bill in its entirety.

However, it is still helpful to contact Republican members though as they may have a say or may have democratic colleagues who they can help understand this issue in a bipartisan way.

The best thing you can do now is to write your Representative and Senator today to tell them to oppose Sections 138312 and 138314 so that you can have investment choices off Wallstreet for your IRA.

Please, forward/share any social media posts and videos I publish on this topic to everyone you know.

Thank you for your efforts in trying to spread the word. If I’m being selfish, I guess I just want to invest in what I know best, and not restricted to Wallstreet’s products. I’m a wolf, not a sheep. Take control of your retirement and what you invest in. No one cares more about your retirement than you!

* To sign up for Mark’s weekly Free E-Newsletter and receive his Free E-Book “The Top 10 Best Tax Saving Secrets Everyone Should Know” visit

Mark J. Kohler is a CPA, Attorney, co-host of the Podcasts “Main Street Business Podcast” and the ”Directed IRA Podcast”. He is the author of the new book “The Business Owner’s Guide to Financial Freedom- What Wall Street isn’t Telling You” and, “The Tax and Legal Playbook- Game Changing Solutions For Your Small Business Questions” He is also a partner at the law firm Kyler Kohler Ostermiller & Sorensen, LLP, and the accounting firm K&E CPAs, LLP.