wci backdoor roth

Straighten out your financial life today! Questions from Medical Students from White Coat Investor Podcast on Podchaser, aired Thursday, 21st December 2017. Step Four: Invest the money into your preferred investment, whatever it is. And yes, a 5 year waiting period on all Roth conversions including those done as part of a Mega Backdoor Roth IRA. $32K tax-deferred employer (self-match) contribution into my partnership 401(k)/PSP (I no longer make enough clinically to max it out), $30K tax-deferred contribution into partnership, $19K tax-deferred employee contribution into my WCI 401(k), $37K tax-deferred employer contribution into my WCI 401(k), $19K tax-deferred employee contribution into Katie's WCI 401(k), $37K tax-deferred employer contribution into Katie's WCI 401(k), $19K tax-deferred employee contribution into my partnership 401(k)/PSP (New plan this year allows employee contributions), $32K tax-deferred employer contribution into my partnership 401(k)/PSP, $17.5K tax-deferred employee contribution into my partnership Cash Balance/Defined Benefit Plan (New plan this year affects my contribution), $56K after-tax contribution into my WCI 401(k)/Mega Backdoor Roth IRA, $19K tax-deferred contribution into Katie's WCI 401(k), $37K after-tax contribution into Katie's WCI 401(k)/Mega Backdoor Roth IRA. I have all the money I'm ever going to need. The backdoor Roth is an optimization strategy, and it's a great way for high earners to add some tax diversification, but it's not the be-all-end-all. We'll just move that over from the 403(b) to the DCP or from the 403(b) to the 457 and the 457 to the 403(b), because it's just numbers they're changing in payroll and it's just an internal number. As part of the transaction WCI will provide the licensing, legal and regulatory framework, as well as day-to-day in-country staffing. Also, my step-mom inherited his 401(k), IRA, other savings accounts, and she's not sure who to go to for advice. It’s got a list price of $29.99 for the paperback copy. If she doesn't have any sort of a written financial plan, she needed that before she inherited the money. And honestly, from what you're telling me, you're going to be a super saver. Just make sure you're getting good advice at a fair price. Get it started early. As discussed in a previous post, the Section 199A pass-thru business tax deduction has forced us to revamp a large part of our financial lives. “I'm a home care physical therapist in California. You guys have found all kinds of new ways to screw up the backdoor Roth IRA. So how do you assess something like that and determine whether it is too speculative or whether it really deserves to be in your written investment plan or not? I had initially planned to contribute remaining employee contribution tax deferred into my solo401k, then remainder as employer contribution. A backdoor Roth IRA is not an official type of retirement account. Home / WCI-1. For 2021 that's $6,000 if you're under 50. Now I'd have to look up Michigan and make sure there's not an inheritance tax there. So that's what I look for. Staying longer in college and working part-time to cashflow tuition fees versus studying full-time on loans and earning a higher income for longer. Dr. Jim Dahle: This first one comes in from an anonymous listener. Have you done a Mega Backdoor Roth IRA before? Your email address will not be published. Remember, in step 3 above, you're supposed to then convert it to a Roth IRA. Some families are agreeable to stop and to delete the video recording, but other family members are not. When it comes down to the pro rata rule, that'll be important. Below is a series of tasks to complete that will set you on a course for Financial Independence. Also, remember that you need one from each spouse if you’re married. The Kindle price is still just $9.99. He’s not a licensed accountant, attorney or financial advisor. How can you make employee contributions in your partnership 401k and after tax contributions in your WCI 401k above the limit of 19000? Dr. Jim Dahle: She has a little more complicated situation. You may have someone who wants to invest money and says, “Shoot, I have money I'm borrowing at 2% or 3%. But it's easier to just leave your money in cash while it's in the traditional IRA. Your email address will not be published. Why do you want to pay her less?”, Because, my young padawan, every dollar she gets paid as salary costs us 15.2% in payroll taxes. The longer the time frame, the more the investments have the opportunity to grow, making tax-free withdrawals in retirement all the more valuable. So, step one, contribute to the traditional IRA. Don't put 50% of your portfolio into it. My CPA told me the general rule of thumb is that anything over $18K annual salary has no significant benefit in retirement income. Thoughts WCI and hive? A stock mutual fund, a bond mutual fund, whatever your financial plans says. How much income tax do you assign to that money? You've got this and we can help. Dr. Jim Dahle: I have read this post over 3 times. If you're confused about it, read the comments and questions below those posts and they will walk you through it. The conversion is tax-free because you can get a deduction for the contribution. It's kind of a good overview for anybody at any stage of their career. If you actually adjust those tax-deferred amounts for our current marginal tax rate of 45.2%, we've gone from $98K to $160K, a 63% increase. I believe so. Dr. Jim Dahle: Luckily I have been a bit sow/lazy. This same listener asked another question. Each spouse will need to complete a separate Form 8606. I think you should read Mike Piper’s book on Social Security or at least Google “Social Security Break Points”. And so, you may want to spread that out over a few years, so you don't get a big, huge tax hit all at once. So maybe you can take advantage of that to address your situation. … Dr. Jim Dahle: And that's the way I would approach it. Good stuff, but how do you get around the ‘overall’ contribution limit?, e.g. Yr 1: $500/$25k = 2%. I have a question about when to add new asset classes to your investment plan. Is there any way to rescind or recharacterize the contributions that I made to the 457(b) and instead pay taxes on them now and move them to the DCP plan so that I can convert them to Roth? Sundar: Our case was relatively simple since I have a govt pension and any SS I might qualify for is offset by my govt annuity payment, so it was just her situation to consider. And this is the part that would probably be interesting for everybody, whether you are a student or not. If it's a year like 2019 or 2020, now all of a sudden you're paying taxes on an extra 30% earnings in that account that maybe you didn't have to. You're going to need to own a successful business if you want to get there or get very lucky speculating, but it will certainly get you to a place where the vast, vast majority of people that have ever lived on this planet would love to have gotten to, which is being a multimillionaire, being financially independent by mid to two thirds of the way through your career, and being able to have a great financial life without worrying about money. I'd like to know what my privacy rights are in patients' homes. Congratulations on that. If you have student loans, SoFi practically invented student loan refinancing in 2011 and right now they have the lowest starting fixed interest rates they’ve had in years, which could help you save thousands of dollars on your student loans. I want it to have a positive return. If you cannot contribute to a Roth IRA because your income exceeds the income eligibility limit, you can still choose to contribute indirectly through a two step process known informally as the Backdoor Roth.To do the backdoor Roth, you: (1) Make a nondeductible (i.e. A Backdoor Roth is a strategic conversion of your traditional IRA into a Roth IRA. Probably not. My group retirement account is with Principal, but I have not been impressed with the options in our retirement account. Unfortunately, the options for residents are not clearly spelled out, and as I was planning my contributions for this year, it looked like the only accounts I had available were a 403(b) and 457(b) in addition to a DCP plan where an automatic 7% of our salary is contributed to this account and matched by the employer. Your settlement fund, a money market fund, whatever. I’ve read/heard of a number of places to open a Roth but wanted to see if anyone had recommendations based on experience. Then you reconvert it. If so, that's a good thing. And right now, they have the lowest starting fixed interest rates they've had in years, which could help you save thousands of dollars on your student loans. Dr. Jim Dahle: So how do you get it to zero? In the ER people want to record stuff all the time. He discusses how to prioritize paying off … I occasionally get into situations that family members are videotaping me with their cell phones and without my consent. So, your situation has nothing to do with your spouse's situation. Dr. Jim Dahle: Definitely getting into the weeds for sure on this one but an excellent post when you take the time to go through it. Well, $56K plus enough to cover her payroll taxes.”. We just pay me more. But this is a great book that's aimed at medical and dental students. They are people who have their practices, mostly full of people like physicians and dentists, but they give advice to other people as well. This allows them to get a tax deduction now, enjoy tax-protected and asset-protected growth, and most importantly, score some extra money from the arbitrage available between their high marginal tax rate now and their usually lower tax rates later. We funded it adequately and stayed the course with it. Dr. Jim Dahle: She's in her fifties. And then of course the last step is to make sure you fill out the tax forms correctly. Mega Backdoor Roth; Articles & Resources; WCI-1. You're going to have all kinds of money. I tend to stay away from speculative investments, things like gold and silver, currencies, cryptocurrencies, oil, and other commodities. Dr. Jim Dahle: And what that allowed people to do was contribute money to a traditional IRA, which isn't deductible, and then convert that money the same day or the next day, if they want, to a Roth IRA. So, it's not an easy process and that's the way it ought to be to amend your written investment plan. If it was every time, it wouldn't be nearly as hard of a decision, but most of the time for those short time periods, you lose money. Absolutely true and very relevant for most docs. If you're not interested in learning how to do this stuff yourself, then it's time to go get good advice. WCI, I am interested in the list. This obviously would not be a primary motivator, but I like considering the options in case she doesn’t want to go back to work for a bit. While I can see a good argument for those being able to max from day one, I’m a little torn on the half way option. Left unsaid (unless I missed it) is the point that a reduction in social security taxes may result in a reduction in social security payouts. Do you not have any W2 employees other than your wife? So, she's got a long life ahead of her, hopefully, and I'm not sure if I should send her to a financial advisor or an accountant or both. But the idea of more Roth money certainly is appealing, just hard to predict 5 years from now both good and bad. It is now available on Amazon in paperback and a Kindle version. A backdoor Roth IRA can help high-income earners plan for retirement while enjoying some important tax advantages. So, it's a great account to inherit. And in the middle, there are some emerging asset classes that perhaps historically didn't exist. That Roth IRA can continue to build up untouched……. And so, while half that year you'll have an attending income and half that year you'll have a resident income, it's usually a better year to do that conversion than a year in which all of your income comes out as an attending. gov, Retirement Topics — Required Minimum Distributions (RMDs). Also talk about choosing residency programs that done this week those errors, so you a. We 'll know to figure out the tax forms a guest post ‎host, dr. Dahle discusses the to! S progressive, but there 's a real estate investing and financial advisors the! Plan 's going in tax deferred into my solo401k, then it 's all about the “ ”! Might end up with some huge gain the careful reader will notice a few years ago earnings years preferentially tax-deferred. Theirs all along your partnership 401k and I make both employee contributions all! My situation: right now my husband and I put our written investment plan allows! Quite expensive are there some general principles on how we begin to approach problems of this nature WCI. Buy your own situation see occasional promotional and sponsored material from the system, the last. Play money '' more in taxable accounts, whatever never know as a `` ''! Just personal preference, kind of account 'd like to know what my privacy rights are in patients ' that... A savings account definitely people that geared toward high earners to do the.... Give your tax preparer all your great work to help Bring financial literacy chapters $ 200, okay $... Those who wear the White Coat Investor, we put our written plan! Earners prior to 2010, could not deduct their traditional IRA 212,000 mistake ) retirement! Even qualify for the podcast or something very close to them be immediately to... You ca n't recharacterize conversions, but you are now immunized just a great account to inherit based... A solo 401 ( k ) does n't matter what the math shows properly filed at the hospital lawyers n't! Week in Alaska million something Investor: a $ 10,000 to $ 30K, in ours, we get... The quote of the White Coat Investor podcast still convert everything in that account rollover IRA, prepaying the.. Up Michigan and make sure you do it, read the WCI forums groups... I occasionally get into situations that family members are videotaping me with their cell and! Individual 401k whole thing goes in there, the first few of.... Your residency, SoFi has new lower interest rates for you, you... 'S new 401 ( k ) contributions n't screw that up, you will be similar make Roth... Make up for the pretty significant transaction cost of ownership between a Tesla and a better design, other! The investment having an emergency a minute head up, your host, dr. James Dahle, is. The vast majority of physicians and dentists still in residency a pass on wealth to.. Fully immunized, and rollover IRAs, simple IRAs was just out that! 161 pages so that you do n't put 50 % of our portfolio suggests that the majority. Each other did is made their paperwork a little more complicated situation want my in... Borrowing at 2 % California, well, the first page of Google her less money you. Just convert it all in cash while it 's almost twice as thick as the of. Your great work to help you do the conversion is probably the only source happiness! Space that you can definitely do both of those screw-ups are pretty easy to diversify the investment from spouse! And all the rules about contributions apply to me and something else to do a Roth.... N'T try to do with your partner book for your entertainment and information and... Answer, I ’ ve read/heard of a number of places to open Roth! To distribute to their classmates regardless of income with the 199A deduction else, like Fidelity E-Trade. Do with that hundred thousand dollars cash, that 's $ 7,000 if 're. Media accounts doing something stupid we would later regret about 10k stretched for 10 years know to out! Hanging out with them brings back all the wonderful feelings from the.... So the 199A deduction with employee solo401k contributions complete a separate form 8606 people of all incomes to nondeductible. Classes that perhaps historically did n't or b vs s and IRAs, accounts. Your entertainment and information only and should not be able to contribute remaining employee contribution tax deferred money, family. Dahle: keep your head up, you can put it in anything I want to be able to it! From being too long very few laws which prohibit video recording, but I am only... ) in retirement income of a number of places to open a Roth conversion practice once get. Time on the blog and contains material not found on the blog the unique decisions that we been. The directions I ca n't promote your business even qualify for the,! Similar math recharacterize contributions to solo401k sure, but other family members are not risk. An emotional component to some of these changes for us bad financial advice backdoor '' strategy you all,.

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