Question: Jon, VA - Hi Joe and Big Al, love your show and listen regularly. I am 53, I have no debt and recently retired. I was a franchisee of one fast food restaurant that I sold in December for $5.3 million dollars!! I have that money invested but my question is about my 401k money. Due to the sale of the business I recently had to close down my company 401k plan. I transferred my 401k money to an IRA with a local investment company. I had $733,811 in my 401k when I moved it to an IRA. I met with my advisor today and that due to my age I may want to consider doing a backdoor Roth conversion. Tax free growth and no required minimum distribution (RMD) sounds GREAT but I am having trouble swallowing the tax that would be due if I did this. Taxes would be somewhere in the $330,000 range. Is this a smart thing to do or should I do it in smaller amounts so I could stay in a lower tax bracket. I am not sure what my income will be in the years ahead other than I do have a couple rental properties that will bring in roughly $35,000 in income. What is your opinion on this backdoor ROTH, does it make sense for me? Listen to the full Your Money, Your Wealth® podcast episode: Download The Ultimate Guide to Roth IRAs: Pure Financial Advisors, LLC is a fee-only Registered Investment Advisor providing comprehensive retirement planning services and tax-optimized investment management to thousands of people across the nation. Schedule a free assessment with any one of our experienced financial professionals: Office locations: Ask Joe & Big Al On Air: Subscribe to our YouTube channel: Subscribe to the Your Money, Your Wealth® podcast: IMPORTANT DISCLOSURES: • Investment Advisory and Financial Planning Services are offered through Pure Financial Advisors, LLC, a Registered Investment Advisor. • Pure Financial Advisors LLC does not offer tax or legal advice. Consult with your tax advisor or attorney regarding specific situations. • Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. • Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. • All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. • Intended for educational purposes only and are not intended as individualized advice or a guarantee that you will achieve a desired result. Before implementing any strategies discussed you should consult your tax and financial advisors. CFP® - The CERTIFIED FINANCIAL PLANNER™ certification is by the Certified Financial Planner Board of Standards, Inc. To attain the right to use the CFP® designation, an individual must satisfactorily fulfill education, experience and ethics requirements as well as pass a comprehensive exam. Thirty hours of continuing education is required every two years to maintain the designation. CPA – Certified Public Accountant is a license set by the American Institute of Certified Public Accountants and administered by the National Association of State Boards of Accountancy. Eligibility to sit for the Uniform CPA Exam is determined by individual State Boards of Accountancy. Typically, the requirement is a U.S. bachelor’s degree which includes a minimum number of qualifying credit hours in accounting and business administration with an additional one-year study. All CPA candidates must pass the Uniform CPA Examination to qualify for a CPA certificate and license (i.e., permit to practice) to practice public accounting. CPAs are required to take continuing education courses to renew their license, and most states require CPAs to complete an ethics course during every renewal period. #BackdoorRothIRA #RothConversion #Retirement...(read more)
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The concept of the "Backdoor Roth" has been gaining popularity among savers who want to take advantage of tax-free retirement savings options. But what is it exactly, and is it worth it? In this article, we'll explore the Backdoor Roth strategy and whether it's a good fit for you. First, let's define what a Backdoor Roth is. It's a way to contribute to a Roth IRA (which grows tax-free and withdrawals are tax-free in retirement) when you've exceeded the income limits to contribute directly. The Backdoor Roth is achieved by contributing after-tax dollars to a traditional IRA and then converting that money to a Roth IRA. So, is it worth it? The short answer is: it depends on your individual situation. If you're already in a high tax bracket and have maxed out your other tax-deferred savings options, then the Backdoor Roth can be a great way to save for retirement tax-free. But if you're in a lower tax bracket, it may not be as beneficial. One key factor to consider is future tax rates. If you expect to be in a higher tax bracket in retirement than you are currently, then a Backdoor Roth can be a strategic move to pay taxes now at a lower rate. On the other hand, if you expect your future tax rate to be lower, it may be more advantageous to stick with a traditional IRA and defer taxes until retirement. Another consideration is how the Backdoor Roth may affect your current tax situation. If you have a lot of pre-tax money in traditional IRAs, the conversion to a Roth may trigger a large tax bill. It's important to consult with a financial advisor or tax professional to understand the potential tax implications before making a decision. In summary, the Backdoor Roth can be a valuable tool for high-income earners looking to save for retirement tax-free. However, it's important to weigh the potential benefits against your individual tax situation and future expectations. As with any financial decision, it's best to consult with a trusted professional to determine what's right for you. https://inflationprotection.org/ymyw-podcast-can-i-remain-in-lower-tax-brackets-by-considering-a-backdoor-roth/?feed_id=88509&_unique_id=643c9c872fdde #Inflation #Retirement #GoldIRA #Wealth #Investing #assetallocation #backdoorroth #BigAlClopine #FinancialPlanning #financialpodcast #investingforbeginners #investmentportfolio2022 #JoeAnderson #lowertaxes #personalfinance #personalfinance101 #personalfinancepodcast #purefinancialadvisors #requiredminimumdistributions #retirementplanning #retirementpodcast #RMD #stayinalowertaxbracket #TaxBrackets #taxfreegrowth #TaxPlanning #YourMoneyYourWealth #BackdoorRothIRA #assetallocation #backdoorroth #BigAlClopine #FinancialPlanning #financialpodcast #investingforbeginners #investmentportfolio2022 #JoeAnderson #lowertaxes #personalfinance #personalfinance101 #personalfinancepodcast #purefinancialadvisors #requiredminimumdistributions #retirementplanning #retirementpodcast #RMD #stayinalowertaxbracket #TaxBrackets #taxfreegrowth #TaxPlanning #YourMoneyYourWealth
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