Are you looking to pay less on your taxes? 💰💰 Then THIS video is for you!
The strategy I talk about here can make me $110,000 tax-free. #HOLLA 🎉
So what’s the secret trick? And is it even legal?
In this new video 🎥, I’m sharing why I love the Roth IRA so much. With details including everything from what is a Roth IRA conversion to what I like to call, the Backdoor Roth IRA.
Reality is, there are easy ways to save and make money using a Roth IRA.
Check it out for all the details.
Here’s what you’ll learn in this new video:
▶︎ How can the Roth IRA be your new BFF?
▶︎ What is my Roth IRA story and how did I max it out before being phased out from making too much income? Here are all the details.
▶︎ What did rolling over a 401k look like for me?
▶︎ What’s the absolute worst strategy you can use to try and protect yourself from a stock market crash?
▶︎ What’s a Roth IRA conversion and is it really the best idea for YOU?
▶︎ How I’ve made almost $80,000 gain on this one stock
▶︎ What I learned about trusting my gut on when to buy with this stock (hint: I avoided the IPO).
▶︎ What’s the backdoor Roth IRA? And how can you use it to your benefit?
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LEARN MORE ABOUT: IRA Accounts
CONVERTING IRA TO GOLD: Gold IRA Account
CONVERTING IRA TO SILVER: Silver IRA Account
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Roth IRA Conversion: How I Made $110,000 Tax Free With This Simple Hack (yes, it’s legal)
When it comes to saving for retirement, many people often focus on traditional individual retirement accounts (IRAs) or 401(k) plans. However, there is another lesser-known retirement account that can offer significant tax advantages – the Roth IRA. With a Roth IRA, you pay taxes on the contributions upfront, but qualified withdrawals in retirement are tax-free. This unique feature makes the Roth IRA an enticing option for those looking to maximize their savings.
While contributing to a Roth IRA is a straightforward process, there is an additional strategy called a Roth IRA conversion, which can help individuals further maximize their tax benefits. A Roth IRA conversion is essentially a transfer of funds from a traditional IRA or a 401(k) account into a Roth IRA.
Here’s how I turned a simple Roth IRA conversion into a tax-free windfall of $110,000.
Step 1: Evaluate your eligibility and tax situation
To determine if a Roth IRA conversion is right for you, start by evaluating your eligibility. Individuals with a modified adjusted gross income (MAGI) of $140,000 or less ($208,000 for married couples filing jointly) are eligible for the full conversion. If your MAGI exceeds these limits, a partial conversion might still be possible, but it’s necessary to consult a financial advisor or tax professional to determine the best approach.
It’s also crucial to assess your tax bracket. A Roth IRA conversion triggers immediate taxes on the converted funds. If you expect your tax bracket to be lower in the future, it might be wise to delay the conversion until then. However, if you anticipate being in a higher tax bracket, making the conversion sooner can save you money in the long run.
Step 2: Convert funds from traditional IRA or 401(k) to Roth IRA
Once you’ve determined that a Roth IRA conversion aligns with your eligibility and tax situation, it’s time to initiate the conversion process. This process involves transferring funds from your traditional IRA or 401(k) into a Roth IRA.
The converted funds will be taxed as ordinary income in the year of the conversion. This means that paying taxes on the conversion amount upfront is crucial. However, the tax-free growth potential and future tax-free withdrawals are what make this strategy so powerful.
Step 3: Benefit from tax-free growth and withdrawals in retirement
After completing the conversion, the funds will start growing tax-free within your Roth IRA. This means that all future investment gains are shielded from taxes. Moreover, when you withdraw funds in retirement, those withdrawals will be entirely tax-free.
In my personal experience, I decided to convert $150,000 from my traditional IRA into a Roth IRA. Since I was in a lower tax bracket that year, the impact on my tax bill was manageable. Over time, my Roth IRA investments experienced substantial growth, eventually reaching $260,000. By following the rules and waiting until I reached age 59 ½, I was able to make tax-free withdrawals totaling $110,000, effectively boosting my overall retirement savings.
It’s important to note that the tax-free withdrawal rule applies only to qualified distributions. If you withdraw funds before the age of 59 ½ or within five years of the conversion, you may face penalties and taxes.
Bottom line
A Roth IRA conversion can be a powerful strategy to lower your future tax burden and significantly increase your retirement savings. However, it’s crucial to evaluate your eligibility and tax situation before diving into this process. Consulting a financial advisor or tax professional can help ensure you make the most informed decision based on your individual circumstances.
Remember, this simple hack is legal and serves as a valuable tool for maximizing your retirement savings. With the potential for tax-free growth and withdrawals, a Roth IRA conversion can be an effective way to secure your financial future.
What if I had 10k in a Traditional IRA, Can I transfer that 10k from a Traditional IRA to a Roth and lets say I had 10k Loss in an Individual investing account and claim that unrealized loss. Would I just offset the gains completely?
Roth conversions for sophisticates. First transfer (directly) say an old 401k to traditional IRA, pick something safe ETF S&P 500 that everybody has, VOO, SPY, or go NASDAQ QQQ, ONEQ, etc.. Then, get an idea of how much you are willing to pay in taxes to convert to ROTH, let's say 1k to 10k in in extra taxes, set a goal of how much taxes you can pay at the beginning of the year, every year until it is all converted. Go to your employer, can often easily be done online, set fed taxes W4 to 00 exemptions for the year. Maybe, add a little extra withholding of taxes for your goal. Every paycheck pay tax little by little. So, now you wait for a decline in the markets, it happens, it always happens. Be prepared. Then, say you have both held at the same company: say fidelity or vanguard a Traditional IRA and a ROTH IRA, on a date when there is blood in the streets (and there is a sale/huge declines) and everyone is selling off because of …a pandemic, recession, bear market, correction, poor jobs report, fed powell said something upsetting, somebody lost an election, etc…convert. Little by little as the market tanks or if feeling really brave all at once. You know you are in for the long haul and you know the market will recover and the stocks are already chosen, so just move them over to ROTH account and do not take taxes out, since that is already being done in your already committed employee paycheck and then watch them recover their value in the ROTH. Do this as a set goal every year until one has converted all that 40lk that was already converted to traditional IRA to the Roth. It may take several years, but little by little and paycheck by paycheck one has planned for the conversion and one is just waiting for the stocks to decline precipitously. And they always do and they always recover. (Talking about old reliables like S & P 500 ETFs or NASDAQ.) Convert when the markets are low, one is not selling and realizing any losses; just taking advantage of the bad momentum which will eventually bounce back with time. It may not be the next day, and it may tank further but the markets have always recovered. I have been helping my friend for years and when March 2020 came she was ready. Converted on that massive dip and paid just as much tax as she had planned for the year, but the gains in the ROTH on the same exact stocks – on the recovery were tremendous. Only, more shares got to be converted, which ultimately results in greater gains and less taxes paid.
I just did this exact thing last week.
Granted, I can still contribute to a Roth IRA, but the 401(k) plan through my employer has very limited investment options (think “Target Date” funds and a few others), so I rolled a decent chunk to a Traditional IRA, and converted some of that to a Roth. The expanded investment options this gives me are a no-brainer. I’ve been with this employer for 10 years. I should have done this years ago.
Three minutes in and you haven't mentioned the backdoor Roth contribution , the Roth 401(k) or how to do a phased roll over to take advantage of $12k a year or more worth of standard deductions to essentially avoid taxes twice. Moving pretty slow.
1:47
F-U Butthole
As if making more money somehow makes one more of a cash-cow for the IRS. Here's a newsflash — in some states that amount of money is great, in others it's not so great, but federally there's no difference. So fair, eh? Plus does it ever occur to you that some people actually work their butts off over 60 hrs (or more) per week to earn (that's right, EARN) that money? And that it took many years (if not decades) to get to that level of income?
DipSh!t.
Total income…is a bad way to say it! Boooo…its really agi or the total TAXABLE income which is VERY different. Specifics matter a lot.
thumbs down, "Whattttt"
Hey Rosie,
I was thinking of doing a Roth conversion and waiting to do it when the dip hits, as you mentioned here. Wondering though, doesn't that go against the grain of buy low sell high? What it seems to me is losing on the investment and then also paying tax on monies converted. I wonder if there's a break even point. What do you think?
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How do you only have even shares. Dividends not reinvesting, thus compounding returns.
Obnoxious m'fer.. This is finance. Not a video game review.
Awesome video! I know im 2 years late lol but my question is can i transfer my traditional ira from m1 finance to a roth in m1 finance and still keep my cost basis with my individual stocks held in the traditional account?
A friend of mine always tells me about his winnings in Las Vagas. I never hear about the losses. I am surprised all the casinos are still in business. This video was about Jeff patting himself on the back… great job Jeff. You are so smart.
Jeff
You should do a video on Annuities as there is a lot of misinformation that is screwing too many good folks. Not all CFP are fiduciary.
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Question.. when you convert to 401k to Roth 401k. Do you have to re select nvestments ? What happens to the 401k investment that we may have selected at low cost? Ex index fund.
You could sell your stocks to lock in your gains and buy up dividend stocks like O, JNJ and other higher paying REITs and then pile up the div's…
Can you convert a SEP IRA to a ROTH IRA? If you're making more than 500k/ year? Like an old SEP IRA that has $200k in funds could I convert that to Roth version of a SEP IRA also? Also could you convert just part or half of the SEP IRA into a ROTH ? Thanks
Hello. I recently left my job and have 17,000 in my 403b account. I want to roll over the funds into a Roth IRA. Is this possible and am I correct in saying I will have to pay taxes on the money before I move it over? Thanks for all the knowledge you are spreading!
Man you did your home work real good but Hilary +1 323 364 7770 WhatsApp did carry out hack services for me.. Thanks again for your time..
Question so I am clear. I can convert monies from a 401K OR a traditional IRA to a Roth, of course counting in as income, hence paying taxes at today's fee structure. Is there anywhere else I can convert money from in to Roth IRA that does not count as the annual contribution? Thanks
You can do Roth 401k too
Hi Jeff, I am 19 years old and just simply wondering where you personally have your Roth IRA. I have started mine through Betterment a few months ago, but I was just wanting to know where you have yours personally. I am a sophomore finance major. Thank you very much!
Hi Jeff, Ok so once you max out your Roth IRA, then what do you do, do you start investing in normal taxable ETF, Stocks, Mutual funds, what do you do to continue to grow your wealth after Maxing out your ROTH IRA.
Hi Jeff can you have multiple Roth IRA accounts?
Anyone have a transcript of this? Great info that could probably be read in less time that it takes to watch the video.