Should I Hold Off On My Back-Door Roth Conversion For This Year?
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How do you do that? Is there any video showing how to go about doing this?
The bill did fail but it's important to note that it's technically still on the table. Uncle Sam doesn't have this as a priority but it will be addressed definitely by 2023.
Thank you for the explanation. Love Dave!
So let's call it Baby step 8?
Dave loves going in the back door
When I have read about a back door Roth it has been from people that contribute after tax money to a 401k, and then convert the entire account balance to a Roth. The employer match goes into a separate pretax account. Any additional tax due on the conversion would be only for any growth in the after tax account they converted.
Mr Dave – You are converting company match to Roth because 1. you might not plan to retire or 2. you have good wealth built you want hassle to investment for kids or 3. avoid RMD hassles. But for many middle class Americans thats not a wise advise to share. Once they retire they could withdraw at lower tax rates because one will have not much income and they will be in lower tax brackets, it is wiser to convert then.
The non-technical language being used is so…frustrating.
It's not "rolling it to a Roth". It's performing a conversion to a Roth IRA. It's no an after-tax Traditional IRA. It's making a non-deductible contribution to a Traditional IRA.
I hope it will extend till 2025 or 2030. I’m on building up my emergency fund at the moment.
PUT IT IN DIVIDEND STOCKS…
Trying to get as much money in a Roth as you possibly can is often a good idea.
Not sure why my comment was deleted….wtc? mod?? I'm just trying to HELP your viewers…sincerely
It is not a loophole. It is explicitly allowed as of the 2017 Tax Cuts and Jobs Act.
Did mine last week. I’m far from rich not even close to a millionaire. BS if they end it.
Dave REALLY needs to learn about how much better ETFs are taxed. You don’t pay cap gains until you sell it, unlike mutual funds where you pay for their turnover every year. Its far more efficient for all taxable investors. Dividends obviously taxed the same on both.
I don't know that the backdoor conversion is a loophole. That implies it happened accidental the government wants money now instead of waiting for your retirement.
Originally they did the backdoor roth as a way to get tax revenue. It is possible that the backdoor Roth could go away but the question comes up does the government want revenue now or wait until you start taking the money out. Do they hate millionaires more than they want their cut now? In any case if it was in a small bill that doesn't include pay offs to Democrat donors it might have a chance of passing. If Joe Mansion wants to get re elected he won't pass those types of bills
The $200,000 income (AGI) limit Dave mentions is only for married people. For us single folk, our max AGI is $144,000 before we lose the ability to directly contribute to a Roth IRA.
I wish Dave would skip all those snarky political statements.
Is the 200k limit gross or AGI?
The one thing is to be careful about with backdoor Roth is doing conversations when there are other existing rollover IRAs. If you have these and do a non-deductible IRA contribution, it will convert part of the rollover IRA which gets taxed. You cannot specify which IRA contributions get converted, it just takes it pro rata out of whole between rollover and non-deductible IRA.
Roth IRA limit is 130k not 200k
Great conversation
I have heard Dave talking about the S&P 500 index fund several times here lately. Normally all he talks about are actively managed mutual funds.
Back door Roth may be gone next year, no one knows. So anyone who has the right situation to be able to do it, should do it!
Dave is the personal finance king! I am inspired by his channel. Dave inspires me to continue my own YouTube channel on Finance and Investing.