043R | Mega Backdoor Roth | Should I Ever Consider Using the Roth?

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Choose FI has partnered with CardRatings for our coverage of credit card products. Choose FI and CardRatings may receive a commission from card issuers. Opinions, reviews, analyses & recommendations are the author’s alone, and have not been reviewed, endorsed or approved by any of these entities. Disclosures.

In this podcast we discuss our takeaways from Episode 43 with Fritz from the Retirement Manifesto plus an in-depth discussion of the Roth IRA conversion and Mega Backdoor Roth, and taxable income scenarios for retirement contributions.

 Podcast Episode Summary

  • Our big takeaways from Episode 43 with Fritz from Retirement Manifesto
  • Brad as a ‘Mystery Reader’ for his daughter’s class plus their trip to Natural Bridge State Park and a FI lesson for his daughters
  • How to tackle drawdown strategies and how that opened our eyes
  • The concept of balance that Fritz brought up in Episode 43
  • How we each have a different path to Financial Independence and we have to find what we each value and how much safety we require
  • How important the math is, but also how the personal side is an important part of the equation
  • Jonathan’s decision to pay off his student loans early and how this may not have been optimal mathematically, but was the “right” decision for him
  • Feedback from the audience on the episode, but specific points from Danny
  • Questions surrounding inflation on your safe withdrawal rate and early retirement
  • Feedback from the audience about delaying social security
  • The distinction between the Roth IRA conversion and the Mega Backdoor Roth IRA
  • The tax issues surrounding the Roth IRA conversion

 

Practical Application of the Mega Backdoor Roth

  • Vishal and Brad share the nuances of trying to navigate the Mega Backdoor Roth: They need to allow for after-tax contributions and in-service distributions/withdrawals
  • Explanation of the Mega Backdoor Roth
  • Email from Zac about the value of using pre-tax or post-tax retirement contributions when you’re already in a low tax bracket
  • Where is the line where we’d consider putting into a pre-tax or post-tax retirement account?
  • A scenario of someone with a $25,000 income and where they’d fall in the tax brackets and how to lower that
  • A scenario of an individual with a $60,000 gross income and what they should consider with their retirement contributions
  • How would Brad and Jonathan choose if they were in this situation?
  • Itunes reviews and book giveaways

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Links from the show:

Books Mentioned in the Show:

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Choose FI has partnered with CardRatings for our coverage of credit card products. Choose FI and CardRatings may receive a commission from card issuers. Opinions, reviews, analyses & recommendations are the author’s alone, and have not been reviewed, endorsed or approved by any of these entities. Disclosures.
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