The $65,000 Roth IRA Mistake To Avoid
ฝัง
- เผยแพร่เมื่อ 5 ก.พ. 2023
- One of my favorite retirement accounts is a Roth IRA for many different reasons. A Roth IRA is a type of individual retirement account that allows individuals to make after-tax contributions to the account, and to withdraw the contributions and earnings tax-free after a qualifying period. In this video, I'll go through 10 of the most common mistakes I see investors make.
Learn more about the 2 Fund and 3 Fund portfolios here: • Investing Strategies
Check Out My Recommendations (It helps support the channel):
🔥 M1 FINANCE Investing- Free $10 (once you deposit at least $100 within 30 days) bit.ly/427KBBn
📚 Here's a video on how to use M1 Finance • M1 Finance Investing T...
📝 NewRetirement - The retirement planning tool I personally use to make sure I'm on track with saving for retirement. It's perfect for "Do it yourself" investors bit.ly/3EAAhrJ
🔒 AURA - 14 day free trial to see if your personal information has been leaked online and have it removed aura.com/jarrad
📝 Empower - Free Net Worth Tracker bit.ly/3NUNtwq
📧 Business Inquiries: JarradMorrowYT@gmail.com
A non-working spouse can open a Roth IRA if their partner has taxable income and they are married and file their taxes jointly. In 2023, the contribution limit is $6,500 for those under the age of 50 and $7,500 for those 50 and older.
Maxing out your Roth IRA every year is extremely important. Since you cannot go back to retroactively contribute money for previous years, you should try to contribute up to the limit every year. You have up until the tax deadline (of the following year) to contribute to the current year.
I've seen a lot of people forget to invest money once they deposit it into their Roth IRA. This is a big mistake a lot of people make because this is how they're expecting to grow their money for retirement. It helps if you have automatic investing set up for your account so you can avoid this issue.
Withdrawals from a Roth IRA before age 59 1/2 are generally subject to taxes and penalties unless they meet certain exceptions. Some of the most common exceptions include being able to withdraw your contributions. Another is for first-home buyers where you can withdraw up to $10,000 for the purchase without incurring taxes or penalties. There are a few others and there are restrictions with each one so do your own research on this one.
Maxing out your Roth IRA before your Taxable Brokerage account is very important. A Roth IRA is exempt from taxes while the money is growing and when you withdraw it. With a taxable investment account, you have to pay taxes on the dividend distributions, while it's growing, and when you withdraw any gains from the account. From a tax perspective, it makes sense to make sure you've contributed up the max within your Roth IRA before investing in your taxable account.
Understanding your personal risk tolerance is very important so you don't invest in a way that doesn't suit your personality and long-term goals. Since money with a Roth IRA is never taxed, you want this account to get as large as possible. This could cause some investors to take on more risk than they normally would try to get this account to grow very large. It's not worth it so make sure to understand how much risk is right for you.
You have to be under a certain income limit to be able to contribute to a Roth IRA. I list out what those look like in the video. If you happen to be above them then you can still contribute to a Roth IRA through something called a Backdoor Roth IRA. Make sure to understand the tax consequences before doing this.
Affiliate Disclaimer: Some of the above may be affiliate links. Support the channel by signing up or purchasing through those links at no additional cost to you. I appreciate you for helping me keep this channel running.
Disclaimer: This video is for entertainment purposes only. Everyone's situation is different so do your own research before making any decisions with your money. If you need help then contact a Certified Financial Fiduciary before trying anything that is mentioned in this video. I prefer a Fiduciary financial advisor that charges an hourly fee as opposed to an ongoing fee based on a % of your portfolio.
Check Out My Recommendations (It helps support the channel):
📝 NewRetirement - The retirement planning tool I personally use to make sure I'm on track with saving for retirement. It's perfect for "Do It Yourself" investors bit.ly/3EAAhrJ
🔥 M1 FINANCE Investing- My preferred investing platform. Get a free $10 (once you deposit at least $100 within 30 days) bit.ly/427KBBn
Here's a video on how to use M1 Finance th-cam.com/video/kEOS-w21U3c/w-d-xo.html
🔒 AURA - 14 day free trial to see if your personal information has been leaked online aura.com/jarrad
📝 Empower - Free Net Worth Tracker bit.ly/3NUNtwq
I did not work last year. Is there a way I can contribute? I know the implications if the contribution is not a pretax money. I have save money from former years or work. I am also single no husband to contribute. I am feeling the pain of not been able to contribute.
Not unless you're married and you file your taxes jointly (the first mistake I talked about)
My question is, wouldn't one Roth IRA that you contribute $6000.00 vs having two at $3000.00 result in higher dividends from compound interest over time assuming both investments are giving about the same rate of return?
@@part1801 No: $6k * 5 growth = $30,000. [$3k * 5 growth = $15,000] + [$3k * 5 growth = $15,000] = $30,000.
I am 52 and just started my Roth IRA! I know I am behind the ball but I will do the best I can to get my life in order! This is great
Love that mentality. Keep up the good work 👍🏻
you are not alone. Im 44 and just learning about all of this
Just opens mine today I’m 27 and I feel stupid for how long it took to get my life straight
@@JamesBurchetteyour in good shape bud. Compared to other people
Never to late to start try to get out of debt first and secure a paid for house at same time
I've been retired going on 5 years. Have a decent size Roth account. I'm going to cash out about half of it and buy my dream car, close to 150k. Don't tell me it's a dumb idea. Saving your whole life and not buying what you want is a dumb idea.
I don't think that's a dumb idea if you can afford it so I'm happy for you! 👍🏻
Hey what's your dream car? I'm a car guy I just gotta know. Also big congrats 👏
@@Jack-id4qm 🚔Porsche 911 not sure what trim yet. I'll wait a few months and see what the market does. Lots of rumors a big market crash is imminent. Also waiting on the release of the 2024 models. Hopefully will take delivery in early 2024. 👍
@@rustyme1122 u only live once enjoy that porche my friend!! Heck of a car!
Hell ya brother! As long as you know it’s not ruining all your hard work, buy it! Being that you’re a Porsche fan I’m sure you want RWD. Being an older gentlemen, a manual? For that money you can get a GT3 RS, cream of the crop really. On the less expensive but still incredible side, the Carrera GT.
Im 40 and just graduated from accounting and im starting. Its not where you start but where you finish
I want to tell you that in the past years I've watched the youtubers which you described in your videos and it wasn't until I watched your video today that it actually made sense, what you are saying is the RIGHT thing to do. I've subscribed to your channel, thank you for the insight.
You explained this so well. Thank you!!
I just opened a Roth IRA account and this video was just the thing I needed! Thanks!
Dude, thank you for sharing! I have so much to learn.
I just found your channel and LOVE you info. It has helped me A LOT. With this video, I had opened a Brokerage Account w/ Fidelity and was days away from investing in the Brokerage AND Roth IRA.... Luckily, i watch the video and am going strictly with the Roth IRA. Appreciate the help!
Thanks for going over these mistakes
No problem. Glad it was helpful!
Thanks for the content with no bulls**t. Going to subscribe!!!
Appreciate it!
Preach it brother! I love how you don't beat around the bush and tell people how dumb it is to withdraw from a retirement account before they are retired. Money in before retirement, money out after, period.
That one makes me cringe so much whenever I hear about someone doing it.
The government gives too many ways to use your retirement money before retirement. If they want to really help people, they need to get rid of all of the exceptions.
This is a GREAT video. More people to need to know this information. I can’t emphasize enough just important of a topic this is. Good job, @Jarrad Morrow!
Glad it was helpful!
You explain this so well! Thank you
Glad it was helpful!
Thank you! This was very helpful. It looks like I’m on the right track.
Great to hear!
Just discovered your channel, will need to listen and learn! ( I made almost every mistake you mentioned here… )
38 and just opened retirement accounts late last year for the first time in my life. I maxed out my Roth IRA for 2023 just 2 days ago, I definitely plan to always max that and my 401k from now on.
Amazing video, good sir!!! Instant like and subscribe. Here’s one little known fact that no one ever talks about when it comes to a Roth. Whenever you re do this video, please add the “Married Filing Separately” condition of the Roth. I got married last year and my accountant broke the uncomfortable news to me. 😩😩😩
#10 - I am not 100% sure about the penalties myself but my understanding is that if you contribute more than you are allowed to in a given year, you must withdraw to the limit as well as any gains you obtained from it. The gains will be taxed at the current year's rate and a penalty will also be added for withdrawing before the allowed time/age.
That's correct. You have to fully undo the contribution so the retirement account has only the funds (and gains) it would have if you contributed the correct amount. I had this same issue. Easiest way was to call the brokerage firm that held that IRA roth and I told them the actual lower contribution limit I had to follow (due to income) and the brokerage firm helped to calculate the gain on that overage.
@@alexjones7845i i made more than the income limit to contribute to roth, and been contributing since 2020. Now i know i have to do the backdoor. However, how do i fix my contributions for the last 3 years? Would i have to pay early withdrawl penalties and start all over again?
@@alexjones7845 With most of the big brokerages, you can just set your account to automatically maximize contributions every year. There is no reason to go over the limit.
One of the few people on TH-cam with some sense 👍🏾
Explained very well
good video Jarrad. This covered all the foundational pieces of Roth IRAs. During the video, I kept thinking, "I hope Jarrad won't forget to talk about " and boom, you cover it a few seconds later. The biggest one was splitting a single year's contributions among multiple Roth IRA accounts. I was like, "Phew, he mentions this AND does not recommend it! :)" Awesome!
Thanks!
Hey that was great help appreciate that.
I love the flat out advice on early withdrawals. Early withdrawal ignores the power of compounding. I am sharing this with several of my friends of various ages. I wish Roth had been more available during our accumulation time. We have converted when available much of our funds to ROTH. Great, straightforward, fact-based advice!
How old are you? Roth has been available for a long time.
Thank you for explaining all of the ins and outs of Roth IRA's. I just opened one, but haven't funded it yet. I am planning to fully fund and invest it before tax day to get last year's contribution and then begin contributing for this year! I was defintiely wondering about different accounts at different brokerages, too.
Glad it was helpful! Happy to hear you’re going to be able to get 2022 maxed out in time 👍🏻
I agree with you 95% haha. If you have an opportunity to buy a good piece of real estate and you need the $10,000 from ROTH, it is not ALWAYS terrible. The 6% appreciation you mentioned is on the WHOLE property, not the $10,000. If you buy a $200,000 property and it appreciated 6%, your $10,000 down payment just increased to a $22,000 equity postion in one year. That next year would be $34k and this is only assuming the appreciation and doesn't take into account the principal pay-down of the loan.
That's over a 100% return tax-free for that $10,000 dollars after the first year. And don't forget, principal pay down, tax right off on interest, and owning where you live/opportunity for passive rental income in the future.
Just saying, you can't create a blanket statement that it's dumb to utilize the aforementioned functionality of a ROTH. For some, that $10,000 will be a massive game changer with gains way beyond even the $100,000 example if kept in the ROTH over 30 years. ROTH is powerful, but so is real estate.
Good information. Thank you.
You're welcome!
On the point of automatic investments. I had to set mine up with Schwab and just know that you have to set up the automatic draft from your bank account to the IRA then set each each mutual fund or whatever you're buying separately. Example would be you have to set the draft day as every Monday it pulls $150 then on Tuesday it buys $50 of mutual fund 1, $50 of mutual fund 2, and $50 of mutual fund 3. I assume most large brokers are like this and was a little more convoluted to set up than I originally anticipated.
Awesome advice. I currently invest into a Roth IRA with Fidelity in good growth stock mutual funds only. These mutual funds have a long track record of outpacing the S&P and a decent dividend yield. I also have a company 401k that I'm capitalizing on with the employer match as well.
Had no idea about the investing part as well. Thought contributing was investing. Thanks for the info.
You got it 👍🏻
As a Canadian, we don't have to invest the year of, in order to make use of the contribution room. in a TFSA (tax free savings account), the contribution room is carried forward and no timeline to invest is set :) There is also no penalty for us to withdraw all of our money (if need be!), even if it surpasses our initial contrition amount! All money withdrawn in a year will be available in contribution room the following year! To make things better, Canadians can use the TFSA for life! I just noticed to many differences between a TFSA and a Roth IRA! Great content and info!
Well Canadian taxes are insane so…..
roth iras generate so much more money though
The amount you get from an IRA is substantially more, it's not even comparable
If you live in alberta it is not as bad, and arguably cheaper than some states from what I understand.@@grady3691
Thank you for your video. It was very clear and straightforward. It made me feel more secure about investing in my Roth. I am looking forward to watching your videos that you recommended. New subscriber here for sure!
Appreciate your support 👍🏻
I love that you explained how the backdoor IRA work , and how to timing go , well done :)))
Glad it was helpful!
@@JarradMorrow
I thought they closed the back door.
it used to be $6000 limit on Roth + IRA contribution.
No, they never closed the back door. The limit increased to $6,500 starting in 2023
Needed this video man I opened up an ira and was thinking what if I ever need that money but ur right its for retirement and retirement only
Happy to hear it helped. It's something a lot of people struggle with so it's not just you. Building up an emergency fund will help prevent you from ever needing to touch Roth IRA money if you get in a pinch.
Nobody talked about rule #5 when I searched back in 2021. This is very informative. Thanks for sharing!
Love ur vids. Thx. In Vanguard, I have a brokerage, rollover IRA, and Roth accounts. Which investments do u recommend for these 3 accounts?
Great video Jarrad
Thanks!
I've made mistake #4 early on. My "financial advisor" told me about all the great benefits of an Roth IRA, but didn't tell me I had to invest it. Sounds silly now, but I didn't know much about investing and assumed they would do it for me. After about a year and no growth other than my contributions, I figured it out. Now I use the basic three fund portfolio (VOO, BND, VSGX).
Thanks for sharing! I’ve talk to at least 5 people who made this mistake. As obvious as it seems, I still felt it was important to mention.
That’s how we learn. Good choices!
@@AshorinaG Yes, I have a Roth at Fidelity. They are helpful there.
I just realized this today! I didn't know anything about this. After 4 years of opening the account and depositing max every year! 😬
🤦♂️
Great info 🔥🔥🔥🔥
Appreciate it!
Thanks Jarred, I really enjoyed this video. I am new to investing but I do have 3 Roth IRAs, one with Scwahb, Fidelity and Vanguard. I like ETFs and Index funds with each company but I wanted to “test drive” all 3 for a year or two and then settle on one for the next 20-25 years. Thanks for the content and I can’t wait until the next video!
I currently have Vanguard, I enjoy it but hear decent things about Fidelity(and there zero cost index funds).
I have one Roth IRA with Marcus which is auto-invested which I started last year. Was it easy to set up multiple Roths? I’m trying to decide which to go with next. I haven’t added for 2023 yet. Do you have a favorite? And you can roll them together later once retired? Thanks
Remember, the contribution limit is for all your IRAs together. You don't get to double or triple up because your have more than one account.
@@drewmqnthoughts on robo advisors?
Great video! Before even mentioning investing, this should be a starter video on investing.
Glad you liked it!
Solid advice!
👍🏻
I somewhat disagree about not using the money to buy a house, although the appreciation of a house is lower then ETFs, assuming returns of 8%, but if a house is a goal of yours then what better way to use it. A house gives you tax perks too and collateral to low interest loans to start a business or renovation to appreciate the house in value and gain income from it if you want to rent it out. Although, I used to max out my 401k and then some to Roth IRA until I purchased a home, now slowly increasing to max it out again, best to consider the short and medium term too, because that's where you will be doing most of your living.
Your hired Immediately !! Wish i could stop buy your office Today well Done
good information
Thanks for the video! I’m putting about $3800 Roth 401k and $3600 in HSA. Plus about $2800 in Roth 401k for company matching. I’m 33yrs old. And unfortunately I’m starting fresh on my retirement cause I took all out for dumb mistakes. It’s a bit late but I think I can still make it to a peaceful retirement, if I continue at this level or more in the future. 😊
You’re still young, you got this!! 💪🏻
Don’t feel bad I didn’t even get out of debt till 35 and started investing at 38. I had prior 401k plans but I always figured I would be dead before I hit the age so I sold and took the tax hit. Since I had my daughter I figured if I die beforehand she can get the money. So now I have the 401k, Roth IRA, and a standard brokerage account. Need to look into the health savings account though. The market is terrible right now and I personally feel it will stagnate for the next decade so bad timing. The last fifteen years was when all the money was made.
Try being in your 50’s and you got wiped out during the last recession and now your starting over !!! You’re doing fine
@@catherinesanchez1185 To avoid being "wiped out during a recession", don't cash out your entire investment in a recession... Just let it ride. The market will go back up.
At least you learned from your mistakes. Keep grinding
I LOVE your videos! THANK YOU... But I don't know about the home-owning math part... If you factor in the savings on rent, does the math still work in favor of not getting a home? There are costs to owning a home, but I'm wondering if the "getting the rent money back" when you sell a home makes it worth it.
Great, thorough presentation. I'm 60 and have been a Roth contributor for about 25 years, smartest thing I ever did. I'm only going to speak to the gray hair comment though. One, gray hair is sexy. It's still hair, be glad you still have some. Two, the Just For Men shampoo works great and looks natural. I get compliments all the time.
I really appreciate the insight. For a 30 year old who knows nothing about investing, what are you opinions on the fidelity GO Roth?
Good info.
Thanks!
Great tips! I usually wait till Tax season and ask my accountant which IRA I can put into, if it's not going to affect my income +Tax break/benefit, I'll put it on ROTH and if it does, Traditional it is. ;)
Roth has such a low contribution limit, I would always maximize Roth before doing anything else. There are Roth 401K and 457b options, that is different, and you may prefer traditional, but you should always maximize a Roth IRA no matter what. It's $7,000 that you won't miss, but will be thankful for when you're 60.
Do u have a vid on m1 vs fidelity acct? Pros and cons of both?
Ive been buying individual stocks in my roth IRA for past two years. I am doing well so far. I plan to invest in safer companies for few years atleast and then switch to a 2 or 3 fund portfolio.
I know you're not a tax professional, but in the case that I have until April 18 to file my taxes for the past year. If I do a full contribution for that year, would I be able to write off the deduction when I do file? And would this partially/fully be deductible if I have a pension plan? Or will I have to do the math on what is being contributed into the pension at then end of the year and only put in and write off the difference in a tradtitional IRA?
thanks bro
how does this work for day traders?..can you trade say futures or only make long term invetments?
Jarrad, thanks this information is very helpful. Do you have content on how the withdrawal of Roth IRA work? I'm over 61 and have a little cash. I can put in a savings account for about 4% and have access at any time. If I put the cash in a Roth IRA and wait until 65 how do I withdraw? Any help would be appreciated. Thanks
I know it's been a while since you said it, but I still find myself saying "A-dios" at the end of the videos!
😂😂 omg I haven't said that in a video for a very long time
Liked and subscribed.
Awesome, thank you!
In my first IRA account with $5500, I was so clueless I bought a seven-year bond at like 3.5%. Why? I didn't know what index funds were.
All good now though.
Should I be maxing out ROTH 457(b) before doing anything else such as roth ira or taxable brokerage account?
Great video for those new to Roth investing! I am in the bracket where I need to contribute doing the back door method, however, it wasn’t clear to me in this video how to do so. Once I convert a traditional IRA into a Roth, how would I contribute to it the following year?
Assuming you have an IRA already, you would need to put the money INTO the IRA first and from there "convert" it to a Roth or move it over to your Roth, but first you need to deposit the money into the IRA. I use Vanguard, so I need to leave the money there a couple of days. When I go to my IRA, there is a "convert to ROTH IRA" button, and then I select the amount I want to move/convert to the ROTH. I use to think it was going to be endless paperwork but it's actually really easy.
If i have a Simple IRA thats through the company i work for, can i still do a backdoor Roth IRA on the side? (Im over income limit) or does the pro-rata rule not allow me to?
Would you put maxing out the roth IRA at the top of the list if your companies 401k is whack because their matching policy is discretionary.
Of course the Vanguard settlement fund is making 5.28% right now so I'm just keeping my money in it until rates start to drop and stocks get a bit cheaper.
I’m starting my first big boy job first week in November. So I’m a little confused on how the actual Roth schedule will work. Should I just wait until January to start maxing it out. Thank you!
The algo recommended this video. I liked it.
Appreciate the feedback
Just turned 60. None of my retirement accounts are a Roth IRA. Not taking anything out yet. In 3 different accounts. Defined contribution retirement account and 2 rollover IRA’s. Can these convert to Roth for full or partial amounts or am I stuck with them as is? Recommendations?
Could you do a video on a 457 B contribution fund?
A little more advanced, but within the Roth IRA, if you focus on dividend paying ETFs, you don't care if the dividends are "ordinary" or "qualified". Since all gains in the Roth are tax-free at retirement age, the tax status of the dividends doesn't matter. Think of this when balancing out your Roth IRA, Traditional IRA (if you have one), 401k, Roth 401k, and... Brokerage account.
Yea, keep capital gains, qualified dividends in taxable accounts.
Focusing on dividends leads to suboptimal returns. The math doesn't lie. If it buys you peace of mind then it's worth it though
@@rayzerot Yes, you are correct. However there are reasons to invest in dividend-focused funds, but it's not the dividends. These funds generally focus on value stocks, which might be more attractive to an older person. These stocks generally don't grow much, but are less volatile. I use them as part of my fixed income allocation instead of putting it all in bonds.
Regarding income limits, do they consider all forms of income or specific ones?
The back door Roth is an excellent idea!
Hi Jarrad. What can you do to SAVE your vested 401k balance when you are leaving Walmart for a much better job BUT you still have an outstanding 401K loan left? I thought I could still pay off that loan with my new job. But Merrill is using my fund to pay off the loan which means my fund will be half. I'm trying to better myself by leaving Walmart. Thank you!
This was very helpful. I am doing mistake 6/7. I knew of them, was unsure of withdrawal rules which was mistake 5 confusion. I knew I couldn’t withdraw money before 59.5 just hiding account from wife because she doesn’t like investing so was in case she told me to get it out.
Lol jeez
doesnt the loss of taxes put a dent right away at any gains from contributing early to HSA out of pocket bypassing payroll.
I don't think the early withdrawals are as bad as being stated. I mean, it sucks that the money doesn't get to grow tax free anymore since you won't be able to re-contribute it, but you can still invest it elsewhere and get the same gains minus tax. So taking 6500 dollars from your Ira costs 65000 dollars in the same way that taking it from your taxable brokerage account costs you 55000 dollars or whatever. But if you are borrowing from your Ira and plan to reinvest it after your financial risis is over, it actually costs the difference of 10k or whatever, not the full 65k. So don't take it from your Ira if you have otheplaces to take it from, but if you gotta do it then you gotta do it.
Thanks for sharing your opinion 👍🏻
i have a 403B acct thru my employer to which i've been contributing max since 2000. I'm turning 60 yo this year & would like to retire at age 62...do you think a ROTH IRA is still ok for me to invest in even if i only have 3 more years left till retirement?
Never had a 401k. While Roth is lovely, I'm low income and my taxes are low on long term investments, so why lock them in Roth, they are fine in regular brokerage account. Had to empty Roth two times to pay bills. Only took out what I put in but still ended up paying penalties. Not sure why as it had been open way over 5 years. Can't put it back for the tax year I already contributed either- live and learn. I'd rather take high risk with $6k than keep contributing $6k for next 20-30 years on low income which is a stretch, but for each their own. For me, high risk is 1-2 stocks, for investment firm, it's stock fund. What a disconnect.
Sent money to Fidelity and even though I had an ETF there, the cash was never put to use. I had to do it. Now looking back, it's funny, ofcourse I had to do it, but I wonder how many other people have done the same. I have a list of mistakes I have made with my money and you'd think I would stop, but the list keep growing. All I can do is not repeat the old mistakes, but new ones coming.
I "gamed" the system by setting up a spousal roth ira for my wife. Now i can max out our roths times 2!
Yeah that first time home buyer tax penalty exception should not be used
If you rollover your Roth 401k to Roth IRA, will all the money from your Roth 401k be considered as contributions in your Roth IRA and thus eligible to be withdrawn without penalty like the contributions can from your Roth IRA. Is this where the 5 year rule occurs? Not that you should naturally but curious.
When you do get to the investing portion and realize you invested in something you no longer want, can you sell that stock and buy a new one without penalty?
I’m getting 6% employer match with my 401k now. I can convert that to Roth 401k?
My biggest mistake is looking at it daily. Oh and selling 74 shares of nvda the day before its earning report and missing that 80$ a share jump.
Yes, but what about the RMD's for inherited IRA? The gov says you have to take the required minimum distribution. Sometimes that can be upwards of 10 grand or more, so are you saying just go and reinvest that money elsewhere? Because RMD's are mandatory that you must take once a year and the IRA isn't taxed but your taxed on your individual as income. But you can't reinvest that money back into the IRA you have to take it, it's sort of a use it or lose it type deal with taxes I believe. So kind of not understanding what you mean other than yes if you withdrawl you lose on the investment growth but what if its mandatory with an RMD? Unless you don't know about IRA RMD's
First thing, even if you pay is higher than what you show, you can still contribute to the Roth IRA. Called Backdoor Roth IRA. I wish that was metioned.
Am currently 23 and am going to start a ROTH or a traditional and “forget” about it
If they do need to barrow from the 401k. Just take a loan , the irs don't tax that unless u get fired or quit. The interest is very fair, at least for me
Thoughts on Robo Advisor for Roth?
too little per year maxing out the IRA's (6500$ or 7500$). I would like to see the same max amount like a 401k. & not having to use a backdoor option..
Hi Jarrad. Great video. Quick question. When you are saving in a Roth 401k and leave your employer, you could move these funds to Roth IRA WITHOUT generating a taxable event, right?
Yes you can. There are some benefits that a 401k offers over a Roth IRA though so make sure you understand those things before doing this.
Just opened one today with fidelity, I'm 38, better late then never
You’re either really tall or the ceilings really low. But thx for the video! Would you say if we also have a Roth 401k, to max that as well and roll it over to Roth IRA since my 401k plan provider kinda sux?
😂 I'm 6′1, but the ceilings are lower in the basement. Two questions: 1. why do they suck and 2. are you able to roll them over while you're still contributing to the 401k?
@@JarradMorrow my 401k plan management isn’t great because the lack of investment options and the performance has been lagging behind my Vanguard (short and long term). I’ve got majority in traditional with them but thinking about eating the tax benefit this year and go fully in on Roth. I’m able to roll my Roth 401k to my personal Roth IRA any time.
Interesting. TFSA, the equivalent roth IRA in Canada, does not have a limit. Your allowable limit begins at age 18, and goes up every year to how much in total you can have. I think its 6500$ a year rn.
Great video. Why do you do HSA before Roth IRA? To get the tax break up front? Or other reason? Thanks I was going to do the reverse so withdrawals are tax free later.
The only reason is because of the triple tax savings and nothing else. I know some people prefer to do the Roth IRA before the HSA which is perfectly fine.
@@JarradMorrow thanks. In new jersey
, along with California, we don't get state income tax deduction on HSA contributions. Can't wait to move to Florida one day soon to escape state income taxes.
Do you have any videos that explain the backdoor Roth IRA better? Does the $6500 have to be converted from the traditional to the Roth IRA all at once or can it be done over time? If the former, my money would be sitting in the Traditional IRA uninvested and not making money until it adds up to $6500 and I can convert it to the Roth right?
Are you over the income limit for direct contribution to Roth IRA?
Can you do the backdoor conversion easily multiple times a year. For example, if I want to invest in my Roth the 1st of every month to take advantage of dollar cost averaging, how easy is it in terms of filing taxes to have 12 or more tIRA -> Roth conversions every year?
Very good question. I’ve personally only ever done the conversion in lump sums so I don’t know if your brokerage will send the full years info all together or in 12 separate forms. Hopefully someone who has first hand experience can chime in or you could probably get the answer by calling whichever brokerage you use
I used to do it once a month for several years in the past, and i never had a problem. But now i just do it once per year to avoid the paperwork. I dont think it creates a tax issue for you. Your brokerage should be able to do it for you.
Love the dog lol thanks 👍
I read if u withdrawal some contribution money, u can pay it back within 60 days. Is this true?
i wonder what happens when you exceed the contribution limit??? My hypotheses is the IRS will certainly ask you to pay up in the following tax season.