5 Biggest Roth IRA Mistakes
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- เผยแพร่เมื่อ 23 ก.ค. 2024
- The Roth IRA and the use of tax diversification can provide a tremendous lift to your financial success and retirement. To use the Roth IRA effectively, we will help you avoid the five biggest mistakes people make with their Roth IRA in this episode of Wise Money.
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Kevin Korhorn, CFP® offers securities through Silver Oak Securities, Inc., Member FINRA/SIPC. Kevin offers advisory services through KFG Wealth Management, LLC dba Korhorn Financial Group. KFG Wealth Management, LLC dba Korhorn Financial Group and Silver Oak Securities, Inc. are not affiliated. Mike Bernard, CFP® and Joshua Gregory, CFP® offer advisory services through KFG Wealth Management, LLC dba Korhorn Financial Group. This information is for general financial education and is not intended to provide specific investment advice or recommendations. All investing and investment strategies involve risk, including the potential loss of principal. Asset allocation & diversification do not ensure a profit or prevent a loss in a declining market. Past performance is not a guarantee of future results.
Intro: (0:00)
Segment 1: (0:11)
Break 1: (10:28)
Segment 2: (14:08)
Break 2: (24:22)
Segment 3: (26:05)
Break 3: (36:22)
Segment 4 (37:00)
Outro: (47:13)
I was a factory rat though retired now. I started my Roth back in 2003. I maxed it out every year. Once I hit 55, I maxed out the catch-up contribution as well. I contributed to my company's 401(k) ~10%. I later changed my 401(k) to a Roth 401(k) How could I afford to do that? I never turned down overtime and lived frugally. Not smoking or drinking, no bass boat, snowmobile, or new vehicles.
My 401(k)s are all converted to an IRA and a Roth IRA. I have hit critical mass and living off the dividends paid out quarterly. I did a few IRA to Roth conversions but will run the numbers to see what can be withdrawn from the IRA and have the new personal exemption cancel or reduce taxes paid. What I didn’t spend while saving, I’m spending now.
How did you knew so much how to strategize? All power to you . Good job !
@@shaimasuls7006Personal fiance education found online and talking with others smarter than me.
The Roth tool is great. WIsh I would have started a bit earlier. We max the 401K Roth at 30K a year, plus both contribute to Roth IRAs. That's 45K a year that should never be taxed again.
If your tax bracket will be lower in retirement (and it likely will be by the sound of it) you might be better off in a traditional 401(k).
This is a great show, thank you!
Sorry, too much chit chat for me on this channel, 15 minutes in and commercial and only 1 of the 5. Great for those who want to hang around listening to everything for 47 minutes, but this could have been a 20-30 minute video.
Im trying to get thought it myself and it's "get to the point" time 13 minutes in...
2x speed helps
GET TO THE POINT!! 👎🏾
TY guys❤❤❤ will ur firm provide advice for a fee, on what we should do with our finances??
Hi, thank you for this video. I've already done the IRA conversions to Roth for my wife and I. Yes it's painful but worth it. I have a question for you. We are in our late 40's, early 50's. Can you take money from your 401K, pay taxes and put it into (convert/transfer) to your Roth 401K....like you can do with your traditional IRA's? I have a 401K and a couple years ago, opened a Roth 401K. Hope the question makes sense. Thanks
hmmm...I thought that every Roth Conversion had to have it's own 5 year clock no matter what the age of the account opener was. So you are saying that EACH Roth Conversion account opened AFTER age 59 1/2 doesn't have to be open for 5 years?
@@OneAndDone5150 Please specify what the "fact" is that you are referring to. I have no idea what you are trying to clarify or say.
Each conversion does have a 5 year clock. Contributions however don’t . So if you make contributions you can pull it out anytime but you will pay a penalty if not 59.5
@@debbieeles371 If I understand correctly, the amount that you contribute can be pulled out at ANY time penalty free, but the earnings are what receive the penalty if taken out early.
A whole life insurance policy could give people extra money that could help them. Bank infinite is ok for cash to borrow?
Does your clients get your help and the tax help in your fees or when you deal with the taxes, the client also has to pay your tax person also?
So for someone like myself who makes 350K per year, 52 years old, have 1.3 million in 403B/IRA accounts (contribute the max amount every year), high risk return strategy, plan on working at least another 10 yrs, have 170K in a brokerage account also in high risk return strategy (adding approximately 36K per year), 100k in a money market account, expecting $4500 in social security per month at 65 for both of us, and will have a pension that pays $3000 per month, should I start contributing my annual 403B money to the Roth 403B plan at my work and build that account for the next ten years? When my financial advisor (Raymond James) did future projections, at some point because of my RMDs, it had me projected to pay upwards of $140,000 in TAXES some years! I'm concerned that I don't have more assets in the "tax free bucket".
What about a Roth within a 457B plan? Does age 591/2 still apply?
What if I want the cash flow now?
Great info for the average Person. I'm retired at 71 YO. I have a 401K from my previous Employer. I want to Rollover that 401K to a already Established IRA at Schwab. I have not rolled over any IRA for the past 14 months. Can I do it since it is past the restriction of 12 calender months?; With this move I can now self manage the funds from the 401 K . At my age, I will remain Cautious - probably a Ladder of Tresury securities , maybe Silver or Gold, and possibly consider some didvidend stocks. Next Question for 2024. I will need to take RMDs by October 2024 when I hit 73. When I take the funds out to meet the requirements, acn I put that in a New ROTH IRA, so the income that investment generates is Tax Free?
First financial show that has some personality and isn’t a snoozer.
If I open and fund my Roth at age 50 snd then do Roth conversions at age 60 do I still need to wait the 5 years (age 60) before i can acess any conversion money.
I wonder that myself but in reality don’t touch the Roth IRA until you’re in your 70’s to 80’s. You want to achieve some growth out of it…tax free.
@@f430ferrari5 I plan on using my Roth for big purchases like home repairs, cars, weddings etc and to keep me from tax bracket jumping and staying below IRMAA Levels etc. What's left when I'm gone goes to my kids tax free
@bigtoeknee11 I recently read somewhere that all/each Roth Conversion account opened had its own 5 year clock. I'd like a confirmation of this from an expert tax accountant.
If I’m unemployed, is there any way to contribute to some kind of IRA?
Gosh,, waaay too much noise to signal. Please do better🤞👍
Lots of good information that was kinda random however there was no discussion on how you do a Roth conversion in other words how are the tax brackets work and how you have to figure out how to be under the next higher up tax bracket
I think your audience would be very well served with that discussion and also when do you pay the tax on a Roth conversion
If he did the Roth conversion in February do you just wait until you do the taxes next year
There seems to be lots of confusion on that very question from my experience
Anyway I love you show and I appreciate you all thank you
I just did a Roth conversation because my income is lower this year and will increase next year when I apply for social security. I was told that I'll receive a 1099 for 2023 income tax and I'll settle the tax obligation with my tax return for 2023. I also have a ss repayment this year to counter the income from the conversion.
@@caseytcat888Check with your accountant you may be required to make a tax payment in the quarter you took the distribution. If your taxable income is significantly above last year’s you could owe penalties and interest for underpayment.
To oversimplify it: look at last year’s taxes and see what tax bracket you’re in. Then see what the income limit is for that tax bracket. Estimate your income for this year and subtract that from the max amount of your current tax bracket. That number will be how much you can convert from your traditional IRA to your Roth IRA. If you pay state taxes you will also need to watch your state’s tax brackets. AND, if you’re 63 or older, you need to be aware of the IRMAA surcharge for Medicare monthly premiums.
@jameswitte5676 thank you. I had a repayment to ss because I stopped it. I haven't restarted it yet. I already paid taxes on the ss benefits that I repayed. The Roth conversion is less than the repayment, so I'm thinking I'll be okay. Does that make sense?
@@jameswitte5676 thanks, that all makes sense, but I'm way below any of those conditions.
I am on disability and my husband has income through a traditional 9 to 5 job. We have a joint bank account. We started a Roth IRA through our bank before I was disabled. Can we still contribute to our Roth IRA?
Here's a trick to pull money out of an IRA tax free. Take the money out & fund your HSA. The HSA contributions are above the line tax deductions (100 % tax free). This only works if you have high deductible health insurance plan. Also, limited to HSA contribution limits. 🥳
What about going in the back door to contribute to a Roth if one makes too much money??
I started with a roth back when I started my first job in 2001 in my teens, the options were so limited then, over the years I transitioned to a brokerage where I can manage the funds actively. It's been going good 22 years later with this. Hopefully it stays tax free when I retire in another 30 years. You know how the politicians like to change things.
You are referring to your 401k Roth ……Ira Roth there always have been many choices.
If I make less than the income limit for a Roth contribution ($138K - single), can I contribute to a Roth and do a backdoor Roth (contribute after tax to trad. IRA and convert to Roth)? I did a backdoor Roth in 2023 and I want to make a Roth contribution for 2023 before Apr. 15th, but my tax person said I can't do that.
Anyone can contribute after tax money to traditional IRA then convert to Roth. No income limits or even if you do 401k. It's the backdoor Roth. Just 2 steps.
Number 6. Not using NICER Fiduciary Security CFPs to defend it.
I missed it but what is the “5 Year Clock”?
When you open a Roth and contribute to it you have to wait 5 years until you can dip into it without penalty even if you are over 59.5 years old. If you like me have opened a Roth at age 58, you have to wait 5 years to not be penalized if you withdrawal from it. If say you are 50 and open a Roth you have to wait 5 years to dip into the contributions without penalty but, if you take any of the earnings before you are 59.5 years old you will be penalized. If you are 59.5 years old and open and contribute to a Roth you have to wait 5 years before you can dip into it without penalty... That's the Roth 5 year rule.
@@BG-gi4tp Okay thanks!! It’s a moot point for me as I’m adamant about dipping into my nest egg 🥚until way after I retire in about 8 years!
The College Football Playoffs is who consult for all my maxi backdoors. 😅
What happens if you contribute to a Roth and your income exceeds the allowable amount?
That's the million dollar question
The utilization of after-tax money and tax-free growth makes opening a Roth IRA very advantageous. Through a careful guidance of my FA, I did not pay taxes on my withdrawals of $2.86 million when I retired.
Indeed, I did make use of a financial counselor. As I get closer to retirement, their advice has been really helpful. I thought compound interest on index funds wouldn't be sufficient because I started late. It's amusing how I've done better than colleagues who have more years of investment experience. I've profited more than $886k tax free.
Please who is the consultant that assists you with your investment and if you don't mind, how do I get in touch with them?
I've shuffled through investment coaches and yes, they can be positively impactful to an individual's portfolio, but do your due diligence to find a coach with grit, one that withstood the 08' crash. For me, Carol Vivian Constable turned out to be better and smarter than all the advisors I ever worked with till date, I’ve never met anyone with as much conviction.
Thanks, I just googled her and I'm really impressed with her credentials; I reached out to her since I need all the assistance I can get.
Great info! People have to keep emotion out of investing, IMO. From Nov '21 to now, I've seen so much growth it's insane! I'm up ~30%+ YTD and ALWAYS BE BUYING! I've been investing a while now so I understand how this all works. Don't listen to pundits on CNBC about how the sky is falling!
How do you contribute pure tax dollars to a traditional ira
Amazing video, A friend of mine referred me to a financial adviser sometime ago and we got talking about investment and money. I started investing with $120k and in the first 2 months , my portfolio was reading $274,800. Crazy right!, I decided to reinvest my profit and gets more interesting. For over a year we have been working together making consistent profit just bought my second home 2 weeks ago and care for my family.
@rachealhubert74 Quitting may not be the best approach if you ask me. This is where an AI comes into the picture. I barely have time to trade myself as my job swallows up most of my time. Alice Marie Coraggio a licensed fiduciary whom has made me over 5 figures in profit in less than seven months, handles my investments. I could leave you a lead if you need help.
@rachealhubert74 Alice Marie Coraggio
Lookup with her name on the webpage
65y old still should contribute to Roth?
Don’t dance with Irmaa
You guys ramble and then keep saying how you need an advisor know you just need the answers to the questions that you guys are leaving open
Get to the point!
GET TO THE POINT!!