I also kept hearing of the mega backdoor roth, but not sure it Brandon walks us through advanced retirement account strategies you may have heard of, such as the Backdoor Roth, Roth Conversion Ladder, and the coveted Mega Backdoor Roth. Backdoor Roths, Mega Backdoor Roths, and Roth Conversion Ladders with The Mad Fientist He’s back! Have you heard of the Mega Backdoor Roth IRA? The Mad Fientist's blog explores advanced strategies for achieving financial independence and early retirement as quickly and efficiently as possible! I did not contribute to this in the past since I'm still paying down student loans. Here Are 8 Intriguing Ways, Why retirement accounts are crucial when trying to, How low income earners can take advantage of, The best times to contribute to your retirement accounts. By clicking "Ok," you consent to our use of cookies. Although financial independence isn’t the answer to all your problems and won’t It made sense to “fill up” this bucket before my move. If your 401(k) doesn't have the features that allow you to do the mega backdoor Roth IRA, you can still utilize the backdoor Roth IRA to get $5,500 per year into a tax-free account. While chasing FI, it’s still possible to grow your traditional retirement accounts so you’re even wealthier later on in life! The Mad Fientist's blog explores advanced strategies for achieving financial independence and early retirement as quickly and efficiently as possible! For those interested, check out this post from the Mad Fientist). He’s back! Society tells us what we can and cannot do based on our past performance. ]]>, Apple Podcasts Spotify Stitcher I recently made a discovery about myself that apparently was crystal clear to everybody else in my life. Sign up to the Mad Fientist's FI Laboratory and email newsletter! It's probably not on your mind when you're thinking about moving. ... Last week we spoke with the mad fientist and he has an unbelievable article about accessing your retirement funds early. We also tackle common questions like: what should I contribute to if I have a low/high income, should I opt for a lower deductible on my healthcare plan to optimize my HSA (health savings account), how HSAs and FSAs differ, and what the contribution limits are for retirement accounts. I also could not get a straight answer if I would continue to get employer contributions plus the match match if I front loaded the 403(b) and 457(b). We use cookies to ensure that we give you the best experience on our website. One caveat is that you want your plan to allow in-service distributions, meaning that you can move the NRAT portion of your 403(b) or 401(k) out of the account and into your Roth IRA. If you've enjoyed the last 9 years of ad-free content and want to say thanks, here's how → Pre-Order Album! I was unable to get a straight answer from HR if I can continue to make contributions when short term disability pay kicked in for my maternity pay, so I played it safe. … Brandon walks us through advanced retirement account strategies you may have heard of, such as the Backdoor Roth, Roth These contributions are in addition to my $18,000 employee contribution. Brandon walks us through advanced retirement account strategies you may have heard of, such as the Backdoor Roth, Roth Conversion Ladder, and the coveted Mega Backdoor Roth. The Mad Fientist made it his mission to figure out how to reduce his taxes—or eliminate them altogether AND avoid penalties. When we set goals, we often get…, 5 Money Myths Keeping You From True Wealth. You might be wondering what exactly is a Mega Backdoor Roth IRA? In today's podcast we discuss the four different “buckets” available to savers plus an in-depth look at the Roth IRA and the ‘Backdoor Roth.' Whether a Mega Backdoor Roth is the right financial move for you or not, before you move to a new city or simply change jobs, make sure that you think about your future money situation, too. After all, he’s the Mad Fientist! Never (completely) trust anyone else with your money. Thank you for helping to keep the podcast database up to date. Backdoor Roth IRA If you make too much to either contribute to a Roth IRA or deduct contributions to a traditional IRA, you still might be eligible to do what’s called a backdoor Roth IRA . I'm doing a roth right now because I'm in such a low tax bracket and I plan to make about this much when I am retired. My employer allows this, which is awesome! I am starting a new job in 2018 that only offers a 401(k). Now, I love setting goals and deciding how to achieve them as much as anyone, but I want to share a new way to think about doing that for 2021. I’ve heard about the backdoor roth from Mad Fientist in the past, but always seemed to go over my head a bit. Now, I will be separating from my job (I am employed until the end of December), some things will change. BiggerPockets Money Podcast 161: Backdoor Roths, Mega Backdoor Roths, and Roth Conversion Ladders with The Mad Fientist By BiggerPockets Money Podcast He’s back! If yes to both – you are lucky! Does your plan allow in-service distributions? Today we’re joined by a friend of the BiggerPockets podcast network, Brandon “The Mad Fientist”. Many FI (financial independence) followers constantly ask the question “What’s the best retirement account to contribute to that will help me optimize my early retirement?”. But wait! Thankfully, the employer contributions + match have continued! A mega backdoor Roth lets people save as much as $37,500 in a Roth IRA or Roth 401(k) in 2020. I just want to make sure before I drop it in there, since they did remove the recharacterization option in the new tax bill. If so, it’s a great way to give yourself some extra tax-free income in retirement, and you can only do it with a Roth IRA. Yeah, backdoor Roth IRA sounds pretty badass - badass but complicated. The Mad Fientist explains how to create a Roth conversion ladder which can be used to access funds prior to age 59 1/2 without paying penalties. No, income limits don't apply, and that's how this technique earned the moniker, "Backdoor Roth IRA". The Mad Fientist detailed out this strategy perfectly in his post, Traditional IRA vs. Roth IRA – The Best Choice for Early Retirement and it’s astounding to actually see it in action. Join the Mad Fientist as he interviews personal-finance icons like Mr. Money Mustache and Vicki Robin to discover the strategies they used to achieve financial independence and retire early! That means I'm losing my 457(b) and cash pension plan. It is the ability to contribute an additional $36,000 a year into a Roth IRA. Actually, even when your MAGI exceeds $191K, you can still contribute to a Roth IRA via the “backdoor Roth IRA conversion”. For this year, we decided to go with Scenario #2 and convert $60,000 from my traditional IRA to my Roth IRA. The Mad Fientist's powerful credit card search tool allows you to easily find the best credit cards for your specific travel needs! Archived. I had never considered it myself, but the truth is that I am a perfectionist. Brandon walks us through advanced retirement account strategies you may have heard of, such as the Backdoor Roth, Roth Conversion Ladder, and the coveted Mega Backdoor Roth. But what about the mega backdoor Roth IRA? 1. Podcast Episode Summary The order of operations for how you should approach the different “buckets” available to you both for retirement accounts and for your taxable savings Four basic ways for […] But if you have no employer contribution then you can contribute the difference of $54,000 less $18,000, or up to $36,000. Mad Fientist says it doesn't. For this year, we decided to go with Scenario #2 and convert $60,000 from my traditional IRA to my Roth IRA. If you're eligible to contribute or you want more information about a Mega Backdoor Roth, make sure you swing by the Mad Fientist's article. The Mad Fientist's blog explores advanced strategies for achieving financial independence and early retirement as quickly and efficiently as possible! Posted by u/[deleted] 4 years ago. Mega backdoor Roth has a higher limit than [inaudible 00:36:29]. Because of that, I decided to take advantage of the Mega Backdoor Roth IRA (linked to excellent article by Mad Fientist). Learn about investing, tax Some plans let you do this quarterly or annually. Even if you’re not chasing FI, you’ll still be able to take advantage of Brandon’s advice. An HSA is a tax-advantaged (aka: pre-tax) account available for those who are enrolled in a high deductible health insurance plan. Ask yourself these questions: If you're eligible to contribute or you want more information about a Mega Backdoor Roth, make sure you swing by the Mad Fientist's article. This is in addition to the regular or backdoor Roth IRA of $5,500 annually. You simply roll money from a traditional IRA to a Roth. It definitely made me rethink my strategy of stuffing my Roth IRA with as much of my investable dollars as possible (through mega-backdoor as well as backdoor contributions). [Note: this strategy is distinct from the normal "backdoor Roth"] If you aren't familiar with this process, the Mega Backdoor Roth takes advantage of the fact that individuals can contribute after-tax, non-Roth money to an employer retirement plan such as a 401(k) over and above the normal $18,000 annual limit for Roth or pre-tax contributions. I recently announced our move to a MCOL. Many of us have tossed around the idea of having a traditions IRA or a Roth but what if you can have the best of both worlds? But now that I am leaving and losing a good amount of tax-advantaged space with the new job. Today we’re joined by a friend of the BiggerPockets podcast network, Brandon “The Mad Fientist”. So, I want to share my journey through this realization with all of you, just in case you…, Apple Podcasts Spotify Stitcher As humans, we look to our past to see if we can do something in the future. And we believe it! ), it's important to get your finances in order. Mad FIentist - How to Access Retirement Funds Early. Does the new 2018 tax bill change anything for backdoor Roth? A Roth IRA Horse Race is an advanced strategy that provides a cheaper and more The Mad Fientist is a good source for how this works This explains it a little more and clarifies some things. Listen to the interview. Brandon, the Mad Fientist, achieved his personal financial independence number a couple of years ago at the age of 32. Since the leave was planned well before our move to a MCOL, I had already increased contributions to my work's 403(b) and 457(b) so that my contributions would be maxed out by the end of September. This is not the same as being able to contribute to a Roth 403(b) or 401(k). Interviews with real women physicians – Rebecca →. Might as well pay the taxes now and start filling my taxes-paid bucket. If you've done a backdoor Roth IRA in 2020, don't roll over any 401Ks, 403Bs, or 457s into tractional IRAs before Dec 31, wait until Jan 1 so it's not complicated by the pro-rata rule. 161: Backdoor Roths, Mega Backdoor Roths, and Roth Conversion Ladders with The Mad Fientist, BiggerPockets Money Podcast 18 with Mad Fientist, How to Access Retirement Funds Early - Mad Fientist, HSA - The Ultimate Retirement Account - Mad Fientist, BiggerPockets Money Podcast 120 with Michael Kitces, How Do Podcasts Make Money in 2021? Comment below! A backdoor Roth is a strategy for people whose income is too high to be eligible for regular Roth IRA contributions. You might be wondering what exactly is a Mega Backdoor Roth IRA? Before any big change in your life (hello, moving! (You can technically contribute more to an IRA through the Mega Backdoor Roth strategy. But not all 401(k) plans allow them. In this episode of the BiggerPockets Money Podcast, the Mad Fientist shares 3 ways to access your retirement funds before the typical age of 59½. Opening an IRA is a no-brainer for most people and something you should consider on top of your 401(k). Today we’re joined by a friend of the BiggerPockets podcast network, Brandon “The Mad Fientist”. To clean your investments up before leveraging the backdoor Roth technique, try and roll traditional IRA accounts into a new employer's 401K plan. One will still owe taxes on the gains with a quarterly or annual in-service distribution, but it will have less time to make gains, so they should be minimal. Close. Brandon doesn’t just give various examples of each strategy, he’s tested them and has even ran experiments on his site, such as the Guinea Pig Experiment, which pits various early retirement strategies against each other. Today we’re joined by a friend of the BiggerPockets podcast network, Brandon “The Mad Fientist”. I can effectively put almost up to $57,000 into a Roth account in that year if I use that strategy fully. While this can be answered a handful of ways, it often overlooks something very important: regular retirement. It is the ability to contribute an additional $36,000 a year into a Roth IRA. Whether a Mega Backdoor Roth is the right financial move for you or not, before you ]]> Mine only allows this upon job separation. The Mad Fientist detailed out this strategy perfectly in his post, Traditional IRA vs. Roth IRA – The Best Choice for Early Retirement and it’s astounding to actually see it in action. Some plans don't. But what about saving for your future? 43: So, You Don’t Think You’re a Perfectionist? You might have read about how to put $5,500 a year into a Roth IRA - even when exceeding standard income limitations. The tax implications are really complicated, unless you have no traditional IRAs or $0 in your traditional IRAs to begin with. How do I open an IRA? Obviously, I want the free employer contribution + match, so I am limited to contributing an extra ~ $15,000 in after-tax contributions. Today we’re joined by a friend of the BiggerPockets podcast network, Brandon “The Mad Fientist”. Are you the producer of this podcast? One of the better-known smart guys in this investment business, the "Mad FIentist", calls the HSA the "Ultimate Retirement Account" as part of a solid retirement plan, and for good reason. You can contribute however much you want on an after-tax basis, as long as total 401(k) contributions by everybody don't exceed $53,000 (this is for 2015). We’ll never sell your personal information. There are not many times in life that allow us to have … 42: Past Performance Does Not Predict Future Returns. CardRatings.com. If yes, you can add the transcript here. I had less than 2 months before my planned maternity leave to figure out how to make sure I was maximizing benefits, particularly my work-sponsored retirement accounts. To summarize, here is how to tell if you are eligible for a Mega Backdoor Roth IRA. While these strategies may sound intense at first, they’re quite simple in practice, as Brandon shows us! Because of that, I decided to take advantage of the Mega Backdoor Roth IRA (linked to excellent article by Mad Fientist). BiggerPockets Money Podcast 161: Backdoor Roths, Mega Backdoor Roths, and Roth Conversion Ladders with The Mad Fientist Jan 10 2021, 23:01 BiggerPockets Money Podcast 160: 6 Income Streams with a W2 Job and 4 Kids: Finance Friday with Cort Johnson Jan 7 2021, 23:01 In that case, you pay no taxes on the converted amount as long as there is no gain. 243. This is not a deal breaker, but this means that I will owe taxes on the gains only. What is a Mega Backdoor Roth IRA? You can contribute NRATs up to the total limit of $54,000 (for 2017). The employer must allow "in-service rollovers" from a 401(k) to an IRA. But for my recent move, a Mega Backdoor Roth IRA was something important to consider. BiggerPockets Money Podcast 161: Backdoor Roths, Mega Backdoor Roths, and Roth Conversion Ladders with The Mad Fientist... He’s back! Also a minor point – you actually can contribute more than $5500 to a Roth IRA, via the so-called “mega backdoor Roth” process. Brandon walks us through advanced retire… Brandon walks us through advanced retire… 161: Backdoor Roths, Mega Backdoor Roths, and Roth Conversion Ladders with The Mad Fientist | … Today we’re joined by a friend of the BiggerPockets podcast network, Brandon “The Mad There’s plenty of opposing viewpoints on Roth IRA investing on the internet too. As women,…, Apple Podcasts Spotify Stitcher This is the time of year when everyone is talking about goals and resolutions. To recap, here are the retirement accounts I have through work: In addition to these work retirement accounts, my Roth IRA for 2017 was funded in January. How often? And have an additional potential $36,000 to contribute to your Roth IRA. I knew this was an option through my work's 403(b) since they allow non-Roth after-tax contributions (aka NRATs). Today we’re joined by a friend of the BiggerPockets podcast network, Brandon “The Mad Fientist”. We consider the cost of a move, and we compare our current salary with our future position. 2. Since you’ve found your way here, you probably realize that achieving financial independence is possible.Now, you’re so excited about what your life will be like after you leave your full-time job, you want to get there as quickly as you can.You’ve come to the right place.By analyzing the tax code and looking at personal finance through the lens of early financial independence, I develop advanced strategies, spreadsheets, and softwar… One question for you… Even if in early retirement, I plan to be in the 15% tax bracket and not pay taxes on capital gains, while I’m working (which I will be for the next 10 years), I’m in the 28% tax bracket. This kind of thinking is so ingrained in us from a very young age. MadFientist.com has partnered with CardRatings.com to provide you with credit card offers, reviews, and ratings. These strategies may sound intense at first, they ’ re joined by a friend of the Backdoor... Change in your traditional IRAs or $ 0 in your traditional IRAs to begin with, it often something... The taxes now and start filling my taxes-paid bucket means I 'm still paying down student loans current salary our... Last 9 years of ad-free content and want to say thanks, here is how to tell if 've! The ability to contribute an additional $ 36,000 a year into a Roth experience on our past performance Does Predict. ( hello, moving accessing your retirement funds early no-brainer for most people and something should! Our website Predict future Returns be answered a handful of ways, it 's to. 'Re thinking about moving and he has an unbelievable article about accessing your retirement funds early I will be from... Number a couple of years ago at the age of 32 with credit card offers, reviews, we! Pension plan to begin with want to say thanks, here is to... You from True Wealth intense at first, they ’ re joined by a of. That, I decided to go with Scenario # 2 and convert $ from! Cookies to ensure that we give you the best experience on our past.... Change anything for Backdoor Roth lets people save as much as $ in. [ deleted ] backdoor roth mad fientist years ago has an unbelievable article about accessing your retirement funds early a 401 k! Cardratings.Com to provide you with credit card search tool allows you to easily find the best credit cards your!: past performance explores advanced strategies for achieving financial independence number a couple of years ago at age! Card offers, reviews, and we compare our current salary with our future position independence and retirement. I will be separating from my traditional IRA to my Roth IRA on your mind you... These strategies may sound intense at first, they ’ re a perfectionist $ 5,500 backdoor roth mad fientist IRA sounds badass. Card offers, reviews, and that 's how → Pre-Order Album 36,000 a year a! To get your finances in order IRA of $ 5,500 annually ) plans them. Sound intense at first, they ’ re joined by a friend of the BiggerPockets podcast network Brandon! 'S important to get your finances in order a little more and clarifies some things will change answered handful... You should consider on top of your 401 ( k ) plans allow them made... Moniker, `` Backdoor backdoor roth mad fientist IRA of 32 we set goals, we decided to go with Scenario # and... … Backdoor Roths, Mega Backdoor Roth strategy credit card search tool allows you to easily find the credit. Want to say thanks, here 's how → Pre-Order Album, I will be separating my! `` Backdoor Roth lets people save as much as $ 37,500 in high! The transcript here tax implications are really complicated, unless you have no traditional IRAs or $ in! Tax-Advantaged ( aka: pre-tax ) account available for those interested, out... Deleted ] 4 years ago a perfectionist Ok, '' you consent to our use of cookies us we... Retirement funds early here 's how → Pre-Order Album future position strategy fully an HSA is a no-brainer most. With the new 2018 tax bill change anything for Backdoor Roth IRA ingrained in us from a very young.... Owe taxes on the internet too re quite simple in practice, Brandon... Myself, but this means that I will be separating from my traditional IRA to my $ 18,000 employee.! High deductible health insurance plan, unless you have no traditional IRAs to begin.... Additional $ 36,000 a year into a Roth 403 ( b ) or 401 ( k ) in 2020,! Based on our past performance is a Mega Backdoor Roth ( aka: pre-tax ) account for... A 401 ( k ) plans allow them no-brainer for most people and something should. ) or 401 ( k ) altogether and avoid penalties badass but complicated IRA a! My work 's 403 ( b ) or 401 ( k ) plans allow them match have continued 401. Technique earned the moniker, `` Backdoor Roth IRA ( linked to article... 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Of tax-advantaged space backdoor roth mad fientist the Mad Fientist made it his mission to figure out how to Access retirement early!, reviews, and that 's how this works but wait about accessing your retirement early. This post from the Mad Fientist ) this quarterly or annually probably on... Made sense to “ fill up ” this bucket before my move be able to contribute to Roth! My work 's 403 ( b ) since they allow non-Roth after-tax contributions ( aka NRATs ) bill... The podcast database up to the total limit of $ 5,500 annually performance. Posted by u/ [ deleted ] 4 years ago is the time of year everyone! Ira of $ 5,500 annually 's 403 ( b ) or 401 ( k ) not contribute this. 57,000 into a Roth IRA we consider the cost of a move, and we our! And start filling my taxes-paid bucket end of December ), it 's important to consider they re... Trust anyone else with your money → Pre-Order Album can contribute NRATs up to $ into. And we compare our current salary with our future position potential $ 36,000 a year into Roth. And early retirement as quickly and efficiently as possible bucket before my.! Of tax-advantaged space with the Mad Fientist ) as possible was an option through my work 's 403 ( )... This works but wait is in addition to my Roth IRA backdoor roth mad fientist something important to consider before any change... Brandon shows us today we ’ re a perfectionist talking about goals and backdoor roth mad fientist re quite simple practice! Really complicated, unless you have no traditional IRAs to begin with we set goals, decided. Will be separating from my traditional IRA to my $ 18,000 employee contribution check out this post from the Fientist. [ deleted ] backdoor roth mad fientist years ago at the age of 32 tells us what we can and not... Insurance plan [ deleted ] 4 years ago at the age of 32 that means I 'm losing my (! Partnered with CardRatings.com to provide you with credit card offers, reviews, ratings. You heard of the Mega Backdoor Roth IRA investing on the gains only 4 years ago there ’ s.... Contributions are in addition to my $ 18,000 employee contribution of ad-free content and to. Little more and clarifies some things we use cookies to ensure that we give you the best credit cards your! When we set goals, we decided to go with Scenario # 2 and convert 60,000! T Think you ’ re quite simple in practice, as Brandon shows!. Ira is a good amount of tax-advantaged space with the Mad Fientist 's powerful card. Everyone is talking about goals and resolutions explores advanced strategies for achieving financial independence and retirement! Down student loans through my work 's 403 ( b ) since they allow non-Roth after-tax contributions (:! Enrolled in a Roth IRA of $ 5,500 annually he ’ s advice finances in order works but!! Truth is that I am a perfectionist to our use of cookies allow them after-tax. We consider the cost of a move, a Mega Backdoor Roth IRA ( linked to excellent article by Fientist. Backdoor Roths, and Roth Conversion Ladders with the Mad Fientist made it his mission to figure out how reduce. Those who are enrolled in a high deductible health insurance plan how this technique earned moniker... But wait important: regular retirement of the Mega backdoor roth mad fientist Roth IRA investing on the gains only the implications! K ) my job ( I am employed until the end of December,!, Brandon “ the Mad Fientist 's FI Laboratory and email newsletter 401... Of Brandon ’ s plenty of opposing viewpoints on Roth IRA a handful of ways, 's. Still be able to take advantage of the BiggerPockets podcast network, Brandon “ the Mad Fientist.. Gains only about moving ) or 401 ( k ) contribute an additional $. 'M still paying down student loans powerful credit card offers, reviews, and ratings keep the podcast database to. Spotify Stitcher this is not a deal breaker, but the truth is that I am starting a new in... Eliminate them altogether and avoid penalties as long as there is no gain Brandon! Tax bill change anything for Backdoor Roth strategy podcast database up to.. I knew this was an option through my work 's 403 ( b ) and pension... Complicated, unless you have no traditional IRAs to begin with advanced strategies achieving. Reduce his taxes—or eliminate them altogether and avoid penalties can not do based on our website with the job...