If you own international funds in a taxable account, as I do, those funds pay foreign taxes, resulting in a tax credit on your 1040. If your Modified Adjusted Gross Income (MAGI) is more than $200,000 (single) or $250,000 (MFJ), you’ll pay the additional 3.8% NIIT (a.k.a. I’ll disagree with one comment, just at the very beginning. My dad emphasized that agents are looking to clear these forms quickly so encouraged me to keep the letter short and to the point. Include the 8606 this time, and fix it. Just a thought. Only the US tax code could come up with things that would have 17 ways you could mess it up. As an heir I would much rather inherit Roth funds for that reason. Thanks for your input. I am trying to determine if I am eligible to do a backdoor Roth contribution for the year 2020. I posted my financial plan on here earlier. So is line 5, at least if you're doing your Backdoor Roth IRA the way I tell you to (contribution and conversion during the calendar year.) Written by a practicing emergency physician, The White Coat Investor is a high-yield manual that specifically deals with the financial issues facing medical students, residents, physicians, dentists, and similar high-income professionals. Line 6 of IRS Form 8606 (the form on which the Backdoor Roth IRA is reported) requires you to list the total you have in traditional IRAs, rollover IRAs, SIMPLE IRAs, and SEP-IRAs (but not Roth IRAs, 401(k)s, or any other type of retirement account) as of December 31st of that tax year. She loses your SS, loses one deduction, and advances one tax bracket. I’m about to be a new attending and am going to have my salary pulled a lot of different ways. What about the idea of opening a self-directed 401k (you must have a self-employed business w/o employees). I know you said you can leave the.balance as zero in the traditional Ira? Thanks. That’s true. The rest of my comment still stands though. The IRS’s concerns about hobbies is so you can’t keep deducting losses for years and never turn a profit in a business. I don’t believe a CPA would make that mistake. Click on this link to Join Curizon and you'll also be entered into a drawing for an additional $250 to be awarded to one new registrant referred by Physician on FIRE this month. Give me a break. That’s a huge advantage if you plan to leave money to those you love. You do run the risk of losing them to flood or fire in that case, but you probably won’t need them, anyway. Do you feel it’s worth it? Your only question is whether to do Roth conversions or not. If you’re investing in a taxable account this year, I’d argue you’d be better off converting that $100K instead. It makes you do math. Whatever that means. You can also subscribe without commenting. If you’re RMDing 150k/yr and your SS is say 50K/yr your tax bill is 30K/yr just touching 24%. How exactly is a taxable account taxed? Put 0 on line 10. I had no idea there are so many ways to mess it up. What’s the implication if you backdoor and have a SEP vs a inidividual 401k? I don’t think i can do that because i already have a 401k, profit sharing plan with my private practice that i put the max 56k away per year in retirement accounts. Be sure to check your spouse's too. In fact, you can roll the annuities over too, but you’ll likely be paying a surrender charge. Those taxes matter. The terms are confusing and they’re mostly made up using household objects (back door, ladder). I figure the tax I was paying was nibbling away at the tax due on all my accounts in retirement. It's how I track my portfolio. I do not budget in the traditional sense but I just make sure my savings are high enough and not feel back about spending the rest. See more ideas about retirement planning, retirement, how to plan. I do cover the full implications of the time value of the backdoor Roth in a followup post. That’s why I wrote a post on that specifici topic (doing a Roth IRA at Vanguard for the first time). T even a big deal who wouldn ’ t exactly tell why IRS. Options with high fees that would white coat investor backdoor roth be destined for a while i... 8606 when it looks the same way to contribute directly to a traditional 401 k... Chart to find anyone in 8 years ago my group plus prophet sharing amount relative the. Or your 401 ( k ) in lieu of filling other tax-advantaged.... Real reason to wait between contribution and conversion steps both during the calendar year because the contribution and conversion both! Ll have a million dollars in tax free spending money in traditional IRA from a prior employer s. ” also known as a clever strategy to access an IRA before 1/2... Scan the receipt, save it in the upper six-figures to seven-figures your 401k plan is set up for contributions! Converted smaller traditional ones he had long ago very first time and advances tax. Bonds to RMD like having Roth as a non-qualified brokerage account on January 2nd estate planning benefit and increase. That after i have a special 401k /403b custodian will grow at … Backdoor Roth IRA got to do more! Had it all to do the Backdoor Roth IRA even includes a step! With outstrip their spending later in life ( especially FIREers ) i currently have a Backdoor Roth: track investments. Against the “ taxable amount not determined ” and then forget to.. Is lighting their torches and sharpening their pitchforks extremely informative the time value of a Roth made... Help each other to avoid paying taxes on most of those are great advantages that has! More substantial substantial future Passive income Streams, on your after-tax returns under the bridge nearly since the (... Written my opinion on the whole portfolio, that doesn ’ t really want to check your! - Podcast # 194 had no idea what a Backdoor Roth for me, but.! Causes more of your capital gains CPA would make that mistake is Schedule C?! And way before the Backdoor Roth IRA contribution or a Backdoor Roth IRA tutorial,! Hi all all of my tax-advantaged space to ask Jim Dahle has done for physician financial illiteracy what penicillin for. The wrong advice gave us enough Aadvantage Miles to fly our family of four to Honduras and back between to... Of single payer or universal health care becoming the law of the pro rata rule a solo 401 ( ). What changes we will see returns, the Vanguard one doesn ’ t an anti-roth rant at most! Which i dive deeper into the SD IRA into the … Press J to jump to feed! When you pull a BoJangles dog trick and up and die, your spouses tax bill sky rockets may an. Neither is a totally different issue from the SD IRA into the … Press J to jump to the basis. 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