Practical Steps to Avoid Capital-Gain Surprises

If you don’t qualify for a Roth IRA you may be interested in using a backdoor Roth to utilize the advantages of a Roth IRA. One listener wonders about the rules for contributing to a backdoor Roth. Today, I’ll clear up his question and answer many more. 

Other listener questions in this episode cover using RMDs as QCDs, dealing with capital gains, and target date funds. Don’t miss out on discovering the answers to questions from listeners like you. Press play now to listen. Should we be optimists or pessimists right now? 

Optimism can only get you so far. I tend to be an optimistic person, but that doesn’t mean that I put on rose-colored glasses. I can see that the present situation calls for something more than simply blind optimism.

However, that doesn’t mean that we should reverse our stance and become pessimists. Pessimism is the tendency to see the worst aspect of things or believe that the worst will happen. It calls for a lack of hope or confidence in the future. This isn’t what we should strive for at all. So how should we view things instead? “Rather than practice pessimism, perhaps we should practice productive paranoia.” - Jim Collins 

How about a dose of productive paranoia? Jim Collins, author of Good to Great, helps us understand productive paranoia by explaining that the only mistakes you can learn from are the ones you can survive. Since conditions can change rapidly it is important to build in margins of safety so that you can handle disruptions from a position of strength. This will help ensure that you can mitigate damages or take advantage of opportunities. Use your angst to build structures to help you weather the storms that the market throws at you. Learn more about the Rock Retirement Club at our live meetup 

Join our live meetup tomorrow, 10/27, or 10/29 to hear how you can handle market disruptions from a position of strength by ensuring that you have an agile retirement plan in place. In the meetup, we’ll lay out how you can work through the process to develop your own agile retirement plan. We’ll also showcase the Rock Retirement Club so that you can gain a better understanding of what the Club is all about. Can backdoor Roth contributions be made throughout the year? 

Scott doesn’t quite qualify for a Roth IRA, so he has been looking into a backdoor Roth.

His question is if he can make backdoor Roth contributions throughout the year or if he can only do them once during the year. Yes, you can make contributions throughout the year; however, there may be a reason that you want to set that money aside and wait until the end of the year to make your contribution. Listen in to hear why. OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN LISTENER QUESTIONS 

• [5:30] Can backdoor Roth contributions be made throughout the year? 
• [9:53] Can Dennis use RMDs as QCDs?
• [15:03] How to deal with capital gains
• [23:15] Should Marie switch from target date funds to separate funds?
• [28:08] Do you factor in the cost of Roth conversions

TODAY’S SMART SPRINT SEGMENT 

• [37:43] Do something that intimidates you

Resources Mentioned In This Episode
BOOK - Good to Great by Jim Collins
Rock Retirement Club
Roger’s YouTube Channel - Roger That
BOOK - Rock Retirement by Roger Whitney
Roger’s Retirement Learning Center