White Coat Investor Podcast WCI #194: The Backdoor Roth IRA Made Easy
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Jan 21, 2021 Discover the ins and outs of the backdoor Roth IRA, a crucial strategy for high earners to secure their retirement savings. Learn how to successfully navigate the process and rectify common errors. The discussion expands to asset class diversification and the tax implications of inherited money. Strategies for financial literacy aimed at medical and dental students are highlighted, along with tips on managing loans and investment planning. Dive into the emotional and financial factors of homeownership versus renting, and explore smart financial moves after residency.
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Roll Big IRAs Into A 401(k)
- If you have a large pre-tax IRA, roll it into a 401(k)/403(b) that accepts roll-ins to preserve backdoor Roth tax benefits.
- Open a solo 401(k) at a custodian that allows IRA roll-ins if self-employed.
Report Correctly On Form 8606
- Accurately complete IRS Form 8606 to report nondeductible IRA contributions and conversions.
- Check the key lines so taxable conversion amounts read zero when appropriate.
Backdoor Roth Suits Most Doctors
- For most physicians the backdoor Roth is worth doing yearly for tax-free growth and estate benefits.
- Exceptions include SIMPLE/SEP plans or large IRAs with no good rollover options.
