Tax rules are made so complecated so that you have to hire a specialist for it. There is a big industry which only exists on the complexity of the tax code. Now the society in financial terms are divided in 3 group, 1st the poor who live on the tax, 2nd the middle class who pay the tax and 3rd the rich who create employment for the middle class so they can pay the tax. Goverment's job is to maintain this system.
Most tax rules for the every day person is easy to understand: Do you run your business at home? Deduct the price of the bedroom you use to conduct business (total_sqft * price/sqft) Did you have to do house repairs? Deduct the price of repairs Did you donate to a charity? Deduct the amount you donated Did you use your car for daily work? Duduct gas and maintenance. All of these have cut off points but it isnt hard to read tax law that applies to the average joe. The hard tax law comes when you: 1. Have multiple income streams 2. Own a business 3. Own many assets
Tax evasion is legal and morally correct since you're not a slave, you have no obligation to pay any percentage of your time(and therefore wages/labor) to the government. The right to life and liberty cannot exist at the same time as the right for the government to garner your time, and therefore your life. Capital gains, sales tax, etcetera not included.
I used to process roth conversions for an investment company that I worked for and I always wondered how the hell people were able to do this. Now I know.
@TheIvyLens I love people like you who are the literally the definition of consious incompetence and the inability to intuitively understand the theory of mind.
I always think of the richer people I worked for who would bitch and moan about people abusing food stamps, welfare, and medicare etc. While also making sure to avoid paying taxes on so many things. Laundering money through a "business" that didn't exsist.
@@jamesrowe2383 Yes you are right, taxes are "our" money. Do you think that the people getting foodstamps/assistance don't pay taxes as well? In any form? Taxes are not only to pay the government employees, but are to be used as well for the benefit of the people. Now "benefit" is in some cases subjective. Complain all you want, but I feel its hypocritical to complain of others doing the same thing you're doing .(no not you in particular since I don't know you, I'm speaking of the many brokers/lawyers/business owners that I've assisted that would do all they can to avoid paying their actual dues in taxes) Having money doesn't absolve you from mooching off as well. Look at the many corporations that have abused the bankruptcy policies in the past to just recycle and do it again.
Exactly why people get paid to help you. Generally, open one, any of them, and invest on an index fund like snp. Mutual funds allow you to buy fractional shares so dollar amount, however much you have, can be invested. Pls take note retirement accounts will penalize you if you take money before you are age 59 1/2 if it’s made with pretax contributions.
Let's remove some of that stress. In a nutshell, pay your taxes, keep your expenses as low as possible, and invest the money you don't spend. Save your emergency fund, then invest the rest. Different investment (crypto,stocks, real estate, business, etc) all have pros and cons and require different amount of work on your end. Pick the one the aligns best with your lifestyle and risk tolerance. No one knows the future but the ones who ended up coming out on top will be the first to tell you that their method was the right method.😊
1. Step 1, they paid the taxes on 7,000, because they did not claim the tax benefit. Here it depends on their earnings, so I'm assuming they're making more than $161k. Otherwise, just put it in a Roth IRA to begin with. 2. Step 2, they paid the taxes again on 7,000 to move it from traditional to Roth. This part may or may not be at a high tax rate depending on their income. 3. Money put into a ROTH is taxed. It's the gains coming out that's not taxed. So if you put in $7,000 and your account is worth $70,000 when you retire, you paid taxes on the $7,000 but not the $63,000 in gains when you take it out. 4. Of course, if the money investment is a loss, then you paid taxes on all of it.
Now I understand. I thought you’d want to not pay taxes UNTIL AFTER you retire and you tax levels are less. It depends on if you mark a lot on the Roth IRA or not
@@digimom82you’ll be taxed on a much larger amount because you’ll be on a different tax bracket and taxes will more than likely go up, not down. Pay what you can upfront, not later.
This woman is worth every freakin penny . I hope shes even getting paid on every product she just put on her face. So slick if thats a sponser. Not even mad at her hustle and so grateful for her teachers heart! Appreciate'cha!
It's 7,000 now. And more if you are 50+. 7,000/year for 30 years invested in a low cost ETF that nets 8% rate of return will give you $792,500 you will NEVER have to pay taxes on again. If you hit 12% (which is the average for a fund that tracks the S&P 500) that's $1,688,000. You are kidding yourself if you think the rich wouldn't take advantage, especially if you are in the $160,000/year bracket. Hell I would.
@@sarahb8073 I'm not saying someone shouldn't take advantage of it. I'm just saying it's a 15% difference. If you would be rich with the tax benefit, you'd be rich without it too.
@@Death_the_Kid I think you're starting in the wrong spot. You, and everyone else, should do what you can to protect your money. It's a key element to being self-sufficient. 🙏
@@ko7772 I appreciate how much you care, but there was no indication I wasn't 😂 You should talk to people who think it's morally wrong to avoid taxes 💀 tell them it's okay 😗
In Australia, people tend to make contributions superannuation (IRA in the US) 2 ways, pre-tax and post-tax. I've seen people put 330k in their account and they do not get taxed on it unless a person asks to make a claim on it (which is 15% per pre-tax payment taxes or we call it contributions tax). It's a pretty neat way to put a lot of money on your retirement funds and encourages members to use the system if they know it well enough, even to triple it knowing they cannot contribute to the fund for the next 3 financial years. Not a lot of people know how retirement funds work, there needs to be an education about it. It's also a good way to save and be less tempted to take money out of the funds because it is a complicated system to take money out of the superannuation.
I love listening to your advice even though it doesn't apply to me. Im in Taiwan and about to move to South Africa. Im anxious af but your voice soothes me. Just bought your book btw
What she doesnt say is that for this to work, you have to have an empty IRA account. I rolled my old 401ks into my personal Ira and due to me having pre-tax money in my IRA, if i would to try to backdoor now that I am married and no longer qualify for a ROTH, i would have to pay taxes based on what percentage of my IRA is pre-tax vs post-tax. Due to this, if I were to backdoor this year’s contribution, I would trigger hundreds or thousands of dollars in taxes. I bought her book hoping it would go over this info but it didnt!! I still had to scour the interwebs to figure it out smh.
You need to speak to your team of professionals ( Tax strategists, CPA, etc.) Use books for general information and your team for your personal situation.
Correct, you need to not have money in any IRAs otherwise you're hit with the Pro-rata rule. That said, you can also roll your IRA into your current employer's 401K... if they allow it. This can allow you do do the backdoor roth conversion free and clear.
She did mention paying taxes once it’s rolled over. Money out into a Roth IRA is always taxed on the front end so it’s tax free when you take a distribution. There’s no way around that bc Uncle Sam always gets his $
I'm not that rich and never understood the rationalization for income caps for Roth IRAs. It's always better for the government to get tax revenue in current year rather than getting it decades later. This rule is getting the IRS pennies when they could have dollars by focusing on (corporate) tax dodging.
If you want people to trust you, you need to be trustworthy. That is not breaking rules, It is working within the rules. When they did not take the tax deductions that they were entitled to in the first year, that is how they earned that advantage or later.
But presumably, the idea of an IRA is that you put the contribution in pretax while you are more than likely in a higher tax bracket now, so you can take it out later when you are in a lower tax bracket in retirement, no?
Thia is an ad for ola Plex and all the other brands. Look at how shes purposefully showing thenbrands and even has a hard time with putting the dripper back
Yeah I was wondering why she was doing all that stuff to her face while making the video. It was distracting but now after you said it, she is holdig her hands under some of the products to guide peoples eyes to them. How sinister!
The backdoor Roth IRA process is confusing, but only worth doing for people earning more than $120k to $160k per year. If you don't earn them that much, then just put the money directly into a Roth IRA and don't worry about this video.
Yep and any investment income will also be tax free. Amazing. But you must do the traditional contribution and the conversion in the same calendar year.
There needs to be a branch of government solely dedicated to closing loopholes. Or a law thats passed that states, persons who find ways of positioning their finances to surpass laws meant to hold them accountable will be fined $5 on every dollar gotten through loopholes.
So what brokerage account should I use for the maybe $400 we could afford to put aside for the year when we cannot afford a brokerage account. This advice might be for middle-upper class
I'm sure you explained it fine, but I think I'm missing something. So traditional you don't pay the taxes until you receive the money in retirement right? And in this case you dont invest any of the money [like a savings/ checking account] and then you roll over the money once a year into a ROTH and invest it then? Or am I completely wrong and got something swapped?
You are correct. An IRA account is usually a tax-deferred account. This means you put money in (contribution) pre-taxed and when you pull the money out (withdrawal) you pay taxes on whatever you take out. When the contribution is claimed on your tax return, it reduces your taxable income by the contribution amount in the year that it was contributed. For the backdoor roth you are not claiming a tax deferral on the contribution. Hence your contribution is post-tax/after tax. You then roll over that amount into a Roth IRA since you already paid the taxes on it. The trouble some people run into is when they already have tax deferred money in an IRA, or they contributed money to the IRA and invested it, then the investment grew before they did the conversion to a Roth IRA. They then have a mix of pre and post tax dollars and will be hit with the pro-rata rule. The pro-rata rule prevents you from converting just the money you contributed post-tax. You'll be forced to convert the mix and that mix will depend on the ratio of pre and post tax money across all tax deferred accounts. So if the split is 50% pre and 50% post, you'll pay taxes on 50% of whatever amount is converted. It's important to know that it doesn't matter if you open a new IRA. The fed looks at money across all accounts. This is why you don't want to have an IRA before you start the backdoor conversion. It's also not the end of the world if you don' to a backdoor roth. It's not as good but investing the money in a regular brokerage account still has its benefits for long term capital gains, but those dividends can get you. Hence the leaky bucket.
Just look up backdoor ROTH. 401K providers will tell you to do traditional but that's because they get a percentage of the balance. Open a Roth IRA outside your company, transfer your 401k funds to it. If you have a match from the employer you want a traditional to get the match then convert to roth.
It is not only for "rich people" (language of division & envy & hate). It is the tax code / the rules of the game; not a "loophole". Play the game best by knowing the rules.
Regular college educated Joe’s who have corporate jobs don’t know this. The Roth IRA limit was always just below my income, so I could never contribute, and at the age of 58, I only recently learned about it on the plane sitting next to a nurse. You should explain this to your young viewers again, because when you get to retirement age and you look at that beautiful 401(k), you have to tell yourself that you only own half of it because the federal and state government will take their share when you withdraw.
No, you can convert your Traditional IRA to a Roth IRA. (Keep in mind that this creates a taxable event.) I've never heard of anyone rolling an IRA to a 401k. I doubt that is even possible. People do roll 401ks to their IRA, typically when they leave a job or retire. You can generally roll an old 401k into a new one (if you leave one job and get another).
oh yes. one of my son's classmates' moms was complaining about mortgage laws. She wanted a rental property but didn't want to put the mandated 20% down as it wasn't their primary residence, "so we just added my husband to the lease." oh, and they were also sending their son to school in a diffrent district by borrowing a family member's address. I should've just kicked her out of my house right then.
If you need the money don't need a Roth you can have a traditional and use the money tax free for other things like medical expense or move money into other investments
Wrong. They report the contribution to the ira as non deductible. Then when they convert to a roth the distribution from the ira is not taxable as they have basis.
It’s considered post tax as is.. you pay tax now/at your current bracket and by the time you withdraw the money say 20 years later you would have paid taxes on it already on a much smaller amount (w/o growth) and at your smaller tax bracket from 20 years ago.
I need a start a step by step. Because last yr I just made 165k. And I honestly did not know this. I also, did not realize I made so much until the end of the yr. Because my pay and hours very by contract.
I mean I’m not rich so I guess it’s fine that I just contribute directly to a Roth IRA but I guess this is good to know in case I suddenly stop working in non profits for a job that pays well
What are your thoughts on i investing in gold to protect losing as much of your savings in dollars due to inflation? If favorable, do you recommend any of the digital ways to buy gold?
No, you can roll it over into one existing Roth. I do this and I make an annual contribution into a traditional IRA set up for this purpose, then my financial advisor rolls it over into the existing Roth.
I enjoy your content but what I don't get is if people are behaving legally and acting in accordance with th law why are you making it sound like they are actually doing something immoral or skirting around the system? What are those people supposed to do with their money? Let it sit in a Wels Fargo savings account? What is your recommendation? Should they do legal things with their money or illegal things?
Except you don't want to do that b/c, if you're "rich", you're likely in the highest tax bracket & you'll be in a lower bracket when you're ready to take the money out.
I used to work with a bunch of Rich guy engineers. And they would complain about illegal immigrants not paying for taxes. Then they would tell me tricks and tips on how I could not pay taxes like get a dog and claim he's security and open a business doing whatever claim a closet in my house an office right off my car and clothes. .. bro....
If you have a 401k match it is. If you want to own their company inside a roth they do. Anyone that hold stocks does this. Why would you pay .ore tax???
Your multi tasking is next level. I am out in these streets trying to figure out why I am in the kitchen holding a towel in one hand and a tennis racket in the other. And I don't even play tennis! Why am I here? What did I come in here for? Send help!
Very nice. I’m 25 and I want to retire at 45 - I rolled over my retirement plan from a shitty job to a traditional IRA and will do this. Thank you. I was just about to claim my contributions lol
So let me get this, I can roll over an account, pay the taxes put it into a roth ira, when I retire then I don't pay taxes because I already paid taxes on it despite it growing after I rolled it over?
It makes me nervous how the FIRE crowd treat the backdoor IRA as their sole means of taking profits early. Any loopholes that get too popular get shut down.
Imagining that anyone is ‘finding ways to break’ the rules, and not that those rules were specifically written to benefit those who already have money.
Of course you leave out that high income rich people paying the highest marginal tax rate likely shouldn’t as that taxable income to this year. Rather should defer and take the traditional IRA distribution while in a lower income tax bracket. (It’s better for the IRS to give them this option).
But traditional IRA also has income limits for tax deductions. I put money in traditional IRA, but now realized I cannot use that for tax deductions because of income limit. Now I’m doing double tax. This year I’m paying tax for this, when I take this money out that time also . I’m not sure how rich people doing that if IRS has limit. For a single filing you can use traditional IRA for tax deductions if your gross income is less than 87k. For married filing joint Its 143k.
Beside money tip i noticed you didnt apply enough sunscreen. The right amount is around 2 fingers long, lookup 1 video you’ll find people explaining it throughly ❤
How are they breaking a rule when it's clearly legal and allowed by the IRS, like trump said, the loopholes are there for a reason, their rich friends.. change the tax code
Ah yes, the classic I'm going to put on makeup in front of you to make this feel like a normal conversation and I'm just a regular person who does regular things
I file jointly with my wife. I took the year off because f*ck it. I own a rental property I depreciate over 28.5 years. Ergo, I hid no income for the year and did a back door roth for about $45k (joint fed deduction + depreciation on rental) I paid no tax on it and actually got money back from the state and Fed.
When you say “they’ll pay taxes on it this year” that’s incorrect. Since it’s post tax income there’s no need to pay double taxes when converting to Roth
Well good for them! ☺️ I am a bit poor but I see why they created a go-around. I don't think this is"rich people" but smart people. If it isn't illegal? They are "breaking" anything. 😄
If they can legally do it, it’s not breaking the rules. If you want it to stop, lobby your congressman, but of course they won’t change anything because they and their donors are doing the same thing.
I’m reading a book called ‘Taxtopia’ which is about how the rich bend tax rules
Woah
*work WITHIN the tax rules.
Those rules are available to you as well, just gotta put yourself in the position to leverage them.
Many of the more complicated tax laws are for the rich to protect or pad their assets.
@@thatindinkid I’m not that level of wealthy for it to be worth it 😬
Vivian just got paid for 6 or 7 product placements right before our eye$. Beauty influencing without being a beauty influencer.
Woah! I didn't even notice till I watched it back!!
Was gonna say exactly that!
I couldn't read half the brands!
No she didn’t becuase if something is sponsored you have to clearly declare that portions of your content are sponsored
Tax rules are made so complecated so that you have to hire a specialist for it. There is a big industry which only exists on the complexity of the tax code. Now the society in financial terms are divided in 3 group, 1st the poor who live on the tax, 2nd the middle class who pay the tax and 3rd the rich who create employment for the middle class so they can pay the tax. Goverment's job is to maintain this system.
We must maintain the agenda 😎🇺🇲🇺🇲🇺🇲
oh if only that was how the system actually functioned
Most tax rules for the every day person is easy to understand:
Do you run your business at home? Deduct the price of the bedroom you use to conduct business (total_sqft * price/sqft)
Did you have to do house repairs? Deduct the price of repairs
Did you donate to a charity? Deduct the amount you donated
Did you use your car for daily work? Duduct gas and maintenance.
All of these have cut off points but it isnt hard to read tax law that applies to the average joe. The hard tax law comes when you:
1. Have multiple income streams
2. Own a business
3. Own many assets
Still the top 1% pay 40% of all taxes
Most poor people *think* they are middle class. The percentage of your tax dollars that goes to social programs is so terribly miniscule.
Tax evasion is illegal. Tax avoidance is encouraged.
Tax evasion is legal and morally correct since you're not a slave, you have no obligation to pay any percentage of your time(and therefore wages/labor) to the government. The right to life and liberty cannot exist at the same time as the right for the government to garner your time, and therefore your life. Capital gains, sales tax, etcetera not included.
@@I_Am_Empyrean Right on.
I used to process roth conversions for an investment company that I worked for and I always wondered how the hell people were able to do this. Now I know.
Wow . . . Literally a simple google search would have done the trick
@@TheIvyLensIf you know what you're even doing in the first place. You don't go looking for sht you don't know.
@TheIvyLens I love people like you who are the literally the definition of consious incompetence and the inability to intuitively understand the theory of mind.
I always think of the richer people I worked for who would bitch and moan about people abusing food stamps, welfare, and medicare etc. While also making sure to avoid paying taxes on so many things. Laundering money through a "business" that didn't exsist.
This
There’s a huge difference between the two. Welfare food stamps is our money we a right to complain Duh!!!!
Tax reduction from money I generate is smart!!
@@jamesrowe2383 Yes you are right, taxes are "our" money. Do you think that the people getting foodstamps/assistance don't pay taxes as well? In any form? Taxes are not only to pay the government employees, but are to be used as well for the benefit of the people. Now "benefit" is in some cases subjective. Complain all you want, but I feel its hypocritical to complain of others doing the same thing you're doing .(no not you in particular since I don't know you, I'm speaking of the many brokers/lawyers/business owners that I've assisted that would do all they can to avoid paying their actual dues in taxes) Having money doesn't absolve you from mooching off as well. Look at the many corporations that have abused the bankruptcy policies in the past to just recycle and do it again.
I don’t understand anything about retirement and it stresses me out
don't worry, our planet is going to burn before we get even close to it, so you're good 😊
Exactly why people get paid to help you. Generally, open one, any of them, and invest on an index fund like snp. Mutual funds allow you to buy fractional shares so dollar amount, however much you have, can be invested. Pls take note retirement accounts will penalize you if you take money before you are age 59 1/2 if it’s made with pretax contributions.
@@Erundilmedoubtful but will it possibly burn when my kids are trying to retire? Possibly.
Let's remove some of that stress. In a nutshell, pay your taxes, keep your expenses as low as possible, and invest the money you don't spend.
Save your emergency fund, then invest the rest. Different investment (crypto,stocks, real estate, business, etc) all have pros and cons and require different amount of work on your end. Pick the one the aligns best with your lifestyle and risk tolerance. No one knows the future but the ones who ended up coming out on top will be the first to tell you that their method was the right method.😊
@@Erundilmelol this is funny af, let’s wait for the end together. I got my Hennessy.
1. Step 1, they paid the taxes on 7,000, because they did not claim the tax benefit. Here it depends on their earnings, so I'm assuming they're making more than $161k. Otherwise, just put it in a Roth IRA to begin with.
2. Step 2, they paid the taxes again on 7,000 to move it from traditional to Roth. This part may or may not be at a high tax rate depending on their income.
3. Money put into a ROTH is taxed. It's the gains coming out that's not taxed. So if you put in $7,000 and your account is worth $70,000 when you retire, you paid taxes on the $7,000 but not the $63,000 in gains when you take it out.
4. Of course, if the money investment is a loss, then you paid taxes on all of it.
Thank you for bringing this down to my level
Now I understand. I thought you’d want to not pay taxes UNTIL AFTER you retire and you tax levels are less. It depends on if you mark a lot on the Roth IRA or not
@@digimom82you’ll be taxed on a much larger amount because you’ll be on a different tax bracket and taxes will more than likely go up, not down. Pay what you can upfront, not later.
Step 2 is wrong. They don't pay any tax on the conversion because their basis in the IRA equals the withdrawal (since it was put in post tax).
@@dustinmitchell4711yep, was gonna comment this. The money is NOT double taxed if you do it right.
It's not breaking the rules its understanding the rules well enough to take advantage of them.
This woman is worth every freakin penny . I hope shes even getting paid on every product she just put on her face. So slick if thats a sponser. Not even mad at her hustle and so grateful for her teachers heart! Appreciate'cha!
Not paying a 15% tax on the growth of $6000/year is not what makes rich people rich.
It's 7,000 now. And more if you are 50+. 7,000/year for 30 years invested in a low cost ETF that nets 8% rate of return will give you $792,500 you will NEVER have to pay taxes on again. If you hit 12% (which is the average for a fund that tracks the S&P 500) that's $1,688,000. You are kidding yourself if you think the rich wouldn't take advantage, especially if you are in the $160,000/year bracket. Hell I would.
@@sarahb8073 I'm not saying someone shouldn't take advantage of it. I'm just saying it's a 15% difference. If you would be rich with the tax benefit, you'd be rich without it too.
Rich people "break rules." Proceeds to explain legal method for converting IRA.
That's the whole point, they make it legal. There's always gonna be loopholes if it doesn't benefit someone
@@Death_the_Kid I think you're starting in the wrong spot. You, and everyone else, should do what you can to protect your money. It's a key element to being self-sufficient. 🙏
@@ko7772 I appreciate how much you care, but there was no indication I wasn't 😂 You should talk to people who think it's morally wrong to avoid taxes 💀 tell them it's okay 😗
In Australia, people tend to make contributions superannuation (IRA in the US) 2 ways, pre-tax and post-tax. I've seen people put 330k in their account and they do not get taxed on it unless a person asks to make a claim on it (which is 15% per pre-tax payment taxes or we call it contributions tax).
It's a pretty neat way to put a lot of money on your retirement funds and encourages members to use the system if they know it well enough, even to triple it knowing they cannot contribute to the fund for the next 3 financial years. Not a lot of people know how retirement funds work, there needs to be an education about it. It's also a good way to save and be less tempted to take money out of the funds because it is a complicated system to take money out of the superannuation.
That's not correct.
I love listening to your advice even though it doesn't apply to me. Im in Taiwan and about to move to South Africa. Im anxious af but your voice soothes me.
Just bought your book btw
What she doesnt say is that for this to work, you have to have an empty IRA account.
I rolled my old 401ks into my personal Ira and due to me having pre-tax money in my IRA, if i would to try to backdoor now that I am married and no longer qualify for a ROTH, i would have to pay taxes based on what percentage of my IRA is pre-tax vs post-tax.
Due to this, if I were to backdoor this year’s contribution, I would trigger hundreds or thousands of dollars in taxes.
I bought her book hoping it would go over this info but it didnt!! I still had to scour the interwebs to figure it out smh.
Because everyone’s situation is different, I always go to a tax professional to get advice.
Don't rely on youtubers for actual in depth financial advice lol
You need to speak to your team of professionals ( Tax strategists, CPA, etc.) Use books for general information and your team for your personal situation.
Correct, you need to not have money in any IRAs otherwise you're hit with the Pro-rata rule. That said, you can also roll your IRA into your current employer's 401K... if they allow it. This can allow you do do the backdoor roth conversion free and clear.
She did mention paying taxes once it’s rolled over. Money out into a Roth IRA is always taxed on the front end so it’s tax free when you take a distribution. There’s no way around that bc Uncle Sam always gets his $
I'm not that rich and never understood the rationalization for income caps for Roth IRAs. It's always better for the government to get tax revenue in current year rather than getting it decades later. This rule is getting the IRS pennies when they could have dollars by focusing on (corporate) tax dodging.
Shhhhhh...
Only works if you do NOT have any other taxable IRAs
First thought that came to mind was magi on the trad ira she says to convert
Do you mean fmv instead of magi?
If you want people to trust you, you need to be trustworthy. That is not breaking rules, It is working within the rules. When they did not take the tax deductions that they were entitled to in the first year, that is how they earned that advantage or later.
DO NOT TOUCH YOUR SKIN WITH THE DROPPER!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
It’s for the content sweetie it’s not that deep
What's wrong with her eyes?
Right. Not qorth cross contaminating just for content...sweetie @@KingKikikoi
Uhh how bad is that?! I do that sometimes when I'm rushing?! 😬😬
@@dmm1648 you don't want to do that because bacteria and gunk on your face.
But presumably, the idea of an IRA is that you put the contribution in pretax while you are more than likely in a higher tax bracket now, so you can take it out later when you are in a lower tax bracket in retirement, no?
Correct. Because the money you save is the TOP bracket i.e. 22%. So in retirement the money starts at the bottom 0%
Thia is an ad for ola Plex and all the other brands. Look at how shes purposefully showing thenbrands and even has a hard time with putting the dripper back
Right?? Obvious ad what a scammer
Yeah I was wondering why she was doing all that stuff to her face while making the video. It was distracting but now after you said it, she is holdig her hands under some of the products to guide peoples eyes to them. How sinister!
She’s likely just showing what product she’s using (so people can go find it themselves) instead of pushing affiliate links for a commission.
If it's a legal rule..... they are not breaking anything.
Yep.
She can't describe a ROBS set up in a way people will understand.
Im trying to learn but i feel like stuff is just flying over my head. I guess i need to read more about this stuff
The backdoor Roth IRA process is confusing, but only worth doing for people earning more than $120k to $160k per year. If you don't earn them that much, then just put the money directly into a Roth IRA and don't worry about this video.
Yep and any investment income will also be tax free. Amazing. But you must do the traditional contribution and the conversion in the same calendar year.
So the rule wasn’t broken, merely followed and executed correctly.
Yes but telling the audience that wouldn’t make for an interesting video
Self employed people can fund a SEP (IRA) and can contribute 20% of their income…up to $60,000 per year…tax deferred. That’s how real money accrues.
There needs to be a branch of government solely dedicated to closing loopholes. Or a law thats passed that states, persons who find ways of positioning their finances to surpass laws meant to hold them accountable will be fined $5 on every dollar gotten through loopholes.
they don't break the rules they are just smart enough to play the game.
Exactly!
So what brokerage account should I use for the maybe $400 we could afford to put aside for the year when we cannot afford a brokerage account. This advice might be for middle-upper class
I'm sure you explained it fine, but I think I'm missing something. So traditional you don't pay the taxes until you receive the money in retirement right? And in this case you dont invest any of the money [like a savings/ checking account] and then you roll over the money once a year into a ROTH and invest it then? Or am I completely wrong and got something swapped?
I have the same question
Which is why this particular short of hers confused me too. I have a finra series 6,7 and 63 and it confused me. I wasnt confused before she talked.
You are correct.
An IRA account is usually a tax-deferred account. This means you put money in (contribution) pre-taxed and when you pull the money out (withdrawal) you pay taxes on whatever you take out. When the contribution is claimed on your tax return, it reduces your taxable income by the contribution amount in the year that it was contributed.
For the backdoor roth you are not claiming a tax deferral on the contribution. Hence your contribution is post-tax/after tax. You then roll over that amount into a Roth IRA since you already paid the taxes on it.
The trouble some people run into is when they already have tax deferred money in an IRA, or they contributed money to the IRA and invested it, then the investment grew before they did the conversion to a Roth IRA. They then have a mix of pre and post tax dollars and will be hit with the pro-rata rule. The pro-rata rule prevents you from converting just the money you contributed post-tax. You'll be forced to convert the mix and that mix will depend on the ratio of pre and post tax money across all tax deferred accounts. So if the split is 50% pre and 50% post, you'll pay taxes on 50% of whatever amount is converted. It's important to know that it doesn't matter if you open a new IRA. The fed looks at money across all accounts. This is why you don't want to have an IRA before you start the backdoor conversion.
It's also not the end of the world if you don' to a backdoor roth. It's not as good but investing the money in a regular brokerage account still has its benefits for long term capital gains, but those dividends can get you. Hence the leaky bucket.
@@TheFirstRealChewythank you for the succinct explanation of the pro rata rule!
Just look up backdoor ROTH.
401K providers will tell you to do traditional but that's because they get a percentage of the balance.
Open a Roth IRA outside your company, transfer your 401k funds to it.
If you have a match from the employer you want a traditional to get the match then convert to roth.
It is not only for "rich people" (language of division & envy & hate). It is the tax code / the rules of the game; not a "loophole". Play the game best by knowing the rules.
Correct. And if you really know the code, you aren't required to pay a cent in income taxes. This is truly what the 1% use.
Usually drafted by lobbyists to bypass legislation if you have an accountant.
Regular college educated Joe’s who have corporate jobs don’t know this. The Roth IRA limit was always just below my income, so I could never contribute, and at the age of 58, I only recently learned about it on the plane sitting next to a nurse. You should explain this to your young viewers again, because when you get to retirement age and you look at that beautiful 401(k), you have to tell yourself that you only own half of it because the federal and state government will take their share when you withdraw.
Federal government employees don't have a max salary on the TSP ROTH 🤔
Very true. Dealt with several this year, during tax season.
Thanks Vivienne. Im naming my next baby after you! Please list the products.?! I cant catch the brands sometimes
Thank you so much awesome. !!Didn't know this .I love vivian & her channel and her new book !!!
This always overwhelmed me. I have a tradional IRA, a ROTH, and a 401k at work. Should i move my IRA's into the 401K???
NO.
No, you can convert your Traditional IRA to a Roth IRA. (Keep in mind that this creates a taxable event.)
I've never heard of anyone rolling an IRA to a 401k. I doubt that is even possible. People do roll 401ks to their IRA, typically when they leave a job or retire. You can generally roll an old 401k into a new one (if you leave one job and get another).
NO. 401k up to the match. Max the Roth. If you're in the 22%+ bracket then everything in the bracket to 401k.
oh yes. one of my son's classmates' moms was complaining about mortgage laws. She wanted a rental property but didn't want to put the mandated 20% down as it wasn't their primary residence, "so we just added my husband to the lease." oh, and they were also sending their son to school in a diffrent district by borrowing a family member's address. I should've just kicked her out of my house right then.
Dearest Vivan your skin looks immaculate your husband is a lucky man any advice for the uk please
great content but please reconsider the GRWM stuff.
Honest, I did let this play a few times but at the beginning almost skipped it thinking it was a makeup tutorial 😂😂😂
If you need the money don't need a Roth you can have a traditional and use the money tax free for other things like medical expense or move money into other investments
They don't break them. They find loopholes that haven't been closed. What they do is perfectly legal... to the letter.
Wrong. They report the contribution to the ira as non deductible. Then when they convert to a roth the distribution from the ira is not taxable as they have basis.
It’s considered post tax as is.. you pay tax now/at your current bracket and by the time you withdraw the money say 20 years later you would have paid taxes on it already on a much smaller amount (w/o growth) and at your smaller tax bracket from 20 years ago.
I need a start a step by step. Because last yr I just made 165k. And I honestly did not know this. I also, did not realize I made so much until the end of the yr. Because my pay and hours very by contract.
It's all good those because lots of people can't even afford food
I mean I’m not rich so I guess it’s fine that I just contribute directly to a Roth IRA but I guess this is good to know in case I suddenly stop working in non profits for a job that pays well
What are your thoughts on i investing in gold to protect losing as much of your savings in dollars due to inflation? If favorable, do you recommend any of the digital ways to buy gold?
So does that mean that the following year they open another traditional ira and so and so forth
Ending up with multiple roths at some point ?
No, you can roll it over into one existing Roth. I do this and I make an annual contribution into a traditional IRA set up for this purpose, then my financial advisor rolls it over into the existing Roth.
I enjoy your content but what I don't get is if people are behaving legally and acting in accordance with th law why are you making it sound like they are actually doing something immoral or skirting around the system? What are those people supposed to do with their money? Let it sit in a Wels Fargo savings account? What is your recommendation? Should they do legal things with their money or illegal things?
Except you don't want to do that b/c, if you're "rich", you're likely in the highest tax bracket & you'll be in a lower bracket when you're ready to take the money out.
Only for a short while. Then the value of the accounts keeps going up.
I used to work with a bunch of Rich guy engineers. And they would complain about illegal immigrants not paying for taxes. Then they would tell me tricks and tips on how I could not pay taxes like get a dog and claim he's security and open a business doing whatever claim a closet in my house an office right off my car and clothes. .. bro....
As a multimillionaire i can confirm this is NOT how we invest our money and time.
If you have a 401k match it is.
If you want to own their company inside a roth they do.
Anyone that hold stocks does this.
Why would you pay .ore tax???
Do you do this every year? How do they continue maxing their contributions in Roth?
Yes, do it every year your income is above the threshold
Your multi tasking is next level. I am out in these streets trying to figure out why I am in the kitchen holding a towel in one hand and a tennis racket in the other. And I don't even play tennis! Why am I here? What did I come in here for? Send help!
Ngl at this point I’ve stopped caring about anything
Very nice. I’m 25 and I want to retire at 45 - I rolled over my retirement plan from a shitty job to a traditional IRA and will do this. Thank you. I was just about to claim my contributions lol
Even better if you're self employed. Solo 401k. You can put 66k into a roth.
I’m 29 and have no idea what she just said I need to get my shit together.
So let me get this, I can roll over an account, pay the taxes put it into a roth ira, when I retire then I don't pay taxes because I already paid taxes on it despite it growing after I rolled it over?
Gurl🤣🤣🤣🤣🤣I’m trying to get to 106k a year… right now it’s only in my dreams!!! But I’m listening 🧐
If I had that kind of money I wouldn't of needed to watch this video...
Now I need to make that kind of money....lol
Lol, rich people are not doing this for their retirement for 20k ish a year. They just open a brokerage account and fund it.
Used to be a 529 workaround too but that got nerfed.
Really? What was it?
It's not breaking the rules if they are following them.
It makes me nervous how the FIRE crowd treat the backdoor IRA as their sole means of taking profits early. Any loopholes that get too popular get shut down.
Wow, Thank you so much, where can I hear more!
More on this topic!
Can confirm, I do this
Imagining that anyone is ‘finding ways to break’ the rules, and not that those rules were specifically written to benefit those who already have money.
Of course you leave out that high income rich people paying the highest marginal tax rate likely shouldn’t as that taxable income to this year. Rather should defer and take the traditional IRA distribution while in a lower income tax bracket. (It’s better for the IRS to give them this option).
If anyone can do it, its not "rich" people, its "smart" people.
But traditional IRA also has income limits for tax deductions. I put money in traditional IRA, but now realized I cannot use that for tax deductions because of income limit. Now I’m doing double tax. This year I’m paying tax for this, when I take this money out that time also . I’m not sure how rich people doing that if IRS has limit. For a single filing you can use traditional IRA for tax deductions if your gross income is less than 87k. For married filing joint
Its 143k.
Can you contribute to an already established IRA if salary jumps into the 161 range.
This only works to a certain extent, because there's also an income cap on a traditional IRA.
how much is that?
they are not breaking them, they are making them just for the poor xD it's a feature, not a bug
how many layers of spackle to get through the clip
Beside money tip i noticed you didnt apply enough sunscreen. The right amount is around 2 fingers long, lookup 1 video you’ll find people explaining it throughly ❤
I’m really appreciate it your great contents every time 🎉my BFF
How are they breaking a rule when it's clearly legal and allowed by the IRS, like trump said, the loopholes are there for a reason, their rich friends.. change the tax code
Ah yes, the classic I'm going to put on makeup in front of you to make this feel like a normal conversation and I'm just a regular person who does regular things
Yeah government doing away with that backdoor
Me sitting here wondering how I’m gonna pay rent this month 🤦♀️
I had a hard time concentrating on what you said because I kept wondering how much money you were spending on beauty products. LOL
I just got a Roth IRA late how do I get the best out of it before I get 60 I say in 25 years
I love Ur videos
Is anyone else completely lost.. I'm definitely not financially illiterate but this went over ....
I've heard of that but what I'm not clear on is if the law is you can't put money in a Roth then how is a Roth rollover even available to convert to?
Great video. Thank you.H
So, how about in Canada? 🙏🏼 We don't have Roth IRA...we have CPP...?
I file jointly with my wife. I took the year off because f*ck it. I own a rental property I depreciate over 28.5 years. Ergo, I hid no income for the year and did a back door roth for about $45k (joint fed deduction + depreciation on rental) I paid no tax on it and actually got money back from the state and Fed.
When you say “they’ll pay taxes on it this year” that’s incorrect. Since it’s post tax income there’s no need to pay double taxes when converting to Roth
Well good for them! ☺️
I am a bit poor but I see why they created a go-around.
I don't think this is"rich people" but smart people.
If it isn't illegal?
They are "breaking" anything. 😄
If they can legally do it, it’s not breaking the rules. If you want it to stop, lobby your congressman, but of course they won’t change anything because they and their donors are doing the same thing.
It definitely helps when you're the ones writing the laws!
But it is far more complex if you have existing IRA accounts
I just opened up a CD IRA. 😊
Wut is that?
How much to open an CD IRA?
Is it beneficial?
Tkx
my financial advisor told me to do this the first meeting from fidelity... lol
Yeahhhh... the point of a Roth Ira, is to take your already TAXED earnings, and let you retire with tax free income.
Would love to know your skin care routine I can't quite make out the labels they're backwards.
I need longer than 60 sec for this gem you dropped lol