043R | Mega Backdoor Roth | Should I Ever Consider Using the Roth?

Oct 6, 2017

Dive into a fascinating discussion on the Mega Backdoor Roth strategy and its tax implications. The hosts share personal anecdotes, like a memorable family hike, while exploring the balance between wealth accumulation and preservation during retirement. Hear about the importance of tailoring financial decisions to individual values, and navigate through the pros and cons of Roth versus pre-tax investments. Discover listener feedback on inflation concerns, social security delays, and learn how math intertwines with personal finance for a holistic approach.

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ANECDOTE

Mystery Reader

Brad Barrett's daughter started kindergarten and he participated as a "mystery reader."
This heartwarming experience demonstrated the flexibility of his FI lifestyle.

ANECDOTE

Natural Bridge Lesson

The Barrett family explored Natural Bridge State Park, a site Thomas Jefferson bought for $2.40.
This sparked a discussion with his daughters about the power of compounding and long-term investing.

INSIGHT

Balancing FI and Life

Fritz from Retirement Manifesto emphasizes balancing risk and enjoying the present while pursuing FI.
He prioritizes absolute safety, delaying retirement until 55 despite potentially retiring earlier.

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043R | In this podcast we discuss our takeaways from Episode 43 with Fritz from the Retirement Manifesto plus an in-depth discussion of the Roth IRA conversion and Mega Backdoor Roth, and taxable income scenarios for retirement contributions. In Today’s Podcast we cover: Our big takeaways from Episode 43 with Fritz from Retirement Manifesto Brad as a ‘Mystery Reader’ for his daughter’s class plus their trip to Natural Bridge State Park and a FI lesson for his daughters How to tackle drawdown strategies and how that opened our eyes The concept of balance that Fritz brought up in Episode 43 How we each have a different path to Financial Independence and we have to find what we each value and how much safety we require How important the math is, but also how the personal side is an important part of the equation Jonathan’s decision to pay off his student loans early and how this may not have been optimal mathematically, but was the “right” decision for him Feedback from the audience on the episode, but specific points from Danny Questions surrounding inflation on your safe withdrawal rate and early retirement Feedback from the audience about delaying social security The distinction between the Roth IRA conversion and the Mega Backdoor Roth IRA The tax issues surrounding the Roth IRA conversion Practical Application of the Mega Backdoor Roth Vishal and Brad share the nuances of trying to navigate the Mega Backdoor Roth: They need to allow for after-tax contributions and in-service distributions/withdrawals Explanation of the Mega Backdoor Roth Email from Zac about the value of using pre-tax or post-tax retirement contributions when you’re already in a low tax bracket Where is the line where we’d consider putting into a pre-tax or post-tax retirement account? A scenario of someone with a $25,000 income and where they’d fall in the tax brackets and how to lower that A scenario of an individual with a $60,000 gross income and what they should consider with their retirement contributions How would Brad and Jonathan choose if they were in this situation? Itunes reviews and book giveaways The Vault is live Click Here for Access Links from the show: Retirement Manifesto FI by 40 Millionaire Educator Mega Backdoor Roth article by the Mad Fientist Post from Vishal from Everything about Education about Mega Backdoor Roth The Wealthy Accountant Books Mentioned in the Show: Hiking to Waterfalls in Virginia