White Coat Investor Podcast WCI #234: Roth Q&A: 401ks, Conversions, and What if the Backdoor Goes Away?
Oct 28, 2021
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Inflation Changes Who Wins And Loses
- Inflation erodes cash and low-interest fixed debt hurts bond holders while benefiting borrowers with fixed low-rate debt.
- Position portfolios for inflation with equities, real estate, I-bonds, or TIPS to preserve purchasing power.
Use Both Roth 401(k) And Roth IRA When Possible
- Contribute to both a Roth 401(k) and a Roth IRA in the same year if eligible, because limits are separate.
- Use Roth 401(k) options during low-income years and roll or convert when you leave if plan rules permit.
Prefer Conversions In Low-Income Years
- Avoid Roth conversions during peak earning years for most physicians; do conversions in low-income years instead.
- Run personalized numbers if you consider conversions now due to potential tax-law changes or higher future rates.