Money Guy Show Don't Make THIS Common Roth IRA Mistake
Mar 19, 2025
Over-contributing to a Roth IRA can lead to a sticky financial situation, but there are solutions! The hosts discuss smart savings rates, balancing spending, and the emotional side of major purchases. They also tackle retirement planning challenges, including employer-sponsored plans and the impact of income adjustments on IRA choices. Strategic conversions and tax projections are highlighted, emphasizing the importance of informed decision-making for long-term financial success. Tune in for practical advice and engaging listener interactions!
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Fixing Roth IRA Overcontribution
- If you over contributed to a Roth IRA due to high income, recharacterize the contribution to a traditional IRA before filing your taxes.
- This avoids penalties and allows a backdoor Roth conversion with taxable earnings handled properly.
Include All Income in Savings Rate
- Calculate your savings rate including all income sources like overtime and rental income.
- Aim to save 25% of your total gross income, adjusting with sporadic savings for variable income.
Young Investors With Large Roth Balances
- Having a large Roth IRA balance at a young age is unusual and often reflects aggressive saving or asset growth.
- Depending on your long-term plans, continuing to build Roth assets can be advantageous especially at lower tax brackets.