WEBVTT
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00:00:14.800We are going to be going over retirement account strategies though and how you can get more money in by December 31st.
00:00:14.880 -->
00:00:17.920And then we're also going to go over the things you don't need to stress about right now.
00:00:18.000 -->
00:00:24.160It's not till April 15th or later in the year, but we want to talk about how do I maximize my retirement account dollars.
00:00:24.320 -->
00:00:27.519There are a number of things we want you to do before year end.
00:00:27.760 -->
00:00:32.320Then lastly, we're going to talk about what are some of the new rules in 2026 you need to know about.
00:00:32.479 -->
00:00:36.560There's a number of changes happening in retirement accounts in 2026 that could affect you.
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00:00:39.920So we want to go over those so you know how to plan and what to be prepared for.
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00:00:45.439So you're making maximum contributions and strategies for 2026.
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00:00:47.039All right, let's dig in.
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00:00:52.799Okay, first thing before you're in, 2025, you need to match it out of your 401k plan.
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00:01:07.519If you've got a 401k plan at work or you have a spouse that has a 401k plan at work where the company offers a match, which is very common, let's say, for example, the match is we'll match dollar for dollar of what you put in your 401k up to 4% of what you make.
00:01:07.680 -->
00:01:15.359So if you make$100,000, let's say, and you put in$4,000, they'll match dollar for dollar up to 4% up to the$4,000.
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00:01:23.439So you want to put in your$4,000 so you get the free money from your employer with the match, which is 100% return on money.
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00:01:32.159You would be a fool to return to, you know, decline an investment that has an automatic 100% return on day one.
00:01:32.319 -->
00:01:36.000But that's what you're doing if you're not matching out in your 401k at work.
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00:01:37.120You are being a fool.
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00:01:39.359So go and do it already.
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00:01:43.920Now, if you have a solo 401k, you're the employer paying for the match.
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00:01:46.239We're going to come to that later, not as critical.
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00:01:52.159But if you have an employer with the match, let's at least get the maximum amount of money in to take full advantage of the match.
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00:01:59.120Even if the match is 50%, some 401ks have a match of 50%, or the last 2% they'll throw in is only at 50%.
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00:02:02.959Still get that because that's a 50% return on your investment.
00:02:03.040 -->
00:02:09.599Again, you'd be a fool not to take advantage of a 50% return on investment in day one, automatically guaranteed.
00:02:09.759 -->
00:02:11.120All right, so that's the match and out.
00:02:11.199 -->
00:02:21.680Now, the why we say match and then out is you may decide whether to maximize your 401k contributions of your own dollars that's coming out of your pocket.
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00:02:23.199That's a different consideration.
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00:02:26.639But number one, here, I want to make sure you at least get the match.
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00:02:29.520Secondarily, let's go back to that example.
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00:02:33.439Make 100K, you put in four grand, the company matched and put in four grand.
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00:02:35.439The company's not putting anything more in.
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00:02:41.280So any more money you put into the 401k, which with your employer 401k, you've got to do this by year end.
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00:02:45.840You've got to do it by year end to qualify for the match as well with an employer-based 401.
00:02:46.879 -->
00:02:55.520But after that, anything I want to put in, I can put up to the 23,500 max, another 7,500 for any of you who are 50 plus.
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00:02:56.879Now, these are your dollars.
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00:02:59.520This is getting deducted out of your paycheck.
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00:03:02.479Um, but these are tax advantaged dollars you can throw in.
00:03:02.560 -->
00:03:08.000So if you're like, well, I need more tax deductions this year in 2025, we'll do traditional contributions.
00:03:08.159 -->
00:03:10.960If you're like, I love Roth accounts, that's more me, my style.
00:03:11.039 -->
00:03:12.879I don't want to grow and build tax-free wealth.
00:03:12.960 -->
00:03:15.120Well, you can only put in so much money every year.
00:03:15.199 -->
00:03:21.439So let's make sure we maximize that in that employer 401k, and you can do the Roth contributions up to that 23.5.
00:03:21.759 -->
00:03:26.560Again, another 7,500 uh if if you're 50 plus.
00:03:26.719 -->
00:03:29.039So, but that's traditional or Roth dollars.
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00:03:30.800This is just your employer 401k.
00:03:30.879 -->
00:03:32.400I want you to think about this for yourself.
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00:03:36.000Or if any of you are married, think about your spouse too, and have they maximized it?
00:03:36.159 -->
00:03:42.639Now, a common question we get is well, Matt, I've only put in$1,000 in my 401k this year.
00:03:42.800 -->
00:03:44.319You know, I've been doing 1%.
00:03:44.719 -->
00:03:45.680I've been targeting that.
00:03:45.759 -->
00:03:46.879I make 100 grand.
00:03:47.280 -->
00:03:52.240You know, I don't have enough paychecks coming through to throw in the other 3,000 to get the full match.
00:03:52.400 -->
00:03:53.120What can I do?
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00:03:58.080Most 401ks allow you to put the money in directly to get the match.
00:03:58.159 -->
00:04:02.639Now you need to coordinate with your employer because you need to get that money in before December 31st.
00:04:02.719 -->
00:04:04.240And they're gonna have to coordinate the match.
00:04:04.400 -->
00:04:08.080It's not as it's not the best way to do it, but this is a common thing.
00:04:08.159 -->
00:04:12.560Some people are having to do and coordinate with their employer and their plan administrator at year end.
00:04:12.719 -->
00:04:14.240Okay, so we got the match.
00:04:14.479 -->
00:04:20.959We can also maximize our 401k contributions from our employee side, but remember that is gonna cost you.
00:04:21.199 -->
00:04:24.399Okay, next, let's go over Roth conversions.
00:04:24.639 -->
00:04:32.800Roth conversions don't have to be done by December 31st, but they do have to be done by December 31st if you want them in the 2025 tax year.
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00:04:39.040So if you want this to go on your 2025 tax return for whatever reason, you need to get your Roth conversion done.
00:04:39.279 -->
00:04:42.319A couple of things I want you to think about on the Roth conversion.
00:04:42.560 -->
00:04:45.519First is, is this a low income tax year for you?
00:04:45.839 -->
00:04:50.800If so, this would be a great year to convert and get it on your 2025 tax return.
00:04:51.040 -->
00:04:54.560Maybe you're out of work this year, you're self-employed, you'd have a low income year.
00:04:54.800 -->
00:05:06.720You could also be looking at this from another angle of, hey, my my for my IRA, 401k, whatever it is, that's traditional dollars, has been in the stock market and it's gone down and I'm at a lower value.
00:05:06.879 -->
00:05:09.360You know, you could also be converting at a lower value.
00:05:09.519 -->
00:05:14.079So think of it from a strategic standpoint where are you sitting right now in 2025.
00:05:14.240 -->
00:05:18.079I think the number one consideration is what's your year been like tax-wise?
00:05:18.560 -->
00:05:25.920The second consideration I want you to think about of whether to do Roth conversions this year is maybe you have a larger amount you're trying to convert.
00:05:26.079 -->
00:05:29.120Let's say this is$300,000 in a traditional IRA.
00:05:29.279 -->
00:05:38.240Let's say you have$300,000 in a traditional IRA and you want to make it Roth dollars, but you're like, but I don't want to take$300K into taxable income in 2025.
00:05:38.399 -->
00:05:40.160That's gonna crush me on my tax bill.
00:05:40.240 -->
00:05:43.040I'm gonna be in the 37% highest bracket.
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00:05:51.199That's gonna cost me, you know, almost$100,000 to convert that thing, or it's gonna cost me over$100,000 to convert that thing just on the federal tax side.
00:05:51.439 -->
00:05:53.759So how can I be more strategic about it?
00:05:53.920 -->
00:05:56.959Well, one thing you could do is just break it up over two years.
00:05:57.199 -->
00:05:58.560We call this chunking.
00:05:58.639 -->
00:06:00.560It's a throwback to the movie Goonies.
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00:06:01.839If you know, you know.
00:06:02.079 -->
00:06:09.199And under chunking, what we're doing is we're saying, hey, let's take$150,000 of that$300K and let's convert it in 2025.
00:06:09.439 -->
00:06:15.439The other$150,000, let's convert that in January of 2026 and that'll go on your 2026 return.
00:06:15.600 -->
00:06:24.560That way, within the you know, 30 days here, I've gotten 300 grand converted over to Roth, but I split the tax liability up between two years.
00:06:24.720 -->
00:06:34.160So if you're someone who has pretty steady income, maybe you're on a salary or your business income is pretty steady between year to year, it's not gonna bump you up to more than a couple brackets.
00:06:34.319 -->
00:06:40.800So rather than going two brackets up to hit 37%, I might stay in a 22% tax bracket.
00:06:40.879 -->
00:06:44.399Okay, it depends on your situation and your total adjusted gross income.
00:06:44.720 -->
00:06:53.040But as a general rule of thumb, you will pay less money in tax by chunking because you will stay in lower tax brackets on the amount you're converting.
00:06:53.199 -->
00:06:54.879Now, this could be done over three years.
00:06:55.120 -->
00:07:10.560You could say, I'm gonna do it over the next 13 months, 100K now, 100K in 2026, another 100K in January of 2027, and I'm gonna convert the whole 300,000, but do it in 100,000 chunks because of where you fall within the tax brackets.
00:07:10.720 -->
00:07:12.879So um just keep that in mind.
00:07:13.040 -->
00:07:22.959We've got some resources, and you can obviously Google the federal tax brackets to look where you're at um in terms of the income because this conversion is these last dollars on top.
00:07:23.120 -->
00:07:25.360So you know your income already through the year.
00:07:25.519 -->
00:07:29.600Let's say you've made 200 grand this year and you're like, well, I want to convert 300 grand.
00:07:29.920 -->
00:07:34.639Well, that 300 grand is gonna be taxed at the rate above 200k of income.
00:07:34.720 -->
00:07:37.759Okay, so we'll be pushing you into higher tax years.
00:07:37.920 -->
00:07:47.920So think about chunking and getting that done by December 31st, 2025, because you want to get some of that chunked into the 2025 tax year.
00:07:48.240 -->
00:07:51.199Now, last consideration on the Roth conversion.
00:07:51.439 -->
00:07:57.120You may be like, Matt, I pretty much make the same every year, or I'm I'm lower middle income.
00:07:57.519 -->
00:07:58.720The chunking doesn't really matter.
00:07:58.800 -->
00:08:00.639I'm just trying to convert 50 grand here.
00:08:00.800 -->
00:08:03.040It's not going to push me into another tax bracket.
00:08:03.279 -->
00:08:05.519Just convert it in January of 2026.
00:08:05.839 -->
00:08:11.680If we're already, what do we got, 15 days here left, unless you have an incredible investment, you need to make it with Roth dollars now.
00:08:11.920 -->
00:08:16.560Just wait until January of 2026 because you'll at least push it out one more tax year.
00:08:16.720 -->
00:08:21.839If you convert now in 2025, remember that's tax return to April 15th plus extensions.
00:08:22.000 -->
00:08:28.879But if you convert in 15 days here, that'll won't be due until April 15th of 2027.
00:08:29.040 -->
00:08:29.360All right.
00:08:29.439 -->
00:08:32.159So that'll push you out another year tax return-wise.
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00:08:33.759Um, any questions yet, Daniel?
00:08:34.000 -->
00:08:41.200Yeah, I think I think we have a good one here, which is uh we have my wife's primary job contributes 4% to her 403B.
00:08:41.360 -->
00:08:41.679Okay.
00:08:41.840 -->
00:08:44.000And she does not have to contribute her portion.
00:08:44.080 -->
00:08:46.960So she doesn't contribute anything at that job.
00:08:47.200 -->
00:08:51.200So we can take the full write-off in our solo 401k.
00:08:51.360 -->
00:08:52.480Does that sound right?
00:08:53.039 -->
00:08:53.360Okay.
00:08:53.519 -->
00:08:53.840All right.
00:08:54.000 -->
00:09:02.000Spouse has a 403B at work, probably works for a government agency with state, local, federal, and then that's typically what the 403B is for.
00:09:02.080 -->
00:09:07.919It's like a 401k for um if you work for a government agency or possibly a nonprofit.
00:09:08.159 -->
00:09:09.840So um that's great.
00:09:10.000 -->
00:09:12.159They throw the match in automatically.
00:09:12.399 -->
00:09:19.360Um, those typically were government um or agencies that used to have a pension plan, and so they've moved to this anyways.
00:09:19.600 -->
00:09:22.799Um so don't worry about the matching out.
00:09:22.960 -->
00:09:24.320You got the match for free.
00:09:24.480 -->
00:09:26.080Like, so you're good there.
00:09:26.480 -->
00:09:34.159Now, in terms of the solo K, I presume that means you're self-employed, the person asking the question here, and you're doing a solo 401k.
00:09:34.320 -->
00:09:35.759We're gonna come to that here in a second.
00:09:35.840 -->
00:09:37.919All right, solo Ks are a little different.
00:09:38.159 -->
00:09:45.600The bottom line here is if you already have a solo K that's already been set up for 2025, don't worry about contributing by December 31st.
00:09:45.759 -->
00:09:55.519I mean, I want you to get your money in and start investing now, but your your deadline to get the money in for 2025 contributions isn't until the company return deadline.
00:09:55.919 -->
00:10:07.360See, a 401k at work, employers have a certain amount of time when they take money out of your paycheck and they're doing a match and they're holding your dollars, they have to put it into the 401k.
00:10:07.519 -->
00:10:12.799And so on an employer 401k, that's basically is happening by December 31st.
00:10:12.960 -->
00:10:19.919In a solo 401k, the actual time to get the money in as a contribution is the company's tax return deadline.
00:10:20.240 -->
00:10:25.759So if you're an S corporation, most common entity for someone that has a solo K is going to be an S corporation.
00:10:25.919 -->
00:10:30.080Um, your tax return deadline is March 15th, plus you get extensions.
00:10:30.159 -->
00:10:37.600So if you extend your company return, you also get an extension of when to put in your solo K contributions, which can push you out till September 15th.
00:10:37.840 -->
00:10:38.159Okay.
00:10:38.480 -->
00:10:43.759Now, if you're a solo K person, the one thing I want to say here, I'm already getting into this.
00:10:43.840 -->
00:10:45.759Why don't I just go to the solo case slide?
00:10:46.000 -->
00:10:48.159You know, you just I was trying to segue you.
00:10:48.240 -->
00:10:49.440I was trying to get you back on the side.
00:10:50.799 -->
00:10:55.279Remember, contribution deadline here, March 15th, you get an extension September 15th.
00:10:55.360 -->
00:10:59.919If you're a solo prop, that's April 15th, plus extension uh October 15th.
00:11:00.159 -->
00:11:02.159Here's the problem though for you, escort boners.
00:11:02.240 -->
00:11:09.759If you have a solo 401k already set up, or you're setting one up right now before and you're trying to get it done before December 31st, we can help you.
00:11:09.840 -->
00:11:11.600You've got to move like now, okay?
00:11:11.759 -->
00:11:13.600Because we got Christmas next week.
00:11:13.759 -->
00:11:19.679New Year's, by the way, the IRS shuts down um around uh New Year's Eve or sorry, Christmas Eve.
00:11:19.759 -->
00:11:22.480They're gonna be shut down here in like the next couple weeks.
00:11:22.639 -->
00:11:27.200So we want to move quickly on getting a solo K set up if you're still trying to do it for 2025.
00:11:27.360 -->
00:11:32.799Now, we can set it up next year too, a solo K for 2025, but your contributions can be limited.
00:11:32.960 -->
00:11:34.000Here's why.
00:11:34.240 -->
00:11:39.519If you have an S corporation and you want to make employee contributions in a solo K.
00:11:39.679 -->
00:11:42.720See, a solo K is a 401k plan if you're self-employed.
00:11:42.879 -->
00:11:50.639You put money in as an employee, and the company, your company, puts money in because you're such a great employee, and they put in a company contribution.
00:11:50.720 -->
00:11:59.840So it's a solo K has a combination of you put money in as the employee because you work in your business, and the company's throwing in a match because you're such a great employee, and it's your own company money.
00:11:59.919 -->
00:12:03.519It's coming out of your pocket all at the same day if you own 100% of the business.
00:12:03.759 -->
00:12:06.480So, um, but that's what a solo K is.
00:12:06.639 -->
00:12:10.240But an employee contribution has to be on your W 2.
00:12:11.120 -->
00:12:15.360In an S corporation, you have to have a W 2 for what you're paying yourself.
00:12:15.519 -->
00:12:23.679That's what your employee contribution is based on, and it must be indicated on your W 2, which is due on January 31st, 2026.
00:12:24.159 -->
00:12:38.960Even though I don't need to put the money in until March 15th or September 15th plus extension if I extend my S corporation deadline, I have to note what I'm putting in on my W 2, which is due on January 31st.
00:12:39.120 -->
00:12:40.080So what does that mean?
00:12:40.240 -->
00:12:41.600It means you got to be planning.
00:12:41.679 -->
00:12:44.240And if you want to make it simple, just put it in now.
00:12:44.399 -->
00:12:46.320If you're like, well, Matt, I missed the deadline.
00:12:46.480 -->
00:12:47.120What can I do?
00:12:47.279 -->
00:12:49.360Well, we can still do employer contributions.
00:12:49.440 -->
00:12:51.679Let's say you're talking to us in February or March.
00:12:51.919 -->
00:12:54.799If you're a sole prop, you could probably do employee contributions.
00:12:54.960 -->
00:13:01.519But US Corp owners, it's gonna be hard to get that employee contribution in because you're gonna have to go back and amend your W-2.
00:13:01.840 -->
00:13:06.960It's a lot more work, pain, and headache, and it's not certain you're gonna be able to maximize all your contributions.
00:13:07.120 -->
00:13:10.879So, bottom line, if you want to keep it simple, just do it now.
00:13:11.039 -->
00:13:12.559Get your contributions in now.
00:13:12.639 -->
00:13:16.799If you don't have a solo K yet, being thinking about doing one, go ahead and set it up already.
00:13:16.960 -->
00:13:20.159There's a new tax credit, automatic contribution arrangement.
00:13:20.559 -->
00:13:28.320If you adopt that, you can get a$500 tax credit that flows down to your personal return over the next three years,$1,500.
00:13:28.639 -->
00:13:30.960It'll pay for the cost of setting up a solo K.
00:13:31.039 -->
00:13:34.000So we've got an article coming out on that uh shortly.
00:13:34.159 -->
00:13:38.320Uh, we did a webinar at our sister-in-law firm, KQS lawyers on it as well.
00:13:38.559 -->
00:13:44.720So um solo Ks kind of matters before December 31st.
00:13:44.960 -->
00:13:47.919US corporation owners, it's really January 31st.
00:13:48.159 -->
00:13:50.879Everyone else, it's kind of the company return deadline.
00:13:51.039 -->
00:13:56.879There is a lot of stuff you can do in 2026 to still make a 2025 contribution.
00:13:57.039 -->
00:14:00.399Just keep in mind US Corp owners, which is most of you doing a solo K.
00:14:00.639 -->
00:14:03.039Your W-2 is gonna be due.
00:14:03.120 -->
00:14:05.519And so you might as well start planning and get the money in now.
00:14:05.679 -->
00:14:07.360Now, here's another thing you could do.
00:14:07.600 -->
00:14:17.360You could, in the solo case, say, Well, I'll put what I'm let's say I decide I want to put in the 23.5 um, 2025 contribution max.
00:14:17.600 -->
00:14:22.240Um, Roth or traditional dollars doesn't matter, but I'm not gonna put the money in yet.
00:14:22.399 -->
00:14:28.159But I know I'm gonna do it before March 15th or September 15th if I extend my extend my company return.
00:14:28.399 -->
00:14:34.639You can just say you're going to do that on your W-2, and you don't have to put it in yet until the cunt contribution deadline as well.
00:14:34.879 -->
00:14:35.279All right.
00:14:35.360 -->
00:14:38.240Um went down a rabbit hole on that, but we did have a slide.
00:14:38.399 -->
00:14:39.919So great question.
00:14:40.399 -->
00:14:42.000What other diversions do you have that?
00:14:42.639 -->
00:14:44.799I actually I think this is gonna be a good diversion for you.
00:14:44.879 -->
00:14:47.200I think a little bit of basis here.
00:14:47.360 -->
00:14:49.360Okay, so on the topic of Roth conversions.
00:14:49.759 -->
00:14:50.080Yes.
00:14:50.480 -->
00:14:59.200Is that assuming pre-tax money andor money that has been generating earnings and therefore taxes could be triggered with a conversion?
00:14:59.360 -->
00:14:59.519Yes.
00:14:59.759 -->
00:15:05.039I'm guessing this does not apply for backdoor Roth uh that is being funded with after tax money.
00:15:05.200 -->
00:15:06.159Am I missing something?
00:15:06.480 -->
00:15:07.600Okay, great question.
00:15:07.679 -->
00:15:09.039And that is a great segue.
00:15:09.200 -->
00:15:10.240Who asked that question?
00:15:10.480 -->
00:15:11.759Uh anonymous attendee.
00:15:11.919 -->
00:15:14.320Oh, anonymous attendee, come out and get some.
00:15:14.399 -->
00:15:14.799Thank you.
00:15:14.879 -->
00:15:16.159That was a great question.
00:15:16.320 -->
00:15:17.840Um, you're absolutely right.
00:15:18.000 -->
00:15:21.919We're talking about pre-tax dollars, also known as traditional dollars.
00:15:22.080 -->
00:15:26.159This is what you got a tax deduction in to put in, plus the earnings on those.
00:15:26.320 -->
00:15:30.639When you convert those dollars to Roth, you have to take it into taxable income.
00:15:30.799 -->
00:15:42.960So when we're talking about that$300,000 traditional IRA or pre-tax dollars that you have in a 401k, whatever it may be, you got a tax deduction to put that money in and there's been earnings on it.
00:15:43.120 -->
00:15:45.120Well, I want to go Roth on those dollars.
00:15:45.519 -->
00:15:48.960Iris is like, we'll let you do it, but you're gonna pay a toll.
00:15:49.120 -->
00:15:51.919You have to take the whole thing into your taxable income.
00:15:52.159 -->
00:15:56.159So that whole 300 grand, and maybe you want to just convert a partial amount.
00:15:56.240 -->
00:16:01.279Again, you can chunk it up and convert whatever piece you want, but that you'll gonna get a 1099.
00:16:01.360 -->
00:16:05.600So to do a Roth conversion, you'll submit a form to us at directed IRA if your accounts here.
00:16:05.679 -->
00:16:12.799You get up other accounts other places, and you know, um, but you're gonna have to, you have to make a Roth conversion election form.
00:16:12.879 -->
00:16:13.919You have to do that in writing.
00:16:14.000 -->
00:16:18.399And then we're gonna send you a 1099 after January 31st, 2026.
00:16:18.480 -->
00:16:20.879That's when your 1099s are due for anyone from anyone.
00:16:21.039 -->
00:16:30.000But you're gonna get a 1099 R from us saying, hey, they converted 150,000 of traditional dollars to Roth, and that's gonna flow onto your 1040 on your tax return.
00:16:30.159 -->
00:16:32.000So that would be your pre-tax dollars.
00:16:32.080 -->
00:16:34.000Now let's go to backdoor Roth IRA.
00:16:34.080 -->
00:16:41.200That was the segue there from anonymous attendee, which was there's no tax on a backdoor Roth.
00:16:41.440 -->
00:16:52.480Okay, a backdoor Roth IRA has a Roth conversion in it, but it is not a taxable Roth conversion because you do something called a non-deductible traditional contribution.
00:16:52.720 -->
00:16:55.440Non-deductible means I didn't take a deduction.
00:16:55.840 -->
00:16:58.559And in the backdoor Roth, you're not investing those dollars.
00:16:58.639 -->
00:16:59.919You're immediately converting.
00:17:00.000 -->
00:17:05.759So there's no earnings, so there's no tax due on the backdoor Roth conversion.
00:17:06.000 -->
00:17:11.119Now, the backdoor Roth IRA can be done by April 15th.
00:17:11.440 -->
00:17:26.960The reason we're noting it here by as a 1231 strategy is some of you may be bumping up on the income limits where you're used to doing Roth IRA contributions, where you put your seven grand in just to your Roth IRA, and you haven't need to worry about the backdoor Roth.
00:17:27.279 -->
00:17:32.720We always run into a handful of clients every year who are like, ah, I'm over the income limits.
00:17:32.880 -->
00:17:44.160They're doing their tax return in 2026 and they just did regular Roth contributions because they weren't aware of the backdoor Roth structure and the modified adjusted gross income limits.
00:17:44.559 -->
00:17:55.519Here's the point if you make more than 150 grand single or 236,000 married filing joint, you need to do a backdoor Roth IRA.
00:17:55.680 -->
00:18:00.000You can't just do a regular Roth IRA and make the full contribution.
00:18:00.160 -->
00:18:00.799All right.
00:18:01.519 -->
00:18:06.160The regular Roth IRA is meant for lower or middle income individuals.
00:18:06.240 -->
00:18:11.920They that when they kind of created Roth IRAs, Congress was like, we can't let high income earners use these.
00:18:12.079 -->
00:18:16.799So they restricted you from putting contributions into a Roth IRA if you were high income.
00:18:16.960 -->
00:18:22.240High income being 150 single, 236 married, these get adjusted every year.
00:18:22.559 -->
00:18:27.039Now, the backdoor Roth IRA, the basic concept is where it's a loophole.
00:18:27.119 -->
00:18:27.279Okay.
00:18:27.519 -->
00:18:28.960That's why it's called the backdoor.
00:18:29.039 -->
00:18:29.359All right.
00:18:29.440 -->
00:18:33.680We're going around the back and we're coming in the back door to get into the Roth IRA party.
00:18:33.759 -->
00:18:34.960That's what's inside.
00:18:35.519 -->
00:18:40.000But what you're doing is you're putting money into a traditional IRA.
00:18:40.079 -->
00:18:42.240It's a non-deductible contribution.
00:18:42.480 -->
00:18:49.680You convert it to Roth on day two, not taxable because it was non-deductible, and now the money's in a Roth IRA.
00:18:49.920 -->
00:18:53.200It seems insane, but this is the tax code.
00:18:53.279 -->
00:18:56.400And this is what this is like the perfect example of a loophole.
00:18:56.559 -->
00:19:00.960You really have to thread the needle through and do the little loophole to validate this strategy.
00:19:01.119 -->
00:19:03.039Now I do a backdoor Roth IRA every year.
00:19:03.119 -->
00:19:04.000I've been doing it for a while.
00:19:04.160 -->
00:19:08.400Many of our clients are utilizing the backdoor Roth IRA every year, getting seven grand in.
00:19:08.480 -->
00:19:12.319That's for 2025, an extra thousand if you're um 50 plus.
00:19:12.640 -->
00:19:15.519But just know, look at where your income's been at for the year.
00:19:15.680 -->
00:19:18.160You might be someone that's already familiar with the backdoor Roth IRA.
00:19:18.240 -->
00:19:19.680You're like, Matt, I've already done it.
00:19:19.839 -->
00:19:21.119You know, I'm good.
00:19:21.440 -->
00:19:27.119But if you're a regular Roth person that's income has gone up, you might need to do the backdoor Roth.
00:19:27.519 -->
00:19:30.960Now, what you will do, let's say you messed this up.
00:19:31.200 -->
00:19:37.359Let's say you did a Roth IRA contribution, you're single, and you end up making 200 grand this year.
00:19:37.519 -->
00:19:39.680You're over that 150 limit.
00:19:39.920 -->
00:19:47.279You're like, I had a good year this year, I made more than I'm used to, or I've gotten a raise, or my business did well, or big bonus, whatever it was, you made 200 grand.
00:19:47.599 -->
00:19:50.000And you're like, but I already put my seven grand in the Roth.
00:19:50.240 -->
00:19:53.200I put it in like in June of 2025.
00:19:53.359 -->
00:19:54.480What do I do?
00:19:54.799 -->
00:19:59.119We're gonna need to recharacterize that, okay, over to traditional dollars.
00:20:00.160 -->
00:20:01.920gonna do a backdoor Roth on it.
00:20:02.240 -->
00:20:06.000And then we are gonna convert it over to Roth.
00:20:06.319 -->
00:20:06.640Okay.
00:20:06.960 -->
00:20:12.480So this is the um this is kind of a fix it backdoor Roth IRA.
00:20:12.559 -->
00:20:15.119Not ideal, but there's a way to do this.
00:20:15.279 -->
00:20:17.839You need to do that before April 15th, by the way.
00:20:18.079 -->
00:20:24.640Um but for any of you that haven't executed yet on the backdoor Roth IRA, definitely something you should be doing every year.
00:20:24.799 -->
00:20:27.519Um and just pay attention to where you're at income wise.
00:20:27.599 -->
00:20:32.240Again, 150 single 236 married is where you need to worry about the backdoor Roth IRA.
00:20:32.319 -->
00:20:37.279Rather than just doing the nice and easy, put your seven grand directly in the front door on a Roth IRA.
00:20:37.440 -->
00:20:39.359Any questions on backdoor Roth that popped in?
00:20:39.519 -->
00:20:39.920I do.
00:20:40.079 -->
00:20:42.000I have one question on the backdoor Roth.
00:20:42.160 -->
00:20:45.680I actually have a couple on solo 401ks too so you get to know if you want to backtrack as well.
00:20:45.759 -->
00:20:45.920Okay.
00:20:46.079 -->
00:20:46.720Let's hit them both.
00:20:46.880 -->
00:20:54.400So for backdoor Roth, can I contribute 7K plus 7K for my wife if we're over the limit?
00:20:54.640 -->
00:20:55.200Yes.
00:20:55.440 -->
00:20:55.759Okay.
00:20:56.000 -->
00:20:56.720I love that.
00:20:56.880 -->
00:21:01.359You should be doubling that up and if you married you should both be doing a backdoor Roth IRA.
00:21:01.839 -->
00:21:14.079Um I'll skip the jokes on that even if your spouse is not working, you might have a spouse that's not working the you can attribute income to them.
00:21:14.799 -->
00:21:23.519If you have a nonworking spouse and a married couple filing on a tax return, one requirement to contribute to an IRA is you must have earned income.
00:21:23.759 -->
00:21:27.599But the nonworking spouse can get income attributed to them from the working spouse.
00:21:27.839 -->
00:21:33.279So um so it's not like you need to put them on payroll for any of you business owners that may have a nonworking spouse.
00:21:33.839 -->
00:21:35.920But absolutely you should be doubling up on that.
00:21:36.079 -->
00:21:37.039Why the heck not?
00:21:37.200 -->
00:21:49.039The only snag I would say on a backdoor Roth IRA is if you have traditional IRA dollars in a traditional IRA somewhere else that you haven't converted to Roth yet.
00:21:49.200 -->
00:22:04.000If you have a traditional IRA that could even be just a SEP IRA because those are actually traditional dollars that is um that's that has not been converted to Roth, the IRS makes you convert pieces of that too when you're doing the backdoor Roth.
00:22:04.559 -->
00:22:17.519You have to do this pro rata share of your traditional deductible dollars with your traditional non-deductible dollars, which is that new seven grand you just put into the uh traditional IRA to do the backdoor Roth IRA.
00:22:17.680 -->
00:22:23.839So um there's just a little more on that we've got articles on that there are some workarounds to it.
00:22:24.000 -->
00:22:26.799Your traditional 401k doesn't matter don't worry about that.
00:22:26.880 -->
00:22:33.839It's just traditional IRA dollars can sometimes if you have those already that could be a snag to executing a backdoor Roth IRA.
00:22:33.920 -->
00:22:41.839The reason I brought that up with the spouse example is I have had clients over the years that are like well I have a traditional IRA with you know 200k in it.
00:22:41.920 -->
00:22:53.519I don't want to convert the whole thing yet so that means I can't do the backdoor Roth um true uh but they're like but my spouse doesn't have a traditional account should I do the backdoor Roth for them?
00:22:53.680 -->
00:23:01.039Yeah because then we can automatically convert theirs so um over to to to do a backdoor Roth IRA.
00:23:01.119 -->
00:23:06.880So just keep that in mind on the uh backdoor Roth IRA if you have traditional IRA dollars.
00:23:07.039 -->
00:23:24.960Okay, solo K questions uh I actually one more good uh Roth convert it's a Roth conversion question that uh you may be getting into I'm not sure but it's the Roth conversion uh to depreciation losses from real estate so I have real estate my IRA what happened what does that look like with the Roth conversion on that one?
00:23:25.440 -->
00:24:18.559Okay that will not help you okay if you have real estate in your IRA that has depreciation losses is that the question yeah so he's using he's excuse me he's looking for his real estate uh losses and then doing the conversion in his Roth IRA got it okay sorry all right let's say that you have rental real estate you're a real estate investor and you have depreciate you have losses on your real estate which generally you get because you have a depreciation expense like you could be cash flowing the property like making money you know over your expenses on your rental property but you actually have a loss for tax purposes because of depreciation whether you're accelerating depreciation with the cost segregation or whatever your strategy is so let's say I have rental real estate losses personally that are on my 1040 and I say hey but I want to do a Roth conversion.
00:24:18.640 -->
00:24:31.680So I've got 100K of rental real estate losses I can go do a Roth conversion for 100K and convert 100,000 of traditional dollars over to Roth and the rental real estate losses will offset the Roth conversion.
00:24:31.920 -->
00:24:37.119Well that only works if you are a real estate professional for tax purposes.
00:24:37.359 -->
00:24:53.599If you are non-real estate professional for tax purposes your rental real estate losses can only offset other investment or rental real estate income it cannot come over and offset a 1099 on a Roth conversion your W-2 income your business income it's bottled up here.
00:24:53.680 -->
00:25:10.960Okay so for example me my rental real estate losses I can use those losses against gains on other properties but otherwise they're bottled up no I'll use those rental real estate losses when I sell the property to offset taxable gain I might have when I sell the property but otherwise they get bottled up here.
00:25:11.119 -->
00:25:18.559I'm not a real estate professional I don't spend enough hours I don't do the material participation and my full-time business isn't real estate.
00:25:18.720 -->
00:25:21.920Okay even though I might have a number of properties.
00:25:22.160 -->
00:25:30.480So the only way your rental real estate losses are going to help you on the Roth conversion is if you're a real estate professional or your spouses.
00:25:30.799 -->
00:25:34.079That's a tax classification you want to talk to your tax lawyer CPA.
00:25:34.240 -->
00:25:44.000The attorneys by the way at KQS Lawyers can do a comprehensive tax and business consult and get over to kqoslawyers.com if you're like Matt you just blew my brain there I didn't even know what you were talking about.
00:25:44.240 -->
00:26:25.519Get over there we can help you um now there are some loopholes to that there for example there's a self-rental rule if you rent real estate to your own business and you own the real estate but you're renting it to your business we can use those losses to offset your business income short-term rental there's a short term rental loophole so there's a number of things to think about there um outside the scope here the point is how can I get tax losses to offset the cost of the conversion okay so that would be more of a tax lawyer question though way too much to cover here today but I love where you're going because that's being strategic and smart about it.
00:26:26.000 -->
00:26:29.920But our lot the law firm sister law firm KQS lawyers can help you there.
00:26:30.319 -->
00:26:46.240So this is this is a very old one hopefully Richard you're still here they are investing in a working interest oil and gas as a sole proprietor with their spouse uh they've been told that the income next year will be on a Schedule C and SE tax will be due.
00:26:46.880 -->
00:26:51.680Does this mean the net income can be invested into a solo 401k?
00:26:52.000 -->
00:26:52.480Yes.
00:26:52.720 -->
00:26:57.119Okay now that would be contributed into a solo K, not invested.
00:26:57.279 -->
00:27:03.279So if you're a sole proprietor this year for 2025, is that what they're saying and they're not going to S Corp?
00:27:03.519 -->
00:27:04.240I believe so yes.
00:27:04.480 -->
00:27:10.079Okay if you're a sole proprietor for this year then what you're contributing is the net self-employment income.
00:27:10.160 -->
00:27:56.480So when you do Schedule C on your 1040 you have your income your expenses what's the net self-employment income that you have let's say it's a hundred grand okay well what can I contribute to my solo K you can contribute$23,500 let's assume you're under age 50 23,500 that is the employee contribution you can choose to do Roth or traditional plus you can do the employer contribution which is 20% of that in the employer contribution you get 25% for S Corps or partnerships or uh for S Corps but for sole proprietorships uh you just get 20% uh again too much detail should I get into I don't even know why I need to say that but there's a reason for it it's just not a good one.
00:27:56.640 -->
00:27:59.839So 20% so you can put in 20 grand as an employer contribution.
00:28:00.000 -->
00:28:04.720So in other words you made 100 grand on your self-employment as a sole prop.
00:28:05.279 -->
00:28:13.519You're gonna be able to put in 235 employee 2000 employer for 43,500 if you want to max out contributions.
00:28:13.839 -->
00:28:20.960Now yours there's no W 2 so you don't need to worry about it on even January 31st you don't need to worry about it to April 15th.
00:28:21.200 -->
00:28:30.079Now you might as well put the money in if you have it to start investing and growing that money um I'm just talking about when's the deadline to get it in for tax purposes.
00:28:30.480 -->
00:28:32.559Uh great question there though.
00:28:32.799 -->
00:28:53.599All right anything else yeah I there there are a lot of questions I'm trying to keep us on topic though of the of the strategy yeah I appreciate it let's so sorry to the people that we may not be answering questions for does anyone have a year end question because I'm gonna jump to April April 15th issues and then 2026 changes and we're gonna come back and do a final QA here.
00:28:53.680 -->
00:28:55.119We'll do a fire round at the end.
00:28:55.440 -->
00:29:48.480I haven't seen anything for year end but uh there are some people that are kind of leading into it but not asking it directly and by the way if you're like oh I need to do a backdoor Roth IRA this year ooh I should get a solo K going we do have a discount code right now you can book a call okay holiday 150 is the promo code that saves you 150 bucks if you need to open a new account you're already a customer or you're new to the directed IRA family you can at least save 150 bucks let's get in and get it done now before year end um because that 150 we don't do specials typically are supposed to be 50 bucks maybe 100 150 is the best uh discount we offer and as somebody who helps open up these accounts day in and day out yeah please guys if you're looking to set up a solo 41k do it get it book calls with us today tomorrow because I don't like you guys getting mad at me later on in the year and being like what's taking so long it's like well there's a line in front of you.
00:29:48.640 -->
00:29:48.960Yes.
00:29:49.200 -->
00:29:51.519There's a lot of people who are trying to do it by the end of the year.
00:29:51.839 -->
00:30:01.759You know like at halftime when you're like trying to go to the bathroom and everyone else is too and you're like maybe I should just go a little bit early or let's let's just go a little bit early.
00:30:02.000 -->
00:30:03.680Go a little bit early you're not gonna miss anything.
00:30:04.960 -->
00:30:05.519It's okay.
00:30:05.599 -->
00:30:06.720It's gonna be all right.
00:30:06.960 -->
00:30:09.200You know um same thing here.
00:30:09.440 -->
00:30:09.759Okay.
00:30:10.000 -->
00:30:15.920All right so let's go into some other items for April 15th.
00:30:16.240 -->
00:30:25.920Um okay now IRA contributions okay this you can put seven grand in for 2025 an extra thousand for you that are 50 plus so you're putting in eight grand.
00:30:26.319 -->
00:30:30.720Now the contribution actually isn't due until April 15th 2026.
00:30:30.799 -->
00:30:33.359This is for 2025 tax purposes.
00:30:33.680 -->
00:30:37.039So don't stress about just your regular IRA contributions.
00:30:37.119 -->
00:30:40.079You can even be doing the backdoor Roth IRA later here.
00:30:40.319 -->
00:30:54.559So I I was talking about December 31st just to know whether you need to do regular Roth or backdoor Roth or whether you need to re-characterize but um otherwise any of your IRA strategies can be done by April 15th.
00:30:54.720 -->
00:30:57.039Now this does not include plus extensions.
00:30:57.200 -->
00:31:04.559Even if you extend your return to October 15th your personal 1040 your IRA contribution is still April 15th.
00:31:04.720 -->
00:31:10.640All right so don't miss the tax return deadline if you're trying to get 2025 contributions in.
00:31:10.799 -->
00:31:34.160Now for a lot of new people one of the things I like to talk about as a strategy if you're new to setting up a Roth IRA traditional IRA backdoor Roth IRA this is the time of year to double up on contributions because what you're gonna be able to do in January of 2026 is put 7500 bucks in to your IRA okay plus you could put the seven grand in for 2025.
00:31:34.319 -->
00:31:37.440So I can put two years of contributions in, right?
00:31:37.599 -->
00:31:50.559Because the 2025 contributions not due until April 15th 2026 and I can start making 2026 contributions in January of 2026 once I made the seven grand in that year or the 7500 bucks.
00:31:50.880 -->
00:32:01.839So um get the money in early and you can double up on the contributions making two years of contributions that you could be doing as soon as January of 2026.
00:32:03.599 -->
00:32:28.400All right now let's talk about some of the changes here um or was there any IRA contribution deadline questions um that's usually pretty straightforward though yeah does the IRA have to exist before 2025 ends even though the contribution is made in 2026 by April 15th no it does not don't worry about that you can set it up next year but if you want to save 150 bucks get it set up now.
00:32:28.640 -->
00:32:40.720Yeah I always tell people like if you set setting up the IRA if you're gonna set one up in January get the 150 bucks off today you're saving yourself maybe$30 by waiting January is how the math works out.
00:32:41.039 -->
00:32:55.680Yeah and I like the other thing there's a study by Fidelity where they looked at what are the characteristics of people who had over a million dollars in an IRA or 401 and there's like three or four like common themes.
00:32:55.839 -->
00:33:09.920One of those common themes was they contribute as soon as they can not when the deadline is okay if you think about that I don't want you to be thinking about when can I put when's the last day to put money into my IRA.
00:33:10.160 -->
00:33:26.079Okay because if you think about like your 2025 IRA contribution yeah it's not due until April 15th of 2026 but if you put the money in of in January of 2025 you would have had all this investment growth.
00:33:26.240 -->
00:33:35.119You would have had a whole 12 months of investment growth all right and then if you're gonna wait till April 15th we got another four and a half months of investment growth.
00:33:35.359 -->
00:33:44.480So we want our money working for us right that's the whole purpose of investing waiting to invest isn't going to grow that money any faster.
00:33:44.720 -->
00:33:54.640So um don't think of this like your like assignment in high school that you turn on the deadline all right think about this as an investment that's gonna grow and benefit you.
00:33:54.720 -->
00:33:59.200So the earlier the earliest you can get it in the more benefit you'll get out of it.
00:33:59.359 -->
00:34:00.960So don't think about when is it due.
00:34:01.119 -->
00:34:02.640Think about when can I put the money in.
00:34:02.799 -->
00:34:13.760And I will tell you I see I see that in our accounts whether it's a solo K, a Roth IRA, backdoor Roth, whatever it is, they contribute in January and February.
00:34:13.920 -->
00:34:15.920They get the money in as soon as possible.
00:34:16.079 -->
00:34:18.880They're not waiting until April 15th of next year.
00:34:19.039 -->
00:34:19.360Okay.
00:34:19.599 -->
00:34:26.159All right shift I know it doesn't matter now because we're talking about year end stuff, but 2026 is around the corner.
00:34:26.400 -->
00:34:31.360So be smart about your 2026 contribution get that in so that money can start working for you.
00:34:31.679 -->
00:34:37.599All right now let's transition into new limits and new rules for 2026.
00:34:37.840 -->
00:34:40.800So the contribution limits did go up for 2026.
00:34:40.960 -->
00:34:56.159That was good news coming from the IRS it's rare but it does come every once in a while so here's what it is for 2026 contributions for IRAs is 2500 bucks that went up$500 from 7,000 sorry did I say$2500?
00:34:56.320 -->
00:35:05.599$7500 okay contribution limits went up to$500 to$7,500 that's up$500 from seven grand in 2025.
00:35:06.159 -->
00:35:13.519The catch up used to be$1,000 extra for any of you$50 plus now it's$1,100 every little bit counts here.
00:35:14.000 -->
00:35:22.000And so the total if you're$50 plus by the way would be$8,600 that you could contribute for 2026 into your IRA.
00:35:22.159 -->
00:35:26.320That's for traditional or Roth also same if you're doing a backdoor Roth IRA.
00:35:26.400 -->
00:35:34.320Now$01Ks the employee contribution amount went up$1,000 the maximum employee contribution was$23,500.
00:35:34.400 -->
00:35:36.400That is now$24,500.
00:35:36.480 -->
00:35:40.239So you can put over$1,000 more in a 401k this includes solo Ks.
00:35:40.559 -->
00:35:54.400The total contributions in last year was$70 grand was the max contributions into a 401 including solo case that is now$72,000 for um 2026 401 contributions.
00:35:54.559 -->
00:36:10.480All right now that's pretty standard every year sometimes the the IRS keeps it the same but these are basically inflation adjusted we've had inflation you know obviously we all hear about it in the news over the last year or so the contribution limits go up because they get adjusted for inflation.
00:36:10.719 -->
00:36:29.679Now the big change that goes into effect in 2026 is something that came from Secure 2.0 this was retirement account legislation that passed a couple years ago there's a provision going into effect from that law in 2026 that affects catch up contributions in a 401 if you're 50 plus.
00:36:30.079 -->
00:36:53.679So and this applies to a solo K as well this applies to your 401 at work or maybe your spouse's 401 if you are 50 plus this is really really important traditionally when you do a catch up contribution and even what you can do for 2025 right now, you can choose and say hey the catch up contribution I want to throw in I want to put in traditional or Roth dollars you could pick.
00:36:53.920 -->
00:37:05.760The IRS gave you the choice and you could do 100% traditional 100% Roth you could mix it up but the IRS gave you the choice now in 2026 you no longer have a choice.
00:37:06.000 -->
00:37:19.280Ketchup contributions must be Roth dollars in 2026 if you made more than 150 grand on your W-2 from that employer in the prior year.
00:37:19.599 -->
00:37:28.000So let's say it's 2026 now you're someone that's 50 plus and you want to make the catch up contributions which how much is that for 2025?
00:37:28.159 -->
00:37:30.159Can you look that up if or do you know off the top of your head, Daniel?
00:37:30.400 -->
00:37:34.960Uh the ketchup contributions for 2025 no I'm not I don't have that right here.
00:37:35.599 -->
00:37:37.440All right I think it's like it's like eight grand.
00:37:37.679 -->
00:37:38.800Yeah I was gonna say 7500.
00:37:39.039 -->
00:37:42.000Yeah 7500 I think goes to eight grand for 2026.
00:37:42.159 -->
00:37:54.239Okay so let's say um we're sitting in 2026 and you want to make your catch up contribution of eight grand or so um and in 2025 you made 150 grand or more from that employer.
00:37:54.480 -->
00:38:07.199Well your catch up contribution must be Roth dollars okay is 7500 for 2025 what is it for 26 though 26 I thought it was just an extra 1080 85 okay I'm double checking that all right we'll clarify that.
00:38:07.360 -->
00:38:09.760Yes um so that's the big change.
00:38:09.920 -->
00:38:17.360Now the there's been a lot of confusion about this rule because a lot of people say if you made more than 150 grand a year this is only about that W2.
00:38:17.519 -->
00:38:22.960You can have a side hustle your spouse can have income your adjusted gross income could be 300 grand for that year.
00:38:23.119 -->
00:38:31.199But if your W 2 from that employer where that 401 exists is 150K, that's all we're looking at.
00:38:31.599 -->
00:38:31.920Okay.
00:38:32.480 -->
00:38:39.840Um so if you made you know 120 grand at that company cool you can still do a traditional catch up contribution if you want it.
00:38:40.000 -->
00:38:46.000Now the why behind this, I know you're thinking like Matt, I thought you said Roth accounts are not for the rich.
00:38:46.320 -->
00:38:54.480Now Congress is making those people who make more than 150 grand, if they want to do ketchup contributions, they have to do Roth contributions.
00:38:54.639 -->
00:38:56.159How do you make sense of that?
00:38:56.400 -->
00:38:58.480This is part of the One Big Beautiful bill.
00:38:58.639 -->
00:39:04.320In the One Big Beautiful bill one of the things they didn't secure 2.0 is they made more tax cuts.
00:39:04.480 -->
00:39:13.199They had to raise revenue by forcing people to do Roth contributions instead of traditional it raises revenue for the government.
00:39:13.519 -->
00:39:29.760Congress loves that so there's this whole concept in DC right now of Rothhification is what they call it, which I actually love, where the government's like we should stop letting people do traditional accounts because they take a deduction and the and the government takes in less money now.
00:39:30.000 -->
00:39:33.280Congress doesn't care about their revenue in 10, 20, 30 years.
00:39:33.519 -->
00:39:35.760The House members and senators won't be there.
00:39:35.920 -->
00:39:39.360They can't spend that money that's some other Congress's problem to worry about.
00:39:39.519 -->
00:39:41.440So the Roth they don't care about that.
00:39:41.599 -->
00:39:45.199They care about tax revenue they're collecting now and next year that they get a spend.
00:39:45.440 -->
00:39:56.800So that's the concept on this they wanted to raise revenue that's why they force you to do Roth contributions because you don't get a tax deduction on this this is for high income earners making more than 150K a year.
00:39:56.960 -->
00:40:00.960They're typically in a higher tax bracket so their deductions are more value As well.
00:40:01.199 -->
00:40:04.639Okay, 2026 catch up amount is it was 8,000.
00:40:04.800 -->
00:40:07.599What I was getting confused on was the super catch-up.
00:40:07.920 -->
00:40:08.320There you go.
00:40:08.719 -->
00:40:10.639Which is 11,250.
00:40:10.719 -->
00:40:14.639And that's for people who are over the age of 60 in the 60 to 63 range.
00:40:14.880 -->
00:40:15.039Okay.
00:40:15.199 -->
00:40:15.440All right.
00:40:15.519 -->
00:40:23.199So 8,000, that's the 2026 catch up contribution amount in your 401k, solo K or employer 401k.
00:40:23.280 -->
00:40:25.039Um, and there is that super contribution.
00:40:25.119 -->
00:40:33.360If you're in that was four years, 60 to 63, where that's your age, um, you actually get to put over 11 grand, 11,250.
00:40:33.519 -->
00:40:33.679Yeah.
00:40:33.840 -->
00:40:34.55911250.
00:40:34.800 -->
00:40:36.159That's the super ketchup contribution.
00:40:36.239 -->
00:40:38.239That's another new thing that came about.
00:40:39.119 -->
00:40:42.000But again, that will be subject to the Roth requirement too.
00:40:42.079 -->
00:40:44.159If you're more than 150K W2.
00:40:44.480 -->
00:40:45.119Yes.
00:40:45.760 -->
00:40:46.159All right.
00:40:46.320 -->
00:40:51.440Now let's come back and I want to summarize all these pieces here, and then we'll take any questions you guys might have.
00:40:51.679 -->
00:40:56.159If you're thinking about year end, I want you to think about the matching out of your 401k at work.
00:40:56.239 -->
00:40:59.280Make sure you're getting the maximum deduction from that 401k.
00:40:59.519 -->
00:41:02.320Second, then let's look at the employee contribution.
00:41:02.400 -->
00:41:05.519Is there more employee contribution dollars I can get in?
00:41:05.760 -->
00:41:09.679Third, maybe you need to do a mega backdoor Roth 401k.
00:41:09.840 -->
00:41:11.360I actually didn't talk about that one yet.
00:41:11.519 -->
00:41:12.159Let's pin that.
00:41:12.239 -->
00:41:13.440I'm going to come back to that.
00:41:13.679 -->
00:41:13.920Okay.
00:41:14.079 -->
00:41:16.880Backdoor Roth IRA or regular Roth IRA.
00:41:16.960 -->
00:41:17.760Where are you at income?
00:41:17.840 -->
00:41:19.679Did you make more than 150K single?
00:41:19.760 -->
00:41:21.280You need to be doing backdoor Roth Ira.
00:41:21.360 -->
00:41:25.199More than 236 married adjusted gross filing joint.
00:41:25.360 -->
00:41:26.880You need to do backdoor Roth Area.
00:41:26.960 -->
00:41:28.880You can't do a regular Roth IRA contribution.
00:41:29.119 -->
00:41:33.280One other note here we have in just the checklist here is HSA eligibility.
00:41:33.440 -->
00:41:48.880You need to have done that by December 1st to have a qualifying healthcare plan to be able to make a 2025 HSA contribution, not due until April 15th, but your eligibility, that HSA high deductible plan needs to be in effect by 12.1.
00:41:49.360 -->
00:41:54.079There's also, by the way, if you can make a four-year contribution if you had that plan in effect by 12.1.
00:41:54.480 -->
00:41:55.760Next, Roth conversions.
00:41:55.840 -->
00:41:56.639Remember chunking.
00:41:56.800 -->
00:41:57.519Let's break this up.
00:41:57.679 -->
00:42:03.039Do I want to get this in on my 2025 tax return to split the tax burn up over multiple years?
00:42:03.280 -->
00:42:18.079And then another one here that we didn't talk about is for any of you that have kids that work in your business or on your rental properties, any of you business owners, you should be paying your kids for that work, taking a tax deduction, and then you can open up a kids Roth IRA for them.
00:42:18.239 -->
00:42:18.400Okay.
00:42:18.480 -->
00:42:20.480We have kids Roth IRAs at directed IRA.
00:42:20.559 -->
00:42:24.639They could be crypto Roth IRAs, they can be self-directed into real estate or other deals.
00:42:24.719 -->
00:42:28.000Um, but you can be doing kids' Roth IRA accounts.
00:42:28.159 -->
00:42:30.239Now, a kid must have earned income.
00:42:30.480 -->
00:42:34.079So you must be paying them from the business or from a rental property, whatever it is.
00:42:34.159 -->
00:42:35.679So they have earned income.
00:42:35.920 -->
00:42:39.119Um, they could have a summer job or even they have a part-time job.
00:42:39.199 -->
00:42:41.360They might work at the mall or a restaurant or whatever.
00:42:41.440 -->
00:42:45.119Yeah, I don't know, some of these like uh teenager jobs.
00:42:45.519 -->
00:42:55.199And um, they're spending that money, but that's earned income too that you could actually then let's say they made five grand through the year at their part-time job, they're in high school, whatever it is, and they spend all that money.
00:42:55.280 -->
00:42:59.599Well, you could drop five grand into a Roth IRA for them because that is earned income still.
00:42:59.760 -->
00:43:04.400So it doesn't have to be the five grand they made, they just have to have the earned income through the year.
00:43:04.559 -->
00:43:08.000Okay, so those are some uh things to worry about by year end.
00:43:08.159 -->
00:43:10.880I'm gonna come back to the mega backdoor Roth.
00:43:11.039 -->
00:43:11.599That's a big one.
00:43:11.760 -->
00:43:13.119Can't believe I skipped that.
00:43:13.360 -->
00:43:15.679Okay, April 15th deadline.
00:43:15.920 -->
00:43:20.400Remember that's your traditional IRAs, Roth IRA, even the backdoor Roth IRA.
00:43:20.559 -->
00:43:25.760You don't get to file an extension and get an extension of time to do the IRA contributions.
00:43:25.840 -->
00:43:27.920Those are due on April 15th.
00:43:28.079 -->
00:43:32.320Um, for any of you solo K owners, you can still make those contributions.
00:43:32.400 -->
00:43:37.280You may not be able to maximize, but you do get the tax return deadline extension as well.
00:43:37.360 -->
00:43:40.960It's based on your company return, not your personal return, your company return.
00:43:41.119 -->
00:43:50.639So if you're an S-corp, that will be March 15th plus extension up to September 15th, of when you can get solo K contributions in for 2025.
00:43:51.119 -->
00:43:55.039I have a question in there from an anonymous attendee to talk about the matter backdoor, right?
00:43:55.360 -->
00:43:56.400The same anonymous attendee?
00:43:56.639 -->
00:43:56.800Okay.
00:43:56.960 -->
00:43:59.199I mean, they have the same name, so I assume it's the same person.
00:43:59.440 -->
00:43:59.760Okay.
00:44:00.320 -->
00:44:05.840Um, well, anonymous attendees just like a default if you click the button to say, I don't want to say my name, you know.
00:44:05.920 -->
00:44:06.239Okay.
00:44:06.480 -->
00:44:07.360All right, which is fine.
00:44:08.000 -->
00:44:09.360Same last name, attendee.
00:44:10.079 -->
00:44:10.719Yeah.
00:44:11.760 -->
00:44:12.079Okay.
00:44:12.719 -->
00:44:18.000Um, yeah, we need we need there's like I think there's like an AA meeting for anonymous attendees.
00:44:18.239 -->
00:44:18.639Oh, okay.
00:44:20.719 -->
00:44:21.519There's a meeting.
00:44:21.599 -->
00:44:26.800All you guys need to go and attend to and say, Hi, my name is Matt.
00:44:26.960 -->
00:44:28.239I'm an anonymous attendee.
00:44:28.559 -->
00:44:29.679But then you're not anonymous anymore.
00:44:30.000 -->
00:44:31.039But then you're not anonymous anymore.
00:44:31.440 -->
00:44:33.199Well, amongst amongst other AA members.
00:44:33.360 -->
00:44:33.679Okay, okay.
00:44:33.920 -->
00:44:35.119Because it's a circle of trust.
00:44:35.440 -->
00:44:36.079You know what I mean?
00:44:36.239 -->
00:44:36.559Yeah.
00:44:37.360 -->
00:44:38.239Are you a part of it?
00:44:38.400 -->
00:44:38.639No.
00:44:38.719 -->
00:44:38.960All right.
00:44:39.199 -->
00:44:39.519Okay.
00:44:39.920 -->
00:44:41.199That might not have been funny at all.
00:44:41.280 -->
00:44:41.599I don't know.
00:44:42.239 -->
00:44:44.400Daniel's maybe giving me some courtesy laughs here.
00:44:44.639 -->
00:44:44.880Okay.
00:44:44.960 -->
00:44:46.639I thought that was pretty good.
00:44:48.320 -->
00:44:48.639Okay.
00:44:50.159 -->
00:44:52.159We'll we'll edit that for the recording.
00:44:52.400 -->
00:44:52.719Okay.
00:44:52.960 -->
00:44:54.719Um, mega backdoor Roth.
00:44:54.880 -->
00:44:55.199Okay.
00:44:55.519 -->
00:44:56.400Great question.
00:44:56.559 -->
00:45:00.639And that is something you want to be making sure you are hyper-focused on by year end.
00:45:01.039 -->
00:45:07.039A lot of our clients that do mega backdoor Roth to do it with their employer 401k, or maybe it's their spouse's 401k.
00:45:07.119 -->
00:45:09.039You can do it in a solo K as well.
00:45:09.519 -->
00:45:14.320The mega backdoor Roth is something you're going to do if you're trying to get a lot of money in.
00:45:14.400 -->
00:45:17.119You've already maxed out your regular employee contributions.
00:45:17.280 -->
00:45:21.840You've gotten your match from the employer 401k where you work, or this could be your spouse's.
00:45:22.159 -->
00:45:33.440And you're like, hey, I've got 30 grand in for my 401k through the year, through my own contributions, through the match, I've got 30 grand in, but I still have another 40K to go to get up to 70, but the company doesn't match anymore.
00:45:33.519 -->
00:45:36.800And I can't put in any regular employee contributions anymore.
00:45:36.960 -->
00:45:38.239What else can I do?
00:45:38.400 -->
00:45:40.320Well, you can do the mega backdoor Roth.
00:45:40.559 -->
00:45:40.880Okay.
00:45:41.039 -->
00:45:50.159The next thing you can do, over 60% of 401k plans allow for something called an after-tax employee contribution.
00:45:50.639 -->
00:45:53.679This is a this is not a deductible contribution.
00:45:53.840 -->
00:45:54.159Okay.
00:45:54.320 -->
00:45:56.000This is not a Roth contribution.
00:45:56.159 -->
00:45:58.960It's an after-tax employee contribution.
00:45:59.199 -->
00:46:02.320So let's say that I had already put in 30 grand through the year.
00:46:02.480 -->
00:46:09.519I have another 70, sorry, I have another 40K to go to get me to the total 70K max that you can put in a 401k for 2025.
00:46:09.679 -->
00:46:16.239So I could drop 40 grand in after-tax employee contributions into the company 401k.
00:46:16.719 -->
00:46:19.679That money is not hostage in the 401k.
00:46:19.840 -->
00:46:28.320You can roll after-tax employee contributions out to a Roth IRA, where that's a directed IRA or a brokerage IRA, doesn't matter.
00:46:28.480 -->
00:46:30.480But that is the mega backdoor Roth.
00:46:30.800 -->
00:46:36.079It essentially is enabled by doing an after-tax employee contribution, as long as your plan allows for it.
00:46:36.239 -->
00:46:36.800Most of them do.
00:46:36.880 -->
00:46:37.920There's still some that don't.
00:46:38.079 -->
00:46:47.199You've got to do this by year end because your plan administrator and an employer 401k at a job that you might have is not going to let you execute on this in 2026.
00:46:47.360 -->
00:46:48.880So we got to get this done now.
00:46:49.039 -->
00:46:51.599Now, again, this is not going to get withheld from a paycheck.
00:46:51.679 -->
00:46:55.119You might be thinking, well, Matt, my regular 401k contributions, I had it scheduled out.
00:46:55.199 -->
00:46:58.400So it was withheld from my paycheck and I was getting the match, and yeah.
00:46:58.880 -->
00:47:00.880So how do I get this in now?
00:47:01.039 -->
00:47:04.880Most 401k providers allow you to send money into the 401k.
00:47:04.960 -->
00:47:06.639It's not getting deducted from your paycheck.
00:47:06.719 -->
00:47:14.159You're ACHing, or if you're doing it this time of year, wiring the money to get it in as a contribution in for 2025.
00:47:14.800 -->
00:47:19.920Now, the rollout part to a Roth IRA is what most people will do.
00:47:20.079 -->
00:47:28.880In a Mega Macdoor Roth, the concept is why would I let that money stay in my 401k where I have some target date funds or some mutual funds?
00:47:28.960 -->
00:47:31.519I'd rather that money get out to a Roth IRA.
00:47:31.679 -->
00:47:48.880Now in 2014, the IRS put out some guidance on this and said, hey, after tax employee contributions can leave the 401k and they can get rolled directly into a Roth IRA, no conversion, no Roth conversion, and they are Roth IRA dollars.
00:47:49.360 -->
00:47:51.119Now you never took a deduction on it.
00:47:51.199 -->
00:47:52.559That's because it's after tax.
00:47:52.880 -->
00:47:54.559Pre-tax would mean you took a deduction.
00:47:54.639 -->
00:47:55.599So it's after tax.
00:47:55.679 -->
00:47:58.000You didn't take a deduction to put the 40K in.
00:47:58.159 -->
00:48:06.239It has to hit the 401k in an after tax bucket of dollars, and then it can get rolled out to a Roth IRA account.
00:48:06.480 -->
00:48:07.119All right.
00:48:07.360 -->
00:48:15.760Now again, that's a December 31st thing because your employer 401k, they think in terms of we've got to get everything done by December 31st, and they do.
00:48:15.920 -->
00:48:22.719So you're not executing on the megaback to a Roth in an employer 401k in 2026 for 2025 contributions.
00:48:22.960 -->
00:48:27.840However, solo K owners, you don't need to worry about it by year end, okay?
00:48:28.079 -->
00:48:30.320Because you can get your contributions in later.
00:48:30.480 -->
00:48:41.519Now, if you're an S-corp owner, I'd still try to do this by January because even your after-tax employee contributions, your regular employee contributions, these are all going on your W-2 to be recorded properly.
00:48:41.679 -->
00:48:46.079Uh so don't be delaying on this strategy, even if you're a solo K owner.
00:48:46.239 -->
00:48:48.480But that would be the mega backdoor Roth.
00:48:49.440 -->
00:48:52.480Um it requires these after-tax contributions.
00:48:52.559 -->
00:48:54.800Check with your plan administrator on that.
00:48:55.039 -->
00:49:00.639Um the I've probably were I've worked with a lot of clients over the years on this.
00:49:00.960 -->
00:49:07.199Um, what I will say, the first thing you're gonna encounter is a lot of no's because that's the easiest answer.
00:49:07.440 -->
00:49:11.199And the and and I know you know some people talk to so-and-so in HR.
00:49:11.280 -->
00:49:12.239They don't know.
00:49:12.559 -->
00:49:13.280They don't know.
00:49:13.760 -->
00:49:14.880You know, okay.
00:49:15.199 -->
00:49:17.679You've got to go through and break through to a few people.
00:49:17.920 -->
00:49:22.239The first thing to ask for is say, I want a copy of the summary plan description.
00:49:22.320 -->
00:49:23.599It's called SPD.
00:49:24.000 -->
00:49:26.880That will say what type of contributions are allowed.
00:49:27.039 -->
00:49:30.480There's usually a box for after-tax employee contribution.
00:49:30.639 -->
00:49:33.360If that box is checked, that means you can do it.
00:49:33.840 -->
00:49:34.159Okay.
00:49:34.559 -->
00:49:39.119And in fact, that's probably the first thing you should do is say, hey, I want a copy of the summary plan description.
00:49:39.280 -->
00:49:44.800It's typically available from your plan provider or whoever the administrator is of your plan.
00:49:44.880 -->
00:49:46.639And that'll give you the answer of whether it's allowed.
00:49:46.800 -->
00:49:48.880Then you got to go through logistics of doing it.
00:49:49.039 -->
00:49:54.639In a lot of bigger companies, this is kind of an executive thing that a lot of them do.
00:49:54.880 -->
00:49:56.559So they will be used to it.
00:49:56.719 -->
00:50:04.639If it's a smaller or mid-sized company and they haven't done this yet, sometimes you might be the pioneer doing it for the first time and it will be a little more painful.
00:50:04.800 -->
00:50:05.119Okay.
00:50:05.360 -->
00:50:13.280So just know this is not like the 101 retirement account contribution that your plant administrator or HR department does.
00:50:13.519 -->
00:50:21.519This is definitely advanced, um, but is a very viable strategy and it's something very common for high income earners to execute on.
00:50:21.679 -->
00:50:24.320So that's the mega backdoor Roth.
00:50:24.639 -->
00:50:26.400This is done in a 401k.
00:50:26.559 -->
00:50:35.599And those after-tax contributions you drop in can get rolled out to a Roth IRA, even though you're not 59 and a half, even though you still work at that employer.
00:50:35.840 -->
00:50:43.840After tax employee contributions are not hostage in the 401k plan, all they have to be contributed there, but they can get rolled out.
00:50:44.079 -->
00:50:45.599Okay, I'm hoping that made sense.
00:50:45.679 -->
00:50:46.800It made sense to me.
00:50:47.039 -->
00:50:52.079So if I lost you, well, it is my fault, but it is tricky.
00:50:52.320 -->
00:50:52.880We'll do it next year.
00:50:52.960 -->
00:50:55.519Yeah, if I lost you, it's an advanced strategy.
00:50:55.679 -->
00:50:56.559Don't worry about it.
00:50:56.719 -->
00:50:58.239If you're like, Matt, I made a lot of money.
00:50:58.400 -->
00:51:02.159Okay, I want to execute on this, I love Roth accounts, I want to maximize this, great.
00:51:02.239 -->
00:51:06.559Get to our law firm, KQS lawyers, one of the tax lawyers can consult you through this.
00:51:06.800 -->
00:51:10.480This is not something any retirement account company is going to be able to give you enough advice.
00:51:10.639 -->
00:51:14.000Now, if you've got a good CPA or account and you're fine, you'll be okay.
00:51:14.239 -->
00:51:29.280Um, but if you're doing your stuff on TurboTax or you know, you're using Chat GPT to try to figure this out, um stop, drop and roll, and get someone who knows what they're doing that can walk you through this because it's definitely more of an advanced strategy.
00:51:29.360 -->
00:51:30.320So we're here to help.
00:51:30.400 -->
00:51:38.159If you need a solo case set up by a year end, a kids' Roth IRA account, you want to pay your kids through the business, you've got to pay them by December 31st.
00:51:38.320 -->
00:51:43.920If you want a tax deduction for your business, um, remember the backdoor Roth IRA.
00:51:44.000 -->
00:51:45.199We can certainly help get those set up.
00:51:45.280 -->
00:51:46.960Any of these accounts, I mean, we're here.
00:51:47.119 -->
00:51:48.079We want to be a resource.
00:51:48.239 -->
00:51:50.480Daniel's, you know, you can book a call with Daniel.
00:51:50.719 -->
00:51:51.039I'm here.
00:51:51.119 -->
00:51:52.559Matt, trust me, he brought me in.
00:51:52.719 -->
00:51:53.039Yeah.
00:51:53.280 -->
00:51:56.800I mean, you know, so we want to make sure we can help you.
00:51:56.880 -->
00:52:11.519Um, because this is one of the greatest ways to grow and build wealth using retirement accounts that have tax-advantaged funds in them, whether it's Roth account, growing and coming out, no tax, or it's a traditional account, you got a tax deduction for it's growing tax deferred.
00:52:11.599 -->
00:52:13.280These are tax-advantaged accounts.
00:52:13.360 -->
00:52:15.199There's$45 trillion in U.S.
00:52:15.280 -->
00:52:16.000retirement accounts.
00:52:16.079 -->
00:52:19.039It's been a staple way for people to grow and build wealth in America.
00:52:19.199 -->
00:52:21.679And we let you invest it in what you want to invest in.
00:52:21.920 -->
00:52:23.199You want to buy a stock or mutual fund?
00:52:23.360 -->
00:52:24.000Knock yourself out.
00:52:24.079 -->
00:52:29.760But most clients here, they're investing in real estate or a private asset or crypto, a fund, whatever it is.
00:52:29.840 -->
00:52:34.639That's the um open architecture investment we allow here at directed IRA.
00:52:34.800 -->
00:52:39.360Um, get over here to book a call, directed IRA.com slash appointment.
00:52:39.440 -->
00:52:42.000Remember to use the promo code HOLIDAY150.
00:52:42.079 -->
00:52:43.519That'll save you 150 bucks.
00:52:43.679 -->
00:52:45.280Daniel would love to talk to you.
00:52:45.599 -->
00:52:47.199I love talking to everybody.
00:52:48.079 -->
00:52:48.480All right.
00:52:48.559 -->
00:52:49.760Any other final questions?
00:52:49.920 -->
00:52:50.880We got maybe one minute.
00:52:51.119 -->
00:52:55.760Yeah, let's uh can I can I try and get as many as we can and I'll just I'll stop you.
00:52:55.840 -->
00:52:57.760I'll be like, Matt, you're you're going into the weed.
00:52:57.840 -->
00:52:58.239Stop it.
00:52:58.400 -->
00:52:58.719Okay.
00:52:58.880 -->
00:53:09.599Uh can I tax, can a tax-deferred annuity I earned before I participated in it in my def defined contribution IRA be converted over to my self-directed Roth?
00:53:10.000 -->
00:53:10.320No.
00:53:10.880 -->
00:53:11.519Next question.
00:53:11.679 -->
00:53:18.480Solo 401k, can the company, either a C or S Corp, take an expense for tax purposes?
00:53:19.360 -->
00:53:21.920The company's contributing to the 401k?
00:53:22.079 -->
00:53:23.920Yeah, that's what I believe.
00:53:24.400 -->
00:53:33.119If it's traditional dollars, so if the company match that you did as traditional dollars, actually let me say this either way, the company takes the tax deduction.
00:53:33.360 -->
00:53:34.400There's a new rule.
00:53:34.559 -->
00:53:35.920This is again secure 2.0.
00:53:36.000 -->
00:53:40.719This went to fact two years ago, actually, this one, where the company can do a Roth match.
00:53:40.880 -->
00:53:48.719And in that case, the company does take a deduction, but 1099's you, so you pick the income back up if you did employer contributions that are Roth.
00:53:49.199 -->
00:53:56.239Generally speaking, though, if the company does traditional contributions, they are taking an expense to that um contribution.
00:53:56.480 -->
00:53:56.719Okay.
00:53:56.960 -->
00:54:02.880Can I pay kids earned income in 2025 if my rental properties are not part of any business?
00:54:03.679 -->
00:54:05.599Um, I don't know how they're not.
00:54:06.000 -->
00:54:08.639Your rental properties are gonna be on your 1040 as a rental property.
00:54:08.719 -->
00:54:12.559You have expenses, you can pay people to work on the properties and help manage them.
00:54:12.719 -->
00:54:15.440So that's where you would pay your kids if you have a rental property.
00:54:15.519 -->
00:54:16.639That is a business.
00:54:16.880 -->
00:54:20.079Now, that's to make a Roth IRA contribution form.
00:54:20.400 -->
00:54:20.559Yes.
00:54:20.719 -->
00:54:22.719Okay, we're not justifying a solo K.
00:54:22.880 -->
00:54:31.519It's not a business in terms of like 401ks are you to in order to do a solo 401k, you have to have a business that provides goods or services.
00:54:31.760 -->
00:54:41.360Rental real estate is rental income, but you can pay your kids for services they're working on your properties to get them earned income to do a kid's Roth IRA account.
00:54:41.519 -->
00:54:44.639Okay, like I mowed the lawn at my dad's duplex when I was a kid.
00:54:45.440 -->
00:54:46.800I got 20 bucks for it.
00:54:46.880 -->
00:54:47.440That was pretty good.
00:54:47.519 -->
00:54:47.679Yeah.
00:54:47.840 -->
00:54:49.440I got well, especially back then.
00:54:49.519 -->
00:54:49.840Whoa.
00:54:50.159 -->
00:54:50.559Exactly.
00:54:51.119 -->
00:54:52.239Soda was a nickel, right?
00:54:52.400 -->
00:54:52.639Yeah.
00:54:52.719 -->
00:54:54.880So it went 20 bucks went a long way.
00:54:55.119 -->
00:54:57.119So it was a fight to who, you know.
00:54:57.199 -->
00:55:00.559Now it took a day because you had to get out on the other side of town to go do it.
00:55:00.719 -->
00:55:04.320And then my dad was there dinking around at the property, you know, all the time.
00:55:04.400 -->
00:55:06.480So dinosaurs moved real slow back then.
00:55:06.639 -->
00:55:07.039Yes.
00:55:07.199 -->
00:55:14.400So what I'm saying here is is that work that's happening at the rental property, you may already be paying your kid.
00:55:14.480 -->
00:55:18.880You might need to pay him more in order to make a meaningful Roth contribution.
00:55:19.119 -->
00:55:23.440And I think last one to wrap it up, is there a minimum age for a kid's Roth IRA?
00:55:23.679 -->
00:55:26.079There's no minimum age, but they have to have earned income.
00:55:26.239 -->
00:55:30.559So if I got like a three-year-old that has a Roth IRA, I'm like, what did they do?
00:55:30.800 -->
00:55:31.119Okay.
00:55:31.360 -->
00:55:35.599I I did Roth IRAs for my kids about when they were 13.
00:55:36.079 -->
00:55:41.280And they would come, they literally came to my office every weekend and then cleaned the office for years.
00:55:41.360 -->
00:55:43.119Okay, my kids were the cleaning crew.
00:55:43.199 -->
00:55:45.840My staff didn't love it, they didn't hate it.
00:55:45.920 -->
00:55:46.800You know, it was cute.
00:55:47.039 -->
00:55:52.880They would come play office for a little bit too, and you know, the the stapler would be in the wrong place on someone's desk.
00:55:53.039 -->
00:55:56.239But um, but I liked teaching them how to work.
00:55:56.320 -->
00:55:57.920I would go do some work on Saturdays too.
00:55:58.000 -->
00:56:00.559It was a it was for many years we did that routine.
00:56:00.880 -->
00:56:08.960But I now had they now had earned earned income and I was paying them out of my business, taking an expense that reduced my taxable income.
00:56:09.119 -->
00:56:10.239They now had earned income.
00:56:10.320 -->
00:56:13.920They didn't even file a 1040 because they were below the standard deduction.
00:56:14.480 -->
00:56:18.400And but they had justifiable earned income to make contributions to a Roth IRA.
00:56:18.480 -->
00:56:20.239So I open up Roth IRAs for them.
00:56:20.400 -->
00:56:26.559So now some people will do it at a younger age, seven and eight, but they've really got to be working in the business.
00:56:26.639 -->
00:56:32.000And you can't just pay them seven grand, the max contribution amount, unless they really did seven grand worth of work.
00:56:32.159 -->
00:56:43.599But even if it's a couple thousand bucks, it's a great way to like teach them investing, get them a couple grand if they have worked in your business or on your rental properties, wherever it may be, and um get them started.
00:56:43.840 -->
00:56:47.440Especially if you're already doing self-direction, you can show them what it looks like.
00:56:47.599 -->
00:56:47.840Exactly.
00:56:48.079 -->
00:56:48.960You can start helping them.
00:56:49.039 -->
00:56:50.800I mean, that's what Mark does with his kids.
00:56:50.880 -->
00:56:53.760I mean, they're older now, but yeah, exactly.
00:56:53.920 -->
00:56:57.280And just teaching them the principle of investing and growing and building wealth.
00:56:57.440 -->
00:57:10.159And I know one of the things we've all seen as investors and savers is if you had a Roth IRA when you were 17 years old, you and you know, now you're 60 and you just put the minimum contribution up, it'll be worth six million dollars.
00:57:10.320 -->
00:57:11.199And that's true.
00:57:11.760 -->
00:57:15.679But most people read that article and hear that and understand that when they're 40.
00:57:15.840 -->
00:57:21.599And they're like, I need a DeLorean, some plutonium, and I need to go back in time to go do that.
00:57:21.920 -->
00:57:23.920But you can start now with your kids.
00:57:24.000 -->
00:57:25.199Help them, give them a head start.
00:57:25.519 -->
00:57:29.119Don't make them be the 40-year-old that looked back and says, I wish I would have done this.
00:57:29.360 -->
00:57:30.159I wish I had this.
00:57:30.320 -->
00:57:31.039Yeah, yeah.
00:57:31.199 -->
00:57:32.480Help them, you know.
00:57:32.719 -->
00:57:34.320So um, all right.
00:57:34.400 -->
00:57:35.760Well, that's it for us here today.
00:57:35.920 -->
00:57:37.039Thank you so much for tuning in.
00:57:37.119 -->
00:57:38.480Thanks for those that asked the questions.
00:57:38.639 -->
00:57:41.840Thank you, Daniel, for um being an amazing co-host over there.
00:57:41.920 -->
00:57:42.480He looks so good.
00:57:42.559 -->
00:57:44.159Look at that cinematography there.
00:57:44.400 -->
00:57:46.159You look like you'd be on between two ferns.
00:57:46.239 -->
00:57:48.079Like Zach Galfinakis could be right next to him.
00:57:48.400 -->
00:57:50.159A little bit skinnier, less beard, but yes.
00:57:50.400 -->
00:57:50.880No, you're the guest.
00:57:50.960 -->
00:57:51.440You're the start.
00:57:51.599 -->
00:57:52.159Oh, yeah, yeah, yeah.
00:57:52.239 -->
00:57:52.639I'll take that one.
00:57:52.719 -->
00:57:53.119I'll take that one.
00:57:53.280 -->
00:57:55.039I'm not saying you look like Zach Galfinakis.
00:57:55.119 -->
00:57:57.119I'm saying, but you could be on the show with him.
00:57:57.679 -->
00:57:59.039Yeah, my other fern is missing.
00:57:59.280 -->
00:58:01.039He just can't see, but it's yeah.
00:58:01.199 -->
00:58:01.920So, all right.
00:58:02.000 -->
00:58:02.880Thanks everybody.
00:58:03.039 -->
00:58:04.079Enjoy the holidays.
00:58:04.159 -->
00:58:05.119Uh thanks for being on.
00:58:05.360 -->
00:58:06.079See you next time.
00:58:06.320 -->
00:58:07.760And thank you everyone for listening.
00:58:08.000 -->
00:58:14.800A quick disclaimer and reminder: this presentation does not constitute an attorney or CPA client relationship.
00:58:14.960 -->
00:58:22.880And it is always in your best interest to consult competent legal and tax professionals when conducting your own personal transactions.
00:58:23.199 -->
00:58:27.360We also want to make sure you know this is not investment advice or financial advice.
00:58:27.440 -->
00:58:33.760We're just trying to give you education, ideas, and strategies you can take to your professionals or conduct your own research on.
00:58:33.920 -->
00:58:34.800We'll see you next time.
