Investor insight please.

[z987k]

For employer plans, no - for individual Roth contributions there are:

The income limits for Roth IRA contributions in 2024 are as follows:

• Single filers
  Modified adjusted gross income (MAGI) must be less than $146,000 to contribute the full amount. If your MAGI is between $146,000 and $161,000, you can contribute a partial amount. If your MAGI is $161,000 or more, you can't contribute at all.
  
  
  
• Married filing jointly
  MAGI must be less than $230,000 to contribute the full amount. If your MAGI is between $230,000 and $240,000, you can contribute a partial amount. If your MAGI is $240,000 or more, you can't contribute at all.
  
  
  
• Married filing separately
  If you lived with your spouse at any time during the year, you can't contribute if your MAGI is more than $10,000.
  

The maximum contribution limit for a Roth IRA in 2024 is $7,000 for those under 50 and $8,000 for those 50 and older.

Ya, but those limits don't actually exist. Just backdoor roth.

 

[Marshfly]

Totally depends on the market and property type.

A little creativity goes a long way.

There are guys/gals killing it in the current high interest rate environment by signing long term leases with sober living companies. The cashflow is insane compared to sfr for the same exact home.

Chat with a couple "high-end" trailer park operators about their numbers...also insane.

Real estate is a much more diverse asset class than most people think.

The more you turn "real estate investing" into 'running a business" on a piece of property of course the return will increase. But there is a point where it's a normal business and not simply real estate investing. Running a luxury mobile home park with tons of amenities is a business. Damn near an RV park. Running a crappy mobile home park where you rent dirt with nothing else is probably not. Lots of grey area there but let's be real here.

However, I am 100% on board with creatively thinking about how to fund retirement and build wealth. Way too many people think in these normal boxes and we need more people like you that can come up with great ideas to utilize capital.

What part of Montana are you in?

 

[Article 4]

Ya, but those limits don't actually exist. Just backdoor roth.

They do exist. They are a part of IRS code

You can backdoor and the limits still are in play unless you decide you wanna risk audit. most reputable advisors and firms won’t let you backdoor over the limits. If you do, up to you if you wanna pay the tax up front in order to backdoor. It might make sense to do that for some investors.

 

[Firestone]

I got 25 acres and about 8 of it is useless. Bunch of utilities run through it and with their right of way stipulations, it makes it hard to do anything with it. But I can build non inhabitant buildings, so I poured a 6000sqft slab last month and here shortly I will be building 48 mini storage units on it. If it fills up I have room to put up 2 more the same size. I am hoping to use this as an early retirement but we will see.

My brother got into crypto this summer and made 47k in the last month alone. Haha kind of wish I had some money in that right now

 

[Hnthrdr]

I got 25 acres and about 8 of it is useless. Bunch of utilities run through it and with their right of way stipulations, it makes it hard to do anything with it. But I can build non inhabitant buildings, so I poured a 6000sqft slab last month and here shortly I will be building 48 mini storage units on it. If it fills up I have room to put up 2 more the same size. I am hoping to use this as an early retirement but we will see.

My brother got into crypto this summer and made 47k in the last month alone. Haha kind of wish I had some money in that right now

Seems like a great use for the property in the right locations storage units are fantastic

 

[z987k]

They do exist. They are a part of IRS code

You can backdoor and the limits still are in play unless you decide you wanna risk audit. most reputable advisors and firms won’t let you backdoor over the limits. If you do, up to you if you wanna pay the tax up front in order to backdoor. It might make sense to do that for some investors.

Of course that part of the code exists, but there are no income limits for a backdoor roth. So I'm not sure what you're talking about for the rest.

 

[Article 4]

Of course that part of the code exists, but there are no income limits for a backdoor roth. So I'm not sure what you're talking about for the rest.

As stated, the income limits are for opening and contributing and if you can do that through an employer 401k structured as a Roth, you can contribute as much as you like.

Backdoor roths have a limit on contribution...also, IMO it is appropriate for those who already have invested through other instruments and decide to pay the tax up front to ensure a tax free and balanced distribution at a later date.

 

[ODB]

Interesting info here. But I admit that the manufactured money game and the notion that, in addition to what one does for a living, one must become some sort of financial guru (either through study or paying for it) in order to live a decent life until the end is patently depressing.

 

[CorbLand]

Interesting info here. But I admit that the manufactured money game and the notion that, in addition to what one does for a living, one must become some sort of financial guru (either through study or paying for it) in order to live a decent life until the end is patently depressing.

I dont disagree with you but it also doesnt really have to be hard. If the average person that has a W2 job would find a way to invest an average of 10% of their pay each year, they will be just fine.

Open a Roth IRA, automatically transfer 10% of your monthly pay into and just buy an SP500 tracker. Do that for 30-40 years. If your employer offers a 401K match, put that amount in, get the match and then invest the rest in your Roth.

Are there better ways to make more money? Yes, but this is simple, and requires zero effort or knowledge of what is going on. People make it sound harder that it needs to be and it turns people away from investing for their future.

 

[SDHNTR]

Interesting info here. But I admit that the manufactured money game and the notion that, in addition to what one does for a living, one must become some sort of financial guru (either through study or paying for it) in order to live a decent life until the end is patently depressing.

A similar argument could be made for any worthwhile pursuit. Maintaining your health and receiving quality healthcare is no different. If you want something in life, you have to actively and intentionally pursue it.

 

[z987k]

As stated, the income limits are for opening and contributing and if you can do that through an employer 401k structured as a Roth, you can contribute as much as you like.

Backdoor roths have a limit on contribution...also, IMO it is appropriate for those who already have invested through other instruments and decide to pay the tax up front to ensure a tax free and balanced distribution at a later date.

You can open an IRA, open a roth IRA, put 7k taxes paid into the IRA, roll it into the roth a day later.
Doesn't matter if you make 1mil a year.
The only effective difference between funding it directly and through your ira is that it takes a day or so extra for the money to arrive in the account. So the income limits on a roth IRA, in reality, is that they do not matter. For all intents and purposes, they don't exist.

 

[Article 4]

You can open an IRA, open a roth IRA, put 7k taxes paid into the IRA, roll it into the roth a day later.
Doesn't matter if you make 1mil a year.
The only effective difference between funding it directly and through your ira is that it takes a day or so extra for the money to arrive in the account. So the income limits on a roth IRA, in reality, is that they do not matter. For all intents and purposes, they don't exist.

I have already answered this.

 

[HuntHarder]

You can open an IRA, open a roth IRA, put 7k taxes paid into the IRA, roll it into the roth a day later.
Doesn't matter if you make 1mil a year.
The only effective difference between funding it directly and through your ira is that it takes a day or so extra for the money to arrive in the account. So the income limits on a roth IRA, in reality, is that they do not matter. For all intents and purposes, they don't exist.

No sense in explaining things to the unwilling to learn..

 

[Article 4]

No sense in explaining things to the unwilling to learn..

Let me try - what I am about to share is in IRS code and everyone here should make their own decision based on their own research. Meaning, your interpretation is all on you.

You can open a Roth IRA at work and contribute nearly any portion of your pay into a Roth as long as you qualify under the MAGI income limits in US/IRS code 26. Perfectly acceptable and NOT what I am talking about at all since it is NOT a backdoor Roth.


The first step in the backdoor Roth IRA strategy involves making a nondeductible contribution to a traditional IRA. There are no income limits for making nondeductible contributions to a traditional IRA, brokerage account or any account that is using non-qualified taxable money. e.g. you got a nice sum of money from somewhere and you wanna throw 20k into a nondeductible IRA brokerage. You can. You paid tax on the money when you earned it, making it non-qualified money. Once contributed, the money is taxed again at the end of the year as part of dividends earned until you want to withdraw it. Then, the basis amount is not taxed; the gain and interest is taxed as part of your ordinary income and may be subject to Cap Gains (consult your tax professional on how that is accounted) That is where you get hit.

After contributing to the traditional IRA, the individual can convert the funds to a Roth IRA. This conversion involves transferring the funds from the traditional IRA (brokerage) to the Roth IRA. Since the individual has already paid taxes on the non-deductible contribution to the traditional IRA, the conversion typically incurs little to no additional tax liability but ONLY as long as there are no earnings on the contributed amount between the time of contribution and conversion. If there are earnings, there may be tax consequences.

The backdoor Roth IRA strategy has the exact same limits as the traditional IRA and Roth IRA contribution limits set by the IRS. The contribution limits for a backdoor Roth IRA tie to those of a traditional IRA and Roth IRA, which can change yearly. As of 2024, individuals under 50 can contribute up to $7,000 annually to an IRA; Those 50 and older can make catch-up contributions of up to $8,000 annually.

 

[z987k]

Let me try - what I am about to share is in IRS code and everyone here should make their own decision based on their own research. Meaning, your interpretation is all on you.

You can open a Roth IRA at work and contribute nearly any portion of your pay into a Roth as long as you qualify under the MAGI income limits in US/IRS code 26. Perfectly acceptable and NOT what I am talking about at all since it is NOT a backdoor Roth.


The first step in the backdoor Roth IRA strategy involves making a nondeductible contribution to a traditional IRA. There are no income limits for making nondeductible contributions to a traditional IRA, brokerage account or any account that is using non-qualified taxable money. e.g. you got a nice sum of money from somewhere and you wanna throw 20k into a nondeductible IRA brokerage. You can. You paid tax on the money when you earned it, making it non-qualified money. Once contributed, the money is taxed again at the end of the year as part of dividends earned until you want to withdraw it. Then, the basis amount is not taxed; the gain and interest is taxed as part of your ordinary income and may be subject to Cap Gains (consult your tax professional on how that is accounted) That is where you get hit.

After contributing to the traditional IRA, the individual can convert the funds to a Roth IRA. This conversion involves transferring the funds from the traditional IRA (brokerage) to the Roth IRA. Since the individual has already paid taxes on the non-deductible contribution to the traditional IRA, the conversion typically incurs little to no additional tax liability but ONLY as long as there are no earnings on the contributed amount between the time of contribution and conversion. If there are earnings, there may be tax consequences.

The backdoor Roth IRA strategy has the exact same limits as the traditional IRA and Roth IRA contribution limits set by the IRS. The contribution limits for a backdoor Roth IRA tie to those of a traditional IRA and Roth IRA, which can change yearly. As of 2024, individuals under 50 can contribute up to $7,000 annually to an IRA; Those 50 and older can make catch-up contributions of up to $8,000 annually.

That's a lot of words to say exactly what I said.

Sure, if you do it like an idiot you'll have some taxes.

 

[KsRancher]

Amazes me how many people don’t know this….including financial advisory’s.

72t is also a great option for the OP.

So I called and asked. I was told I have a "simple IRA". I plan on leaving my employer the first of Jan. Is that something I can pull on and only pay taxes and not get penalized? It's thru EJ.

 

[MallardSX2]

So I called and asked. I was told I have a "simple IRA". I plan on leaving my employer the first of Jan. Is that something I can pull on and only pay taxes and not get penalized? It's thru EJ.

How old are you?

 

[Article 4]

That's a lot of words to say exactly what I said.

Sure, if you do it like an idiot you'll have some taxes.

So I called and asked. I was told I have a "simple IRA". I plan on leaving my employer the first of Jan. Is that something I can pull on and only pay taxes and not get penalized? It's thru EJ.

not unless you are 59 1/2

 

[Article 4]

That's a lot of words to say exactly what I said.

Sure, if you do it like an idiot you'll have some taxes.

obviously. exactly what you said, nearly to the letter.

 

[texag10]

From my research I can’t do a Roth IRA based off the maximum income limitations. I’ve heard of backdoor Roth but it seems pretty extensive for $6k a year contribution or so.



Ours is not a Roth or any portion available to go in a Roth that I’m aware of.

I know I'm way late to the party here, but keep an eye on Roth contribution availability in your 401k. Due to the SECURE Act 2.0, 401k participants making catch up contributions with earned income higher than about 145k will have to make those contributions on a Roth basis.

You're probably thinking "but I won't be making catch up contributions for 20 years"

My hope/guess/hunch is many plans that don't currently allow for Roth money will be FORCED to allow for Roth to comply with this provision of the act.

Backdoor Roth contributions are very easy to do.

Amazes me how many people don’t know this….including financial advisory’s.

72t is also a great option for the OP.

Rule of 55 sounds great..... if your plan rules allow for it to actually work well. Many plan rules limit withdrawal options, some to a one time, full payout only.

Same with 72(t). Do interest rates let you take enough to actually cover your needs? Are you going to be forced to continue the rigid distribution structure after 59.5? Things you need to know going in.