SUBSCRIBE
Enter your Name and Email address to get
the newsletter delivered to your inbox.
Please include name of person that directed you to my online newsletter so I can thank them personally.
Tom Meaglia, ChFC®, AEP®,
CLU®, CRPC®, MSFS
Chartered Financial Consultant
Investment Advisor Representative
Chartered Retirement Planning Counselor
CA Insurance Lic. #0567507
Meaglia Financial Consulting
2105 Foothill Blvd., #B140, La Verne, CA 91750
Toll Free: 800-386-3700
Bus: 909-593-6105
Cell: 818-681-8600
Fax: 909-593-6120
Email: tom@meagliafinancialconsulting.com
Website: www.meagliafinancialconsulting.com
September/October 2024
Should You Consider a Backdoor Roth IRA
A backdoor Roth IRA offers a way for high earners to potentially circumvent income limits on Roth IRA contributions. But before you leap on the bandwagon, weigh your decision carefully.
A Key to The Door
Single taxpayers with incomes of more than $161,000 and married filing jointly with incomes of more than $240,000 are not allowed to make 2024 contributions to a Roth IRA. However, you can convert other types of IRAs to Roth IRAs at a current income tax on the converted amounts. The benefit is that assuming the tax bill now is worth it, your Roth IRA can grow tax-free, allow you to take tax-free retirement withdrawals, and have no minimum required distributions during retirement.*The Catch
But tax-free accumulation comes with an administrative burden. Each year you do this, the converted contribution must be placed in a new separate Roth IRA account. Depending on how many years you have until retirement, you could end up with a multitude of separate Roth IRAs.Follow the Rules
With each conversion, be sure to follow regulations carefully to avoid triggering additional tax liabilities. These regulations are subject to change at the discretion of Congress, so it’s important to work with your trusted tax advisor to avoid surprises.On the Other Side
For someone with a relatively short time until retirement, a backdoor Roth IRA could make sense. The backdoor Roth IRA strategy could also be beneficial if you anticipate having funds left in your traditional IRA because you could pass the money on to your heirs in a Roth IRA.For Business Owners
You have other options that may be more attractive. Ask your financial and tax professionals about creating a deferred compensation plan that utilizes life insurance. Properly structured, the plan could reduce your current taxable income and grow tax deferred.Another possibility is a profit-sharing plan based on age demographics that could accrue assets in a way favorable to you.
SUBSIDIZING TRADITIONAL IRA OR 401(K) DISTRIBUTIONS WITH TAX-FREE ROTH FUNDS COULD LOWER YOUR TAX BRACKET, POTENTIALLY REDUCING YOUR SOCIAL SECURITY AND MEDICARE TAXES, WHICH INCREASE AT HIGHER INCOME LEVELS.
*To qualify for tax and penalty-free withdrawals of earnings, a Roth IRA or Roth 401(k) must be in place for at least five tax years, and the distribution generally must take place after age 59-1/2, with a few exceptions.
CONTACT US
Enter your Name, Email Address and a short message. We'll respond to you as soon as possible.
Thomas Meaglia is an Investment Adviser Representative of Coppell Advisory Solutions LLC, dba, Fusion Capital Management, a registered investment adviser that only conducts business in jurisdictions where it is properly registered, or is excluded or exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. The firm is not engaged in the practice of law or accounting.
Insurance and annuity products are not sold through Fusion Capital Management. Fusion does not endorse any annuity or insurance product, nor does it guarantee any insurance or annuity performance. Annuity and life insurance guarantees are subject to the claims-paying ability of the issuing insurance company. If you withdraw money from or surrender your contract within a certain time after investing, the insurance company may assess a surrender charge. Withdrawals may be subject to tax penalties and income taxes. Persons selling annuities and other insurance products receive compensation for these transactions. These commissions are separate and distinct from Fusion's investment advisory fees.
Meaglia Financial Consulting and LTM Marketing Specialists LLC are unrelated companies. This publication was prepared for the publication’s provider by LTM Client Marketing, an unrelated third party. Articles are not written or produced by the named representative.
The information and opinions contained in this web site are obtained from sources believed to be reliable, but their accuracy cannot be guaranteed. The publishers assume no responsibility for errors and omissions or for any damages resulting from the use of the published information. This web site is published with the understanding that it does not render legal, accounting, financial, or other professional advice. Whole or partial reproduction of this web site is forbidden without the written permission of the publisher.