Not many 20 something’s can say they are able to do all thatWell said. For the record, I 100% support backdoor and mega-backdoor Roth conversions. In these cases, no other discount was available for a tax-deferred contribution: income was too high to make a regular Roth contribution or a deductible IRA contribution, and the deductible 401(k) contribution was maxed out first.IMO, there is only one rate to perform Roth conversions that is an absolute - 0%. Other than that, whether or not to perform conversions at any other tax rate is an exercise of pure speculation; speculation on policy, tax rates, market returns, etc etc etc...... People have a tendency to tilt towards doom and gloom scenarios. So it is always assumed that tax rates will always go up and everything will go to hell. I don't subscribe to this doom and gloom ideology. The only other reason I can see to perform Roth conversions would be to diversify your tax profile - but it may cost you. Other than that, I'm no big fan of prepaying taxes in nearly all scenarios.
Got my niece set up this year with a $7,000 backdoor Roth IRA contribution, a $23,000 deductible 401(k) contribution, and after allowing for a $7,000 employer match, a $40,000 mega back door Roth 401(k) contribution.
Sweet. $77,000 per year in retirement contributions and she's only 20-something.
Does America have a great tax system or ...?
Statistics: Posted by Nathan Drake — Wed Feb 19, 2025 12:14 am — Replies 482 — Views 85058