161: Backdoor Roths, Mega Backdoor Roths, and Roth Conversion Ladders with The Mad Fientist

BiggerPockets Money Podcast

BiggerPockets

Investing, Education, Business

4.6 • 2.9K Ratings

🗓️ 11 January 2021

⏱️ 95 minutes

🔗️ Recording | iTunes | RSS

🧾️ Download transcript

Summary

He’s back! Today we’re joined by a friend of the BiggerPockets podcast network, Brandon “The Mad Fientist”. Brandon walks us through advanced retirement account strategies you may have heard of, such as the Backdoor Roth, Roth Conversion Ladder, and the coveted Mega Backdoor Roth. While these strategies may sound intense at first, they’re quite simple in practice, as Brandon shows us!

Many FI (financial independence) followers constantly ask the question “What’s the best retirement account to contribute to that will help me optimize my early retirement?”. While this can be answered a handful of ways, it often overlooks something very important: regular retirement. While chasing FI, it’s still possible to grow your traditional retirement accounts so you’re even wealthier later on in life!

Brandon doesn’t just give various examples of each strategy, he’s tested them and has even ran experiments on his site, such as the Guinea Pig Experiment, which pits various early retirement strategies against each other.

We also tackle common questions like: what should I contribute to if I have a low/high income, should I opt for a lower deductible on my healthcare plan to optimize my HSA (health savings account), how HSAs and FSAs differ, and what the contribution limits are for retirement accounts.

Even if you’re not chasing FI, you’ll still be able to take advantage of Brandon’s advice. After all, he’s the Mad Fientist!

In This Episode We Cover

What a Backdoor Roth and Mega Backdoor Roth are
Why retirement accounts are crucial when trying to retire early
How low income earners can take advantage of 401(k)s and IRAs
Why an HSA is a great option for high-deductible coverage
The best times to contribute to your retirement accounts
The art of “frontloading” and using it to capitalize on market gains
And So Much More!

Links from the Show

Check the full show notes here: https://www.biggerpockets.com/moneyshow161

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Transcript

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0:00.0	Welcome to the Bigger Pockets Money Podcast. Show number 161, where we interview the mad
0:06.1	scientist and talk about Roth IRAs, backdoor Roth IRAs, mega backdoor Roth IRAs, and
0:12.2	Roth conversion ladders.
0:13.3	So, the match is the most important thing. If you have some money left over, then the
0:19.1	HSA is a great place to put it, but even if you can't max that out, then you can only
0:23.0	do what you have to work with. Don't stress that out about it. Obviously, finding waste
0:29.0	increase income is great, but many people are strapped with time and ability to increase
0:36.4	income. So, don't feel like you're not doing good if you can't max all these things
0:40.8	out. It's really just a sort of, yeah, just think of like all these different buckets.
0:46.0	And when one fills up, then you move to the next bucket and you can keep filling that
0:49.5	up and move to the next bucket. But don't stress out about trying to fill up all the
0:53.2	buckets.
0:54.2	Hello, hello, hello. My name is Mindy Jensen. And with me, as always, is my Costco loving
0:57.9	co-host Scott Trench.
0:59.2	I love always getting a free sample of your creative mind with each of these interests.
1:03.3	Mindy.
1:04.3	I love these little comebacks. They're not even scripted.
1:09.1	Sometimes they're scripted. That one wasn't. Alright.
1:11.1	That one wasn't scripted. They're all these scripted when I read them and they are always
1:14.9	terrible. Scott and I are here to make financial independence less scary, less just for somebody
1:21.2	else. We're here to introduce you to every money story because we truly believe that
1:26.0	financial freedom is attainable for everyone, no matter when or where you're starting.
	...

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