Annual $57k ROTH Contributions - You Wont Believe It
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- Опубліковано 23 сер 2024
- Contributing large amounts of money into a Roth IRA is quite simple if you have the right tools in place. With the right tools, you can explore more possibilities and that all depends on the entities you choose to create.
*CORRECTION: 6:22 With the ROTH you are taxed going in and tax free coming out.
The first thing you'll need to do is create your very own solo 401k to get started.
In this short video I will teach you how to put $57k a year into a Roth IRA so you can live a tax free retirement.
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Clint Coons, Esq. is one of the founding partners of Anderson Law Group, Clint has grown his legal and tax firm to over 400 employees by assisting real estate investors with creating and implementing solid entity structuring plans. His success in these regards is in large part due to his personal investing experience. A successful attorney, real estate investor, and speaker, Clint has used his innovative and dynamic strategies coupled with knowledge borne from experience to help thousands of people save millions of dollars and build real wealth.
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#rothira #solo401k
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Great info! Will watch again!!
Glad it was helpful!
Thanks for the video
Yep, its called a solo 401k! opened mine up last year, its great. If you're a small business, you need to open this up right now. basically when you're the owner, you contribute as the employer and the employee. $19k on each side plus $6k in an ira. if your income allows.
As he points out it's it's $57k total, if you contribute as employer the funds go into the pre-tax bucket and have to be converted to Roth 401k later before they become tax-free. Just do the $19k Roth + $38k After-tax, and rollover After-tax to Roth 401k ASAP.
And yes, you can also do another $6k in Backdoor Roth IRA, but... you want to move the funds to your Solo 401k before doing the Roth conversion, or they will become stuck in IRA.
Hi Clint, great video as always! The $38K will be taxed though when I roll it over to the Roth IRA, correct?
No. The funds were already taxed before you put them in.
6:22 I'm confused as to why there is "no tax going in" to the Roth ... I thought Roth was taxed on contribution year and tax free there-after... is this different here?
Yes. I misspoke at that point. I meant to say you get taxed going in and not taxed coming out. Thanks for pointing this out. I will have my team add a correction to the video.
How do you contribute into the Roth IRA if you make more than $130,000 a year? How do you qualify to use this strategy?
@@BW-kv9wj backdoor roth, anyone can do it.
@@whasian2007 I wish I knew this strategy.
Great video, very instructive! What steps and timing are involved in moving the after tax $38k contribution over to the Roth bucket?
You need to move the funds to the Roth bucket before you have any gains in the after tax bucket. Only the contribution can move not the gains. It is really just administrative and tracked by your trustee and administrator which it typically you. You should work with a professional if implementing this strategy to make sure you are getting it right.
Amazing info
Glad it was helpful!
Hi Clint, this would be a great segue for a video about the new SECURE Act 2020 regarding ‘Inherited Retirement Accounts’. It’s saying non-spouses, “after December 31, 2019, funds from inherited IRAs must now be fully withdrawn by beneficiaries within 10 years of the account owner’s death”.
Is there a way or estate planning strategy to combat this. How did rich people allow this to happen. What is it that we don’t know that they do?
I do not know of one.
Hi Clint,
Thanks for the video. What kind of flexibility is offered with a solo 401K? Specifically once the money is inside of the Roth bucket. Are there strategies that would allow you to use it like a self-directed IRA?
Absolutely. Check out my videos on QRP and Solo 401ks. Here is a link: ua-cam.com/video/IudMEkQHcrU/v-deo.html
Thank you for the good information.
Can I put rental income there?
Yes you can if the property is owned by the QRP.
Do you have any plans on making a video on PPT(personal property trust)? Or other ways to anonymize assets like vehicles?
Also if you use a PPT on a vehicle is the insurance still on your name or can you insure thru a PPT?
Yes, I will create one. Thanks for the suggestion.
@@ClintCoons thank you, also thank you for all the info you give out here on youtube, I learnt a lot of stuff that I didn't even know was a thing before, thank you.
Good stuff
Thanks for the visit
Can you purchase RE inside of the Solo 401k plan?
Yes if you set up a plan that allows for this type of investing. The plans we set up allow for real estate investing and much more.
Hi Clint, I discovered your channel only after I made my Roth IRA my main vehicle. Now, I really want to see if there is a way to transfer that roth ira money to a solo roth 401k. It would be enormously helpful if you did a video on that. Thanks,
Unfortunately ROTH IRAs can not be rolled into a 401k. Once in a ROTH IRA - always in a ROTH IRA. Going forward if you have your own business consider setting up a SOLO 401k for future ROTH contributions then if you want you can have your Solo 401k partner with your existing ROTH IRA on investments.
@@ClintCoons Shoot, I guess that money is trapped for the time being then. As of now, my #1 priority in investable cash placement is my roth 401k (emoployer sponsored - it will be a bit more in the future to go the way of the solo 401k). How does the solo 401k partnering up with roth ira work?
@@wr85487 I have a video on partnering with your IRA/Solo 401k.
@@ClintCoons Amazing! Thank you so much!
Great information.what if I got multiple entities and some of them have employees and some not. On top on that I got an llc without employees. Am I still eligible?
Most likely not.
If you opt to do a Roth conversion from the after-tax contribution, doesn’t the IRS apply the pro rata rule and look at all your IRA assets? So if you have other pre-tax iras, you’ll have to pay income tax pro rata, right?
This isn’t a concern if you make all of the conversion inside of the 401k. Best not to roll to an IRA until everything is converted.
What about govt employees ? TSP 401k Plans do not allow this.. So can you still set up a separate SOLO 401k aside from the ROTH IRA and do the additional contribution of $38K you described.
Yes you must use a 401k to make this type of contribution and your plan documents must allow for it.
Clint, I’m a client with Anderson. How do I use this strategy if I’m single and make more than $130,000 a year? Am I disqualified from a Roth? I want to start this ASAP with my SEP IRA instead of a 401K because I have a single member disregarded LLC. Please reply. Thanks.
You can use this strategy with a SDIRA it is only available to a Solo 401k.
Roth IRA is limited to 6k per....at 5:30 you stated putting more into the instrument if you have a business. I thought the "more" would be a SEP or other account? What did I miss?
This is a 401k ROTH
Is this a move (rolling over from the after tax bucket to the roth) thats common knowledge and wont trigger flags? Or a process that needs to be done filling out certain different forms?
Common practice if the plan allows for it.
Does this only work with a solo 401(k)? If my business has employees, can I set up a safe harbor 401(k) plan with a 5% non-elective employer contribution to all eligible employees, and then allow the owner employee to contribute the max allowed to Roth 401(k) plus the after tax contribution to be then rolled into the ROTH bucket?
Yes you can do this through a traditional 401k with employees provided your plan documents allow for it.
Can I utilize this solo 401k in this way if I have a W2 job and I’m contributing 57k there and I have real estate income with the ability to contribute 57k via a solo 401k?
The income you contribute to your solo 401k can not come from your existing w-2. The income would need to be from a different source. Also if you have maxed your 401k with your w-2 employer then the income you contribute can not be to the 401k side of the plan
If you set up a Solo 401k plan thru your C-Corp, is the amount of the total $57,000 annual limited; can you only put 25% of your salary from the Corp? So you would have to be paid $200k to max out your $57k?
Yes if your corporation is doing funding and not you personally
Thanks for this video, Clint!
Just one point of clarification: Are you saying that if the employER makes the $38k contribution to the solo-401k plan, it is a pre-tax contribution so I would have to pay tax on the withdraws later. However, if I forego this $38k employER contribution and instead, contribute $38k of after-tax money, then I would have the option to roll it over into the Roth portion of my solo-401k, and thereby not pay tax on the withdraws later? Do I have this right?
This is an employee contribution. The maximum funding from all contributions (Employer and employee) can not exceed 57k. You can roll any aftertax employee contributions you make to your plan over to the ROTH side.
@@ClintCoons Ah, I see. So any additional employee contributions beyond the pre-tax $19,500 limit can also go towards the Roth portion of the solo-401k? The strategy here is choosing to make the $38,000 contribution an "employee after-tax" contribution rather than an "employer" contribution, is that correct?
I thought you couldn't contribute anything beyond the $19,500 as the employee (whether it is pre-tax or after-tax dollars) for 2020. Is this not true?
@@reeokim Correct.
@@reeokim Depends on the type of account. Yes this is the limit to your personal 401k account.
is it good idea to set up a solo 401k with a Roth option and have a separate Roth IRA? I would contribute $19.5K to my 401k Roth, and $6K to my Roth IRA. Is it the same thing to keep them separate or consolidate my 401k Roth contributions to Roth IRA?
Yes that is one option but if you can, make all the contributions to the Solo and either earmark them as ROTH employee contributions or make after tax contributions and roll into the ROTH 401k account. This will give you more control over your ROTH funds versus having some held in a SDIRA. Keep in mind this is just general information and you should talk to an advisor to understand the details. If you would like a FREE 30-minute consultation, you can request one here
- aba.link/30minSession
@@ClintCoons thank you, appreciate you taking the time to respond!!
Now I just need to find 57k a year
if I am a w2 employee for a company and my company does not allow it, can I start my own little side business and still take advantage of this as long as my total regular roth 401k contribution does not exceed 19500 between my company and my side business?
Yes but you will not be making a ROTH 401k contribution. Your contribution will be after tax then rolled into the ROTH side of your plan.
@@ClintCoons I can still contribute the 19500 max for the ROTH 401k between my employer and my own company. Then the 38k after tax contribution in my solo 401k from my own company can be rolled into the ROTH side of my solo 401k. Am I understanding it correctly ?
MAX ROTH CONTRIBUTION IS 6000. UNSURE HOW YOU ARE GETTING 19,000. CAN YOU PLS PROVIDE THE IRS LINK?
He's talking about 401k. Not IRA
What if you have a single member LLC taxed as an S Corp? Can you still do this?
Yes it can sponsor a solo 401k
Is this the same/similar to a mega backdoor Roth?
Not sure but it sounds like it might be. The name you use to describe the strategy is a marketing term so without knowing the details I am not sure.
Can one purchase Bitcoin, Cardano and other cryptos via a Roth IRA?
In a self directed IRA. You might consider setting up an LLC owned by your SDIRA and invest in the Bitcoin through the LLC.
Interesting can I make the contribution 38k through something outside of earnings this year. Could it be through money I've already paid taxes from previous years?
No you can only contribute from earnings received from the sponsoring entity.
@@ClintCoons So I need to increase my wages, in a solo Roth 401k, to get to the 57k limit. So 19.5k plus 37.5 k extra wages. And make sure with administrator that I can fund with extra with after tax contribution and roll that to Roth bucket?
@@peterklauser5563 correct
You can have employees. They just can't work over 1000 hours a year. Part time only.
Beginning in 2021 the secure act changes the 1000 hr requirement to 500 a year over three years. You must start tracking hours beginning in 2021 and by 2024 the part time employee who works 500 hours a year will be eligible to participate.
@@ClintCoons thanks for thenheads up. I will have a look at that and make adjustments as necessary.
Would you be able to deduct 57k on your taxes fr your example?
You can not deduct the 57k. Any contributions to a ROTH or after tax account are non-deductible.
Hi. Does ABA have experience working with Truckers?
Yes. One of our advisors actually runs a side long haul business for entertainers (busses). His name is Seth Perlman if you reach out to schedule a consult.
@@ClintCoons Awesome, thanks!
What brokerage company does this?
None that I know of. You must set up your own plan.
@@ClintCoons thanks for responding… def appreciate it.. I have my own business spoke to Vanguard and they don’t do it…Nabers group does it but I don’t know too much about them
@@mecka1980 We set up these plans for our clients.
Does this have the same income limit as a normal Roth IRA?
Not at all. Income limitations only apply to IRAs not 401ks
you can also contribute a traditional ira and then rollover to a roth - called a backdoor roth conversion designed to get around income limits.
Is this the same thing as a back door roth
No. A backdoor ROTH is the 401k ROTH. I call this the trapdoor strategy. :)
@@ClintCoons thanks.
But, 85% of employers have matching plans of between 4-6% on contributions, so while it is "pre-tax" bucket dollars, it's FREE and shouldn't be passed over. I liked the video topic but felt that part was intentionally disingenuous.
How can an W2 employee take advantage of this?
Depends on your 401k plan documents. The plan documents must allow for it.
Start a business.
What brokers would i be able to do tjis with? The main 2 ive found that even offer solo roth 401 k is e trade and van guard.
Do you have one you recommend? Or can you give me a number to call id love to have some help setting everything up and if you offer management or what. Thank you!
We. can set up your Solo 401k then you will need to set up your account with a broker. We typically use Schwab. The process works as follows: We set up a solo 401k for our client. We help the client set up the correct Schwab account under their solo 401k plan. Client rolls funds into their Schwab account. We do not offer any financial management services but we do help with plan administration I.e., plan compliance.