Well, Sharon, how's the weather where you're at? I mean, the beach is beautiful here. It's sunny and the water feels warm. How's it where you're at? Well, it's 27 degrees where I am at. So I hope you're enjoying yourself, Jeremy. Oh, you know, I mean, look at the scenery. I thought I'd show everybody today, you know, what it was like and, you know, we're gonna be talking about the backdoor Roth IRA today. We did a podcast on it. We did, we did, you know, and a lot of people hear about the backdoor Roth, they don't completely understand it. They don't understand the difference between a traditional IRA and Roth IRA. So hopefully we'll clear a little bit up about that today. Sharon, any idea why we have to do a backdoor Roth? We make too much money. We make too much money. That's exactly right. Because the Roth IRA is limited who can contribute based upon your adjusted gross income every year. And the majority of our CRNAs make too much money to contribute to the Roth. So we have to kind of play this game, hence the name, the backdoor Roth IRA. So we'll explain that today, kind of show you how it works and hopefully get rid of some of those misnomers out there that people have in the back of their head. So why would someone do the backdoor Roth? Well, I think that kind of goes back to what is the Roth? You know, with a traditional IRA or your retirement plan, historically, you put the money in, you take a tax deduction for it now, it grows tax deferred. And then after age 59 and a half or whenever you retire, you pull it out and you pay taxes on all that gain and all the money that's in there, right? The Roth IRA kind of works a little bit differently in that when you put the money in a Roth, it's after tax. So you don't get a tax benefit now. But as long as you leave it in there till retirement or age 59 and a half, you pull the money out tax free. So let's kind of run through an example, Sharon. Let's say for, you know, 20 years, you put in $7,000. You put in $140,000. Let's say that $140,000 grew to, let's just say $600,000 for round numbers. And let's say you have $140,000 in it, it's worth $600,000. Sharon, would you rather pay tax on $140,000 or $600,000? Clearly $140,000. Clearly $140,000. And that's the idea behind the Roth. I personally don't think that we're gonna be in a lower tax environment moving forward, looking at everything that's going on with our government and our debt. So utilizing some in the Roth, I think is gonna be important for a lot of people. So it allows you to diversify that stream of income that you're gonna possibly have during retirement. And remember, all that growth that comes in that money is all tax-free on the back end, right now, unless they change the rules. But right now, tax-free growth for the rest of your life. That's pretty amazing. And then, your tax liability. So many people, we just don't know what the future's gonna hold. And being able to control your tax bracket is something we like to do for our clients. So one way to do that is you gotta take X amount that's gonna be taxable, and we need more money than that. We can take the rest out of the Roth because it's all non-taxable money. So it diversifies that income stream during retirement as well. So that's kind of the why of the Roth IRA. That's kind of the basis of what a Roth IRA is. And now we know the reason we have to do the backdoor is because we make too much money to go in the front door. Jeremy, what's the income limits for the Roth IRA? So in 2024, it's $161,000. If you're single, married, file, and joint is at $240,000. So like I said earlier, the majority of our CRNA clients make more single than that, and by the time they add a spouse's income in there, or even CRNA income these days, they're over that 240. So the majority of people aren't gonna be able to do it in the front door, which is why we gotta sneak in the back door. And that's what we're gonna explain next is what do we mean by that? What are the steps in doing? The first thing you've gotta do is you have to set up a traditional IRA. Now that traditional IRA is going to be a non-deductible contribution. So in other words, you can put the money in, but separate from most IRAs that people think about, the money's gonna be non-deductible because we make too much money to do a deductible IRA, we make too much money to do a Roth IRA, but we can all do a non-deductible IRA contribution. So we set it up, we put our money in there, and this year, let's say it's $7,000. Since we put that in, there's no income limitation on it. We put it in. So now it's in an after-tax IRA account. Well, the IRS gives us a ruling that allows us to convert after-tax IRA accounts over to Roth, and we do that through a Roth conversion. We convert the balance over to a Roth IRA. You've gotta do it the right way to make sure that you're doing everything correctly. And then once you do that, you're good to go. Now, Sharon, there is a caveat to this. In order to do this the way we're talking about, you are not allowed to have any additional IRAs because of what's called the pro rata rule. So this is where some people get mixed up. Let's say you had, for round numbers, a $100,000 IRA sitting out there, and then you wanted to do the backdoor Roth. You couldn't do that because there's this complicated, convoluted calculation that says, all right, how much do you already have in IRAs versus your contribution? So it wouldn't allow you to convert it to Roth that way because you've got another IRA out there. So people need to make sure they understand that trap if they've got other IRAs. If you have a solo 401k out there, that does not count. So if you're transitioning from W-2 work to 1099, you could roll your 401k over into a solo 401k, and there's pros and cons with that as well. But then you could continue to do the backdoor Roth because you don't have any additional IRAs. So that is one little caveat there that everybody needs to understand. And then that Roth IRA, like I said earlier, continues to grow tax-free, and the money comes out tax-free in the end, as long as you're over 59 and a half.

backdoor Roth IRA

high-income earners

income limits

tax-free withdrawals

pro rata rule