Roth IRA: Eliminate Tax Drag

Do you have underutilized Roth IRA potential?

Business owners & independent contractors:

Move up to $76,500/year into tax-free Roth accounts using a custom 401(k) plan,

plus $8K-$16K/year via Backdoor in 2024

Withdraw anytime, penalty-free

Roth IRA contributions can be withdrawn anytime, penalty-free.

Roth IRA earnings (tax-free growth) are available after age 59½.*

*Roth IRA opening-date matters if age-55+.
Roth IRA Earnings
As long as your account has been open for 5 years:

  • Access earnings anytime if age 59½, penalty-free
This 5-year-old account rule also applies earnings on conversions made after age-59½ so the sooner you open the Roth IRA the better!

Roth IRA conversions can be withdrawn anytime, penalty-free at age 59½,

or after five years if under age 59½.

The Backdoor Roth IRA is a conversion.
Backdoor Roth IRA
It's a conversion, in 2 steps!

  1. Anyone can make annual after-tax IRA contributions using earned income
  2. Immediately convert the contribution (transfer) into your Roth IRA
⚠️ Consult with your financial professional understand your limits, incl. the IRA pro-rata rule.

Mega Backdoor Roth IRA:
Replace Step 1. with a custom 401k plan able to accept & immediately transfer out:
  • Roth 401k contributions
  • Voluntary after-tax contrib.
👆 IRA pro-rata rule, including the SEP IRA, does not apply to 401k accounts!

Roth IRA withdrawl rules for contributions, earnings and conversions



As you take distributions, the ordering rules tend to be the most favorable:

(1) Contributions (no tax, no penalty)
(2) Conversions (no 5-year wait if age 59½)
(3) Earnings (income tax + penalty if too soon)

"I have taxable savings. How can I get permanent protectection from taxes?"

The Backdoor Roth IRA Strategy can save you thousands in taxes.

Move up to $8,000/year, per spouse/child: much like compound interest, the benefits accrue with time.

Modern Wealth Management



How It Works

Get a personalized financial plan where your goals and priorities are integrated with your tax profile and estate needs.

Investment choice:
Aligned with you and your long-term financial needs.

We handle rebalancing and short-term financial needs with tax-efficiency toward your long-term goals.

  

Relationship choice:
A full-service advisor ,
our 100% digital offering 
or both  

Are you a values-driven investor?
Modern Investing:

We help our clients achieve their financial and personal goals, while giving them the power of choice to invest in alignment with their own mission statement.
Our Mission: To drive the adoption of sustainable investing into the mainstream, while aiming for superior after-tax returns.

IMPACTADVISOR ("ImpactAdvisor") is an investment advisor registered in California.
FINRA CRD# 175155 (Financial Industry Regulatory Authority / Central Registration Depository).

Our Tax Philosophy: Any tax-related advice provided to clients appropriately reflects the actual amount of income generated by the client over time; and the tax advice provided to a client for a jurisdiction appropriately reflects the actual operations of the client in that jurisdiction. Our specialty is in helping our clients shape and preplan events to reduce or eliminate tax liability within the parameters of the law.

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Past performance does not guarantee future results. Investment products are not FDIC insured, are not bank guaranteed and may lose value.

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