A Guide to the Backdoor Roth IRA, and Heirs Squandering Inheritances
4/25/202616 min
People look forward to retirement as a time of fewer obligations, but it can also be a time of lower taxes, especially if you have money in Roth retirement accounts. However, if you earn too much money, you can’t contribute directly to a Roth IRA. But you may still have an option. Host Robert Brokamp lays out the five steps to contributing to a backdoor Roth IRA, and highlights a landmine to avoid. Also in this episode:-The stock market posted one of its best 10-day returns – what does history say happens next?-A new study finds that heirs spend inheritances remarkably quickly. What are ways to leave an inheritance that won’t be squandered?-The input costs for food companies almost doubled in March, and prices may rise even more over the next three to six months.-Happy 50th birthday to Vanguard’s S&P 500 index fund, the first index fund available to individual investors. Host: Robert BrokampEngineer: Bart Shannon Disclosure: Advertisements are sponsored content and provided for informational purposes only. The Motley Fool and its affiliates (collectively, “TMF”) do not endorse, recommend, or verify the accuracy or completeness of the statements made within advertisements. TMF is not involved in the offer, sale, or solicitation of any securities advertised herein and makes no representations regarding the suitability, or risks associated with any investment opportunity presented. Investors should conduct their own due diligence and consult with legal, tax, and financial advisors before making any investment decisions. TMF assumes no responsibility for any losses or damages arising from this advertisement.We’re committed to transparency: All personal opinions in advertisements from Fools are their own. The product advertised in this episode was loaned to TMF and was returned after a test period or the product advertised in this episode was purchased by TMF. Advertiser has paid for the sponsorship of this episode.Learn more about your ad choices. Visit megaphone.fm/adchoices Learn more about your ad choices. Visit megaphone.fm/adchoices
Transcript preview
First 90 secondsRobert Brokamp· Host0:00
[upbeat music] Getting money in a Roth IRA through the backdoor and the amazing inheritance disappearing act. That and more on this Saturday Personal Finance Edition of Motley Fool Money. [upbeat music] I'm Robert Brokamp, and this week I'm going to lay out the five steps to contributing to a backdoor Roth IRA and highlight a couple of potential landmines you definitely want to avoid. But first, let's look at some headlines from this past week or so. You know, the stock market has shaken off the concerns of war and rising oil prices and is now near all-time highs. In fact, the S&P 500 recently posted a nine point eight percent 10-day rally. According to The Carson Group, this was the twentieth best 10-day return for the index since nineteen fifty. What happened a year after the other nineteen? Well, the market earned a positive return in sixteen of those instances, with the three instances of stocks being down a year later, all occurring during the dotcom crash of the early 2000s. The median twelve-month return after all of those nineteen essentially double-digit ten-day rallies was twenty point eight percent. In the Facts versus Feelings podcast, The Carson Group's Ryan Dietrich, a previous guest on our show, pointed out that the market hitting new highs in April has nearly the same frequency as those exceptional rallies, it having happened nineteen times. And in all but one of those instances, the market ended the year in positive territory. As Ryan pointed out, a lot of this is just fun with numbers and not necessarily