Year-End Retirement Account Strategies

To learn more on year-end retirement account strategies read our new article: https://directedira.com/year-end-retirement-account-strategies/?utm_source_youtube_socialmedia&utm_year_end_strategies_webinar

Year-end is one of the most important windows for retirement planning. Some moves must be completed by December 31, while others can wait until the tax filing deadline – and new rules coming in 2026 will change how much you can save and whether certain contributions must be Roth.In this live webinar, Directed IRA’s CEO, Mat Sorensen, will walk through the most important retirement account strategies to understand before year-end and how to position yourself for 2026.
     
You’ll Learn
- Which retirement account moves must be done by December 31…and which can wait
- How to optimize 401(k), IRA, Roth IRA, HSA, and Solo 401(k) strategies at year-end
- When Roth conversions make sense now vs. pushing them into 2026
- Backdoor Roth and mega backdoor Roth strategies to know before year-end
- Key 2026 rule changes that may impact contribution limits and Roth requirements

his session is designed to help you avoid missed opportunities, reduce taxes, and make informed decisions before the year closes.

Why Directed IRA?
At Directed IRA, we’ve helped thousands of investors put over $3 billion into real estate, private funds, notes, and more, all inside tax-advantaged retirement accounts. Our team of experts and streamlined platform make it easy to invest with confidence.

Directed IRA Homepage: https://directedira.com/

Directed IRA Explore (Linktree): https://linktr.ee/SelfDirectedIRA

Book a Call: https://directedira.com/appointment/

Other:
Mat Sorensen: https://matsorensen.com & https://linktr.ee/MatSorensen
KKOS: https://kkoslawyers.com
Main Street Business https://mainstreetbusiness.com

Episode Transcript

SPEAKER_01 (00:08):
We are going to be going over retirement account
strategies though and how youcan get more money in by
December 31st.
And then we're also going to goover the things you don't need
to stress about right now.
It's not till April 15th orlater in the year, but we want
to talk about how do I maximizemy retirement account dollars.
There are a number of things wewant you to do before year end.
Then lastly, we're going to talkabout what are some of the new

(00:30):
rules in 2026 you need to knowabout.
There's a number of changeshappening in retirement accounts
in 2026 that could affect you.
So we want to go over those soyou know how to plan and what to
be prepared for.
So you're making maximumcontributions and strategies for
2026.
All right, let's dig in.
Okay, first thing before you'rein, 2025, you need to match it

(00:51):
out of your 401k plan.
If you've got a 401k plan atwork or you have a spouse that
has a 401k plan at work wherethe company offers a match,
which is very common, let's say,for example, the match is we'll
match dollar for dollar of whatyou put in your 401k up to 4% of
what you make.
So if you make$100,000, let'ssay, and you put in$4,000,
they'll match dollar for dollarup to 4% up to the$4,000.

(01:15):
So you want to put in your$4,000so you get the free money from
your employer with the match,which is 100% return on money.
You would be a fool to returnto, you know, decline an
investment that has an automatic100% return on day one.
But that's what you're doing ifyou're not matching out in your
401k at work.

(01:36):
You are being a fool.
So go and do it already.
Now, if you have a solo 401k,you're the employer paying for
the match.
We're going to come to thatlater, not as critical.
But if you have an employer withthe match, let's at least get
the maximum amount of money into take full advantage of the
match.
Even if the match is 50%, some401ks have a match of 50%, or

(01:56):
the last 2% they'll throw in isonly at 50%.
Still get that because that's a50% return on your investment.
Again, you'd be a fool not totake advantage of a 50% return
on investment in day one,automatically guaranteed.
All right, so that's the matchand out.
Now, the why we say match andthen out is you may decide
whether to maximize your 401kcontributions of your own

(02:19):
dollars that's coming out ofyour pocket.
That's a differentconsideration.
But number one, here, I want tomake sure you at least get the
match.
Secondarily, let's go back tothat example.
Make 100K, you put in fourgrand, the company matched and
put in four grand.
The company's not puttinganything more in.
So any more money you put intothe 401k, which with your
employer 401k, you've got to dothis by year end.

(02:41):
You've got to do it by year endto qualify for the match as well
with an employer-based 401.
But after that, anything I wantto put in, I can put up to the
23,500 max, another 7,500 forany of you who are 50 plus.
Now, these are your dollars.
This is getting deducted out ofyour paycheck.
Um, but these are tax advantageddollars you can throw in.

(03:02):
So if you're like, well, I needmore tax deductions this year in
2025, we'll do traditionalcontributions.
If you're like, I love Rothaccounts, that's more me, my
style.
I don't want to grow and buildtax-free wealth.
Well, you can only put in somuch money every year.
So let's make sure we maximizethat in that employer 401k, and
you can do the Rothcontributions up to that 23.5.
Again, another 7,500 uh if ifyou're 50 plus.

(03:26):
So, but that's traditional orRoth dollars.
This is just your employer 401k.
I want you to think about thisfor yourself.
Or if any of you are married,think about your spouse too, and
have they maximized it?
Now, a common question we get iswell, Matt, I've only put in
$1,000 in my 401k this year.
You know, I've been doing 1%.
I've been targeting that.
I make 100 grand.

(03:47):
You know, I don't have enoughpaychecks coming through to
throw in the other 3,000 to getthe full match.
What can I do?
Most 401ks allow you to put themoney in directly to get the
match.
Now you need to coordinate withyour employer because you need
to get that money in beforeDecember 31st.
And they're gonna have tocoordinate the match.
It's not as it's not the bestway to do it, but this is a

(04:07):
common thing.
Some people are having to do andcoordinate with their employer
and their plan administrator atyear end.
Okay, so we got the match.
We can also maximize our 401kcontributions from our employee
side, but remember that is gonnacost you.
Okay, next, let's go over Rothconversions.
Roth conversions don't have tobe done by December 31st, but

(04:28):
they do have to be done byDecember 31st if you want them
in the 2025 tax year.
So if you want this to go onyour 2025 tax return for
whatever reason, you need to getyour Roth conversion done.
A couple of things I want you tothink about on the Roth
conversion.
First is, is this a low incometax year for you?
If so, this would be a greatyear to convert and get it on

(04:49):
your 2025 tax return.
Maybe you're out of work thisyear, you're self-employed,
you'd have a low income year.
You could also be looking atthis from another angle of, hey,
my my for my IRA, 401k, whateverit is, that's traditional
dollars, has been in the stockmarket and it's gone down and
I'm at a lower value.
You know, you could also beconverting at a lower value.
So think of it from a strategicstandpoint where are you sitting

(05:12):
right now in 2025.
I think the number oneconsideration is what's your
year been like tax-wise?
The second consideration I wantyou to think about of whether to
do Roth conversions this year ismaybe you have a larger amount
you're trying to convert.
Let's say this is$300,000 in atraditional IRA.
Let's say you have$300,000 in atraditional IRA and you want to

(05:32):
make it Roth dollars, but you'relike, but I don't want to take
$300K into taxable income in2025.
That's gonna crush me on my taxbill.
I'm gonna be in the 37% highestbracket.
That's gonna cost me, you know,almost$100,000 to convert that
thing, or it's gonna cost meover$100,000 to convert that
thing just on the federal taxside.
So how can I be more strategicabout it?

(05:53):
Well, one thing you could do isjust break it up over two years.
We call this chunking.
It's a throwback to the movieGoonies.
If you know, you know.
And under chunking, what we'redoing is we're saying, hey,
let's take$150,000 of that$300Kand let's convert it in 2025.
The other$150,000, let's convertthat in January of 2026 and
that'll go on your 2026 return.

(06:15):
That way, within the you know,30 days here, I've gotten 300
grand converted over to Roth,but I split the tax liability up
between two years.
So if you're someone who haspretty steady income, maybe
you're on a salary or yourbusiness income is pretty steady
between year to year, it's notgonna bump you up to more than a
couple brackets.
So rather than going twobrackets up to hit 37%, I might

(06:38):
stay in a 22% tax bracket.
Okay, it depends on yoursituation and your total
adjusted gross income.
But as a general rule of thumb,you will pay less money in tax
by chunking because you willstay in lower tax brackets on
the amount you're converting.
Now, this could be done overthree years.
You could say, I'm gonna do itover the next 13 months, 100K

(06:59):
now, 100K in 2026, another 100Kin January of 2027, and I'm
gonna convert the whole 300,000,but do it in 100,000 chunks
because of where you fall withinthe tax brackets.
So um just keep that in mind.
We've got some resources, andyou can obviously Google the
federal tax brackets to lookwhere you're at um in terms of
the income because thisconversion is these last dollars

(07:22):
on top.
So you know your income alreadythrough the year.
Let's say you've made 200 grandthis year and you're like, well,
I want to convert 300 grand.
Well, that 300 grand is gonna betaxed at the rate above 200k of
income.
Okay, so we'll be pushing youinto higher tax years.
So think about chunking andgetting that done by December
31st, 2025, because you want toget some of that chunked into

(07:46):
the 2025 tax year.
Now, last consideration on theRoth conversion.
You may be like, Matt, I prettymuch make the same every year,
or I'm I'm lower middle income.
The chunking doesn't reallymatter.
I'm just trying to convert 50grand here.
It's not going to push me intoanother tax bracket.
Just convert it in January of2026.
If we're already, what do wegot, 15 days here left, unless

(08:08):
you have an incredibleinvestment, you need to make it
with Roth dollars now.
Just wait until January of 2026because you'll at least push it
out one more tax year.
If you convert now in 2025,remember that's tax return to
April 15th plus extensions.
But if you convert in 15 dayshere, that'll won't be due until
April 15th of 2027.

(08:29):
All right.
So that'll push you out anotheryear tax return-wise.
Um, any questions yet, Daniel?

SPEAKER_02 (08:34):
Yeah, I think I think we have a good one here,
which is uh we have my wife'sprimary job contributes 4% to
her 403B.

SPEAKER_01 (08:41):
Okay.

SPEAKER_02 (08:41):
And she does not have to contribute her portion.
So she doesn't contributeanything at that job.
So we can take the fullwrite-off in our solo 401k.
Does that sound right?

SPEAKER_01 (08:53):
Okay.
All right.
Spouse has a 403B at work,probably works for a government
agency with state, local,federal, and then that's
typically what the 403B is for.
It's like a 401k for um if youwork for a government agency or
possibly a nonprofit.
So um that's great.
They throw the match inautomatically.
Um, those typically weregovernment um or agencies that

(09:16):
used to have a pension plan, andso they've moved to this
anyways.
Um so don't worry about thematching out.
You got the match for free.
Like, so you're good there.
Now, in terms of the solo K, Ipresume that means you're
self-employed, the person askingthe question here, and you're
doing a solo 401k.
We're gonna come to that here ina second.
All right, solo Ks are a littledifferent.

(09:38):
The bottom line here is if youalready have a solo K that's
already been set up for 2025,don't worry about contributing
by December 31st.
I mean, I want you to get yourmoney in and start investing
now, but your your deadline toget the money in for 2025
contributions isn't until thecompany return deadline.
See, a 401k at work, employershave a certain amount of time

(10:00):
when they take money out of yourpaycheck and they're doing a
match and they're holding yourdollars, they have to put it
into the 401k.
And so on an employer 401k,that's basically is happening by
December 31st.
In a solo 401k, the actual timeto get the money in as a
contribution is the company'stax return deadline.
So if you're an S corporation,most common entity for someone

(10:23):
that has a solo K is going to bean S corporation.
Um, your tax return deadline isMarch 15th, plus you get
extensions.
So if you extend your companyreturn, you also get an
extension of when to put in yoursolo K contributions, which can
push you out till September15th.
Okay.
Now, if you're a solo K person,the one thing I want to say
here, I'm already getting intothis.

(10:43):
Why don't I just go to the solocase slide?

SPEAKER_02 (10:46):
You know, you just I was trying to segue you.
I was trying to get you back onthe side.

SPEAKER_01 (10:50):
Remember, contribution deadline here,
March 15th, you get an extensionSeptember 15th.
If you're a solo prop, that'sApril 15th, plus extension uh
October 15th.
Here's the problem though foryou, escort boners.
If you have a solo 401k alreadyset up, or you're setting one up
right now before and you'retrying to get it done before
December 31st, we can help you.
You've got to move like now,okay?

(11:11):
Because we got Christmas nextweek.
New Year's, by the way, the IRSshuts down um around uh New
Year's Eve or sorry, ChristmasEve.
They're gonna be shut down herein like the next couple weeks.
So we want to move quickly ongetting a solo K set up if
you're still trying to do it for2025.
Now, we can set it up next yeartoo, a solo K for 2025, but your
contributions can be limited.

(11:32):
Here's why.
If you have an S corporation andyou want to make employee
contributions in a solo K.
See, a solo K is a 401k plan ifyou're self-employed.
You put money in as an employee,and the company, your company,
puts money in because you'resuch a great employee, and they
put in a company contribution.
So it's a solo K has acombination of you put money in

(11:53):
as the employee because you workin your business, and the
company's throwing in a matchbecause you're such a great
employee, and it's your owncompany money.
It's coming out of your pocketall at the same day if you own
100% of the business.
So, um, but that's what a solo Kis.
But an employee contribution hasto be on your W 2.
In an S corporation, you have tohave a W 2 for what you're

(12:14):
paying yourself.
That's what your employeecontribution is based on, and it
must be indicated on your W 2,which is due on January 31st,
2026.
Even though I don't need to putthe money in until March 15th or
September 15th plus extension ifI extend my S corporation
deadline, I have to note whatI'm putting in on my W 2, which

(12:36):
is due on January 31st.
So what does that mean?
It means you got to be planning.
And if you want to make itsimple, just put it in now.
If you're like, well, Matt, Imissed the deadline.
What can I do?
Well, we can still do employercontributions.
Let's say you're talking to usin February or March.
If you're a sole prop, you couldprobably do employee
contributions.
But US Corp owners, it's gonnabe hard to get that employee

(12:58):
contribution in because you'regonna have to go back and amend
your W-2.
It's a lot more work, pain, andheadache, and it's not certain
you're gonna be able to maximizeall your contributions.
So, bottom line, if you want tokeep it simple, just do it now.
Get your contributions in now.
If you don't have a solo K yet,being thinking about doing one,
go ahead and set it up already.
There's a new tax credit,automatic contribution

(13:19):
arrangement.
If you adopt that, you can get a$500 tax credit that flows down
to your personal return over thenext three years,$1,500.
It'll pay for the cost ofsetting up a solo K.
So we've got an article comingout on that uh shortly.
Uh, we did a webinar at oursister-in-law firm, KQS lawyers
on it as well.
So um solo Ks kind of mattersbefore December 31st.

(13:44):
US corporation owners, it'sreally January 31st.
Everyone else, it's kind of thecompany return deadline.
There is a lot of stuff you cando in 2026 to still make a 2025
contribution.
Just keep in mind US Corpowners, which is most of you
doing a solo K.
Your W-2 is gonna be due.
And so you might as well startplanning and get the money in

(14:05):
now.
Now, here's another thing youcould do.
You could, in the solo case,say, Well, I'll put what I'm
let's say I decide I want to putin the 23.5 um, 2025
contribution max.
Um, Roth or traditional dollarsdoesn't matter, but I'm not
gonna put the money in yet.
But I know I'm gonna do itbefore March 15th or September

(14:25):
15th if I extend my extend mycompany return.
You can just say you're going todo that on your W-2, and you
don't have to put it in yetuntil the cunt contribution
deadline as well.
All right.
Um went down a rabbit hole onthat, but we did have a slide.
So great question.
What other diversions do youhave that?

SPEAKER_02 (14:42):
I actually I think this is gonna be a good
diversion for you.
I think a little bit of basishere.
Okay, so on the topic of Rothconversions.

SPEAKER_01 (14:49):
Yes.

SPEAKER_02 (14:50):
Is that assuming pre-tax money andor money that
has been generating earnings andtherefore taxes could be
triggered with a conversion?

SPEAKER_03 (14:59):
Yes.

SPEAKER_02 (14:59):
I'm guessing this does not apply for backdoor Roth
uh that is being funded withafter tax money.

SPEAKER_01 (15:05):
Am I missing something?
Okay, great question.
And that is a great segue.
Who asked that question?

SPEAKER_02 (15:10):
Uh anonymous attendee.

SPEAKER_01 (15:11):
Oh, anonymous attendee, come out and get some.
Thank you.
That was a great question.
Um, you're absolutely right.
We're talking about pre-taxdollars, also known as
traditional dollars.
This is what you got a taxdeduction in to put in, plus the
earnings on those.
When you convert those dollarsto Roth, you have to take it
into taxable income.
So when we're talking about that$300,000 traditional IRA or

(15:35):
pre-tax dollars that you have ina 401k, whatever it may be, you
got a tax deduction to put thatmoney in and there's been
earnings on it.
Well, I want to go Roth on thosedollars.
Iris is like, we'll let you doit, but you're gonna pay a toll.
You have to take the whole thinginto your taxable income.
So that whole 300 grand, andmaybe you want to just convert a

(15:55):
partial amount.
Again, you can chunk it up andconvert whatever piece you want,
but that you'll gonna get a1099.
So to do a Roth conversion,you'll submit a form to us at
directed IRA if your accountshere.
You get up other accounts otherplaces, and you know, um, but
you're gonna have to, you haveto make a Roth conversion
election form.
You have to do that in writing.
And then we're gonna send you a1099 after January 31st, 2026.

(16:18):
That's when your 1099s are duefor anyone from anyone.
But you're gonna get a 1099 Rfrom us saying, hey, they
converted 150,000 of traditionaldollars to Roth, and that's
gonna flow onto your 1040 onyour tax return.
So that would be your pre-taxdollars.
Now let's go to backdoor RothIRA.
That was the segue there fromanonymous attendee, which was
there's no tax on a backdoorRoth.

(16:41):
Okay, a backdoor Roth IRA has aRoth conversion in it, but it is
not a taxable Roth conversionbecause you do something called
a non-deductible traditionalcontribution.
Non-deductible means I didn'ttake a deduction.
And in the backdoor Roth, you'renot investing those dollars.
You're immediately converting.
So there's no earnings, sothere's no tax due on the

(17:03):
backdoor Roth conversion.
Now, the backdoor Roth IRA canbe done by April 15th.
The reason we're noting it hereby as a 1231 strategy is some of
you may be bumping up on theincome limits where you're used
to doing Roth IRA contributions,where you put your seven grand
in just to your Roth IRA, andyou haven't need to worry about

(17:25):
the backdoor Roth.
We always run into a handful ofclients every year who are like,
ah, I'm over the income limits.
They're doing their tax returnin 2026 and they just did
regular Roth contributionsbecause they weren't aware of
the backdoor Roth structure andthe modified adjusted gross
income limits.
Here's the point if you makemore than 150 grand single or

(17:49):
236,000 married filing joint,you need to do a backdoor Roth
IRA.
You can't just do a regular RothIRA and make the full
contribution.
All right.
The regular Roth IRA is meantfor lower or middle income
individuals.
They that when they kind ofcreated Roth IRAs, Congress was
like, we can't let high incomeearners use these.

(18:12):
So they restricted you fromputting contributions into a
Roth IRA if you were highincome.
High income being 150 single,236 married, these get adjusted
every year.
Now, the backdoor Roth IRA, thebasic concept is where it's a
loophole.
Okay.
That's why it's called thebackdoor.
All right.
We're going around the back andwe're coming in the back door to

(18:32):
get into the Roth IRA party.
That's what's inside.
But what you're doing is you'reputting money into a traditional
IRA.
It's a non-deductiblecontribution.
You convert it to Roth on daytwo, not taxable because it was
non-deductible, and now themoney's in a Roth IRA.
It seems insane, but this is thetax code.

(18:53):
And this is what this is likethe perfect example of a
loophole.
You really have to thread theneedle through and do the little
loophole to validate thisstrategy.
Now I do a backdoor Roth IRAevery year.
I've been doing it for a while.
Many of our clients areutilizing the backdoor Roth IRA
every year, getting seven grandin.
That's for 2025, an extrathousand if you're um 50 plus.
But just know, look at whereyour income's been at for the

(19:15):
year.
You might be someone that'salready familiar with the
backdoor Roth IRA.
You're like, Matt, I've alreadydone it.
You know, I'm good.
But if you're a regular Rothperson that's income has gone
up, you might need to do thebackdoor Roth.
Now, what you will do, let's sayyou messed this up.
Let's say you did a Roth IRAcontribution, you're single, and
you end up making 200 grand thisyear.

(19:37):
You're over that 150 limit.
You're like, I had a good yearthis year, I made more than I'm
used to, or I've gotten a raise,or my business did well, or big
bonus, whatever it was, you made200 grand.
And you're like, but I alreadyput my seven grand in the Roth.
I put it in like in June of2025.
What do I do?
We're gonna need torecharacterize that, okay, over

(19:57):
to traditional dollars.
gonna do a backdoor Roth on it.
And then we are gonna convert itover to Roth.
Okay.
So this is the um this is kindof a fix it backdoor Roth IRA.
Not ideal, but there's a way todo this.
You need to do that before April15th, by the way.

(20:18):
Um but for any of you thathaven't executed yet on the
backdoor Roth IRA, definitelysomething you should be doing
every year.
Um and just pay attention towhere you're at income wise.
Again, 150 single 236 married iswhere you need to worry about
the backdoor Roth IRA.
Rather than just doing the niceand easy, put your seven grand
directly in the front door on aRoth IRA.
Any questions on backdoor Roththat popped in?

SPEAKER_02 (20:39):
I do.
I have one question on thebackdoor Roth.
I actually have a couple on solo401ks too so you get to know if
you want to backtrack as well.
Okay.

SPEAKER_01 (20:46):
Let's hit them both.

SPEAKER_02 (20:46):
So for backdoor Roth, can I contribute 7K plus
7K for my wife if we're over thelimit?

SPEAKER_01 (20:54):
Yes.
Okay.
I love that.
You should be doubling that upand if you married you should
both be doing a backdoor RothIRA.
Um I'll skip the jokes on thateven if your spouse is not
working, you might have a spousethat's not working the you can
attribute income to them.

(21:14):
If you have a nonworking spouseand a married couple filing on a
tax return, one requirement tocontribute to an IRA is you must
have earned income.
But the nonworking spouse canget income attributed to them
from the working spouse.
So um so it's not like you needto put them on payroll for any
of you business owners that mayhave a nonworking spouse.
But absolutely you should bedoubling up on that.

(21:36):
Why the heck not?
The only snag I would say on abackdoor Roth IRA is if you have
traditional IRA dollars in atraditional IRA somewhere else
that you haven't converted toRoth yet.
If you have a traditional IRAthat could even be just a SEP
IRA because those are actuallytraditional dollars that is um

(21:57):
that's that has not beenconverted to Roth, the IRS makes
you convert pieces of that toowhen you're doing the backdoor
Roth.
You have to do this pro ratashare of your traditional
deductible dollars with yourtraditional non-deductible
dollars, which is that new sevengrand you just put into the uh
traditional IRA to do thebackdoor Roth IRA.
So um there's just a little moreon that we've got articles on

(22:21):
that there are some workaroundsto it.
Your traditional 401k doesn'tmatter don't worry about that.
It's just traditional IRAdollars can sometimes if you
have those already that could bea snag to executing a backdoor
Roth IRA.
The reason I brought that upwith the spouse example is I
have had clients over the yearsthat are like well I have a
traditional IRA with you know200k in it.

(22:41):
I don't want to convert thewhole thing yet so that means I
can't do the backdoor Roth umtrue uh but they're like but my
spouse doesn't have atraditional account should I do
the backdoor Roth for them?
Yeah because then we canautomatically convert theirs so
um over to to to do a backdoorRoth IRA.
So just keep that in mind on theuh backdoor Roth IRA if you have

(23:05):
traditional IRA dollars.

SPEAKER_02 (23:07):
Okay, solo K questions uh I actually one more
good uh Roth convert it's a Rothconversion question that uh you
may be getting into I'm not surebut it's the Roth conversion uh
to depreciation losses from realestate so I have real estate my
IRA what happened what does thatlook like with the Roth
conversion on that one?

SPEAKER_01 (23:25):
Okay that will not help you okay if you have real
estate in your IRA that hasdepreciation losses is that the
question yeah so he's using he'sexcuse me he's looking for his
real estate uh losses and thendoing the conversion in his Roth
IRA got it okay sorry all rightlet's say that you have rental
real estate you're a real estateinvestor and you have depreciate

(23:49):
you have losses on your realestate which generally you get
because you have a depreciationexpense like you could be cash
flowing the property like makingmoney you know over your
expenses on your rental propertybut you actually have a loss for
tax purposes because ofdepreciation whether you're
accelerating depreciation withthe cost segregation or whatever
your strategy is so let's say Ihave rental real estate losses

(24:12):
personally that are on my 1040and I say hey but I want to do a
Roth conversion.
So I've got 100K of rental realestate losses I can go do a Roth
conversion for 100K and convert100,000 of traditional dollars
over to Roth and the rental realestate losses will offset the
Roth conversion.
Well that only works if you area real estate professional for

(24:36):
tax purposes.
If you are non-real estateprofessional for tax purposes
your rental real estate lossescan only offset other investment
or rental real estate income itcannot come over and offset a
1099 on a Roth conversion yourW-2 income your business income
it's bottled up here.
Okay so for example me my rentalreal estate losses I can use

(24:59):
those losses against gains onother properties but otherwise
they're bottled up no I'll usethose rental real estate losses
when I sell the property tooffset taxable gain I might have
when I sell the property butotherwise they get bottled up
here.
I'm not a real estateprofessional I don't spend
enough hours I don't do thematerial participation and my
full-time business isn't realestate.
Okay even though I might have anumber of properties.

(25:22):
So the only way your rental realestate losses are going to help
you on the Roth conversion is ifyou're a real estate
professional or your spouses.
That's a tax classification youwant to talk to your tax lawyer
CPA.
The attorneys by the way at KQSLawyers can do a comprehensive
tax and business consult and getover to kqoslawyers.com if
you're like Matt you just blewmy brain there I didn't even

(25:43):
know what you were talkingabout.
Get over there we can help youum now there are some loopholes
to that there for examplethere's a self-rental rule if
you rent real estate to your ownbusiness and you own the real
estate but you're renting it toyour business we can use those
losses to offset your businessincome short-term rental there's

(26:04):
a short term rental loophole sothere's a number of things to
think about there um outside thescope here the point is how can
I get tax losses to offset thecost of the conversion okay so
that would be more of a taxlawyer question though way too
much to cover here today but Ilove where you're going because
that's being strategic and smartabout it.

(26:26):
But our lot the law firm sisterlaw firm KQS lawyers can help
you there.

SPEAKER_02 (26:30):
So this is this is a very old one hopefully Richard
you're still here they areinvesting in a working interest
oil and gas as a sole proprietorwith their spouse uh they've
been told that the income nextyear will be on a Schedule C and
SE tax will be due.
Does this mean the net incomecan be invested into a solo

(26:50):
401k?

SPEAKER_01 (26:52):
Yes.
Okay now that would becontributed into a solo K, not
invested.
So if you're a sole proprietorthis year for 2025, is that what
they're saying and they're notgoing to S Corp?
I believe so yes.
Okay if you're a sole proprietorfor this year then what you're
contributing is the netself-employment income.
So when you do Schedule C onyour 1040 you have your income

(27:13):
your expenses what's the netself-employment income that you
have let's say it's a hundredgrand okay well what can I
contribute to my solo K you cancontribute$23,500 let's assume
you're under age 50 23,500 thatis the employee contribution you
can choose to do Roth ortraditional plus you can do the

(27:34):
employer contribution which is20% of that in the employer
contribution you get 25% for SCorps or partnerships or uh for
S Corps but for soleproprietorships uh you just get
20% uh again too much detailshould I get into I don't even
know why I need to say that butthere's a reason for it it's

(27:55):
just not a good one.
So 20% so you can put in 20grand as an employer
contribution.
So in other words you made 100grand on your self-employment as
a sole prop.
You're gonna be able to put in235 employee 2000 employer for
43,500 if you want to max outcontributions.
Now yours there's no W 2 so youdon't need to worry about it on

(28:17):
even January 31st you don't needto worry about it to April 15th.
Now you might as well put themoney in if you have it to start
investing and growing that moneyum I'm just talking about when's
the deadline to get it in fortax purposes.
Uh great question there though.

SPEAKER_02 (28:32):
All right anything else yeah I there there are a
lot of questions I'm trying tokeep us on topic though of the
of the strategy yeah Iappreciate it let's so sorry to
the people that we may not beanswering questions for does
anyone have a year end questionbecause I'm gonna jump to April
April 15th issues and then 2026changes and we're gonna come
back and do a final QA here.

SPEAKER_01 (28:53):
We'll do a fire round at the end.
I haven't seen anything for yearend but uh there are some people
that are kind of leading into itbut not asking it directly and
by the way if you're like oh Ineed to do a backdoor Roth IRA
this year ooh I should get asolo K going we do have a
discount code right now you canbook a call okay holiday 150 is
the promo code that saves you150 bucks if you need to open a

(29:17):
new account you're already acustomer or you're new to the
directed IRA family you can atleast save 150 bucks let's get
in and get it done now beforeyear end um because that 150 we
don't do specials typically aresupposed to be 50 bucks maybe
100 150 is the best uh discountwe offer and as somebody who
helps open up these accounts dayin and day out yeah please guys

(29:38):
if you're looking to set up asolo 41k do it get it book calls
with us today tomorrow because Idon't like you guys getting mad
at me later on in the year andbeing like what's taking so long
it's like well there's a line infront of you.
Yes.

SPEAKER_02 (29:49):
There's a lot of people who are trying to do it
by the end of the year.

SPEAKER_01 (29:51):
You know like at halftime when you're like trying
to go to the bathroom andeveryone else is too and you're
like maybe I should just go alittle bit early or let's let's
just go a little bit early.

SPEAKER_02 (30:02):
Go a little bit early you're not gonna miss
anything.

SPEAKER_01 (30:04):
It's okay.
It's gonna be all right.
You know um same thing here.
Okay.
All right so let's go into someother items for April 15th.
Um okay now IRA contributionsokay this you can put seven
grand in for 2025 an extrathousand for you that are 50
plus so you're putting in eightgrand.

(30:26):
Now the contribution actuallyisn't due until April 15th 2026.
This is for 2025 tax purposes.
So don't stress about just yourregular IRA contributions.
You can even be doing thebackdoor Roth IRA later here.
So I I was talking aboutDecember 31st just to know
whether you need to do regularRoth or backdoor Roth or whether

(30:46):
you need to re-characterize butum otherwise any of your IRA
strategies can be done by April15th.
Now this does not include plusextensions.
Even if you extend your returnto October 15th your personal
1040 your IRA contribution isstill April 15th.
All right so don't miss the taxreturn deadline if you're trying

(31:08):
to get 2025 contributions in.
Now for a lot of new people oneof the things I like to talk
about as a strategy if you'renew to setting up a Roth IRA
traditional IRA backdoor RothIRA this is the time of year to
double up on contributionsbecause what you're gonna be
able to do in January of 2026 isput 7500 bucks in to your IRA

(31:30):
okay plus you could put theseven grand in for 2025.
So I can put two years ofcontributions in, right?
Because the 2025 contributionsnot due until April 15th 2026
and I can start making 2026contributions in January of 2026
once I made the seven grand inthat year or the 7500 bucks.

(31:50):
So um get the money in early andyou can double up on the
contributions making two yearsof contributions that you could
be doing as soon as January of2026.

SPEAKER_02 (32:03):
All right now let's talk about some of the changes
here um or was there any IRAcontribution deadline questions
um that's usually prettystraightforward though yeah does
the IRA have to exist before2025 ends even though the
contribution is made in 2026 byApril 15th no it does not don't

(32:24):
worry about that you can set itup next year but if you want to
save 150 bucks get it set upnow.
Yeah I always tell people likeif you set setting up the IRA if
you're gonna set one up inJanuary get the 150 bucks off
today you're saving yourselfmaybe$30 by waiting January is
how the math works out.

SPEAKER_01 (32:41):
Yeah and I like the other thing there's a study by
Fidelity where they looked atwhat are the characteristics of
people who had over a milliondollars in an IRA or 401 and
there's like three or four likecommon themes.
One of those common themes wasthey contribute as soon as they
can not when the deadline isokay if you think about that I

(33:04):
don't want you to be thinkingabout when can I put when's the
last day to put money into myIRA.
Okay because if you think aboutlike your 2025 IRA contribution
yeah it's not due until April15th of 2026 but if you put the
money in of in January of 2025you would have had all this

(33:25):
investment growth.
You would have had a whole 12months of investment growth all
right and then if you're gonnawait till April 15th we got
another four and a half monthsof investment growth.
So we want our money working forus right that's the whole
purpose of investing waiting toinvest isn't going to grow that
money any faster.
So um don't think of this likeyour like assignment in high

(33:48):
school that you turn on thedeadline all right think about
this as an investment that'sgonna grow and benefit you.
So the earlier the earliest youcan get it in the more benefit
you'll get out of it.
So don't think about when is itdue.
Think about when can I put themoney in.
And I will tell you I see I seethat in our accounts whether
it's a solo K, a Roth IRA,backdoor Roth, whatever it is,

(34:11):
they contribute in January andFebruary.
They get the money in as soon aspossible.
They're not waiting until April15th of next year.
Okay.
All right shift I know itdoesn't matter now because we're
talking about year end stuff,but 2026 is around the corner.
So be smart about your 2026contribution get that in so that
money can start working for you.

(34:31):
All right now let's transitioninto new limits and new rules
for 2026.
So the contribution limits didgo up for 2026.
That was good news coming fromthe IRS it's rare but it does
come every once in a while sohere's what it is for 2026
contributions for IRAs is 2500bucks that went up$500 from

(34:53):
7,000 sorry did I say$2500?
$7500 okay contribution limitswent up to$500 to$7,500 that's
up$500 from seven grand in 2025.
The catch up used to be$1,000extra for any of you$50 plus now
it's$1,100 every little bitcounts here.

(35:14):
And so the total if you're$50plus by the way would be$8,600
that you could contribute for2026 into your IRA.
That's for traditional or Rothalso same if you're doing a
backdoor Roth IRA.
Now$01Ks the employeecontribution amount went up
$1,000 the maximum employeecontribution was$23,500.

(35:34):
That is now$24,500.
So you can put over$1,000 morein a 401k this includes solo Ks.
The total contributions in lastyear was$70 grand was the max
contributions into a 401including solo case that is now
$72,000 for um 2026 401contributions.

(35:54):
All right now that's prettystandard every year sometimes
the the IRS keeps it the samebut these are basically
inflation adjusted we've hadinflation you know obviously we
all hear about it in the newsover the last year or so the
contribution limits go upbecause they get adjusted for
inflation.
Now the big change that goesinto effect in 2026 is something
that came from Secure 2.0 thiswas retirement account

(36:17):
legislation that passed a coupleyears ago there's a provision
going into effect from that lawin 2026 that affects catch up
contributions in a 401 if you're50 plus.
So and this applies to a solo Kas well this applies to your 401
at work or maybe your spouse's401 if you are 50 plus this is
really really importanttraditionally when you do a

(36:41):
catch up contribution and evenwhat you can do for 2025 right
now, you can choose and say heythe catch up contribution I want
to throw in I want to put intraditional or Roth dollars you
could pick.
The IRS gave you the choice andyou could do 100% traditional
100% Roth you could mix it upbut the IRS gave you the choice

(37:02):
now in 2026 you no longer have achoice.
Ketchup contributions must beRoth dollars in 2026 if you made
more than 150 grand on your W-2from that employer in the prior
year.
So let's say it's 2026 nowyou're someone that's 50 plus

(37:24):
and you want to make the catchup contributions which how much
is that for 2025?
Can you look that up if or doyou know off the top of your
head, Daniel?

SPEAKER_02 (37:30):
Uh the ketchup contributions for 2025 no I'm
not I don't have that righthere.

SPEAKER_01 (37:35):
All right I think it's like it's like eight grand.

SPEAKER_02 (37:37):
Yeah I was gonna say 7500.

SPEAKER_01 (37:39):
Yeah 7500 I think goes to eight grand for 2026.
Okay so let's say um we'resitting in 2026 and you want to
make your catch up contributionof eight grand or so um and in
2025 you made 150 grand or morefrom that employer.
Well your catch up contributionmust be Roth dollars okay is
7500 for 2025 what is it for 26though 26 I thought it was just

(38:02):
an extra 1080 85 okay I'm doublechecking that all right we'll
clarify that.
Yes um so that's the big change.
Now the there's been a lot ofconfusion about this rule
because a lot of people say ifyou made more than 150 grand a
year this is only about that W2.
You can have a side hustle yourspouse can have income your
adjusted gross income could be300 grand for that year.

(38:23):
But if your W 2 from thatemployer where that 401 exists
is 150K, that's all we'relooking at.
Okay.
Um so if you made you know 120grand at that company cool you
can still do a traditional catchup contribution if you want it.
Now the why behind this, I knowyou're thinking like Matt, I

(38:43):
thought you said Roth accountsare not for the rich.
Now Congress is making thosepeople who make more than 150
grand, if they want to doketchup contributions, they have
to do Roth contributions.
How do you make sense of that?
This is part of the One BigBeautiful bill.
In the One Big Beautiful billone of the things they didn't
secure 2.0 is they made more taxcuts.

(39:04):
They had to raise revenue byforcing people to do Roth
contributions instead oftraditional it raises revenue
for the government.
Congress loves that so there'sthis whole concept in DC right
now of Rothhification is whatthey call it, which I actually
love, where the government'slike we should stop letting
people do traditional accountsbecause they take a deduction

(39:27):
and the and the government takesin less money now.
Congress doesn't care abouttheir revenue in 10, 20, 30
years.
The House members and senatorswon't be there.
They can't spend that moneythat's some other Congress's
problem to worry about.
So the Roth they don't careabout that.
They care about tax revenuethey're collecting now and next
year that they get a spend.
So that's the concept on thisthey wanted to raise revenue

(39:49):
that's why they force you to doRoth contributions because you
don't get a tax deduction onthis this is for high income
earners making more than 150K ayear.
They're typically in a highertax bracket so their deductions
are more value As well.
Okay, 2026 catch up amount is itwas 8,000.

SPEAKER_02 (40:04):
What I was getting confused on was the super
catch-up.

SPEAKER_01 (40:07):
There you go.

SPEAKER_02 (40:08):
Which is 11,250.
And that's for people who areover the age of 60 in the 60 to
63 range.

SPEAKER_01 (40:14):
Okay.
All right.
So 8,000, that's the 2026 catchup contribution amount in your
401k, solo K or employer 401k.
Um, and there is that supercontribution.
If you're in that was fouryears, 60 to 63, where that's
your age, um, you actually getto put over 11 grand, 11,250.

SPEAKER_02 (40:33):
Yeah.

SPEAKER_01 (40:33):
11250.
That's the super ketchupcontribution.
That's another new thing thatcame about.
But again, that will be subjectto the Roth requirement too.
If you're more than 150K W2.
Yes.
All right.
Now let's come back and I wantto summarize all these pieces
here, and then we'll take anyquestions you guys might have.
If you're thinking about yearend, I want you to think about

(40:54):
the matching out of your 401k atwork.
Make sure you're getting themaximum deduction from that
401k.
Second, then let's look at theemployee contribution.
Is there more employeecontribution dollars I can get
in?
Third, maybe you need to do amega backdoor Roth 401k.
I actually didn't talk aboutthat one yet.
Let's pin that.
I'm going to come back to that.
Okay.
Backdoor Roth IRA or regularRoth IRA.

(41:16):
Where are you at income?
Did you make more than 150Ksingle?
You need to be doing backdoorRoth Ira.
More than 236 married adjustedgross filing joint.
You need to do backdoor RothArea.
You can't do a regular Roth IRAcontribution.
One other note here we have injust the checklist here is HSA
eligibility.
You need to have done that byDecember 1st to have a
qualifying healthcare plan to beable to make a 2025 HSA

(41:40):
contribution, not due untilApril 15th, but your
eligibility, that HSA highdeductible plan needs to be in
effect by 12.1.
There's also, by the way, if youcan make a four-year
contribution if you had thatplan in effect by 12.1.
Next, Roth conversions.
Remember chunking.
Let's break this up.
Do I want to get this in on my2025 tax return to split the tax

(42:01):
burn up over multiple years?
And then another one here thatwe didn't talk about is for any
of you that have kids that workin your business or on your
rental properties, any of youbusiness owners, you should be
paying your kids for that work,taking a tax deduction, and then
you can open up a kids Roth IRAfor them.
Okay.
We have kids Roth IRAs atdirected IRA.
They could be crypto Roth IRAs,they can be self-directed into

(42:23):
real estate or other deals.
Um, but you can be doing kids'Roth IRA accounts.
Now, a kid must have earnedincome.
So you must be paying them fromthe business or from a rental
property, whatever it is.
So they have earned income.
Um, they could have a summer jobor even they have a part-time
job.
They might work at the mall or arestaurant or whatever.
Yeah, I don't know, some ofthese like uh teenager jobs.

(42:45):
And um, they're spending thatmoney, but that's earned income
too that you could actually thenlet's say they made five grand
through the year at theirpart-time job, they're in high
school, whatever it is, and theyspend all that money.
Well, you could drop five grandinto a Roth IRA for them because
that is earned income still.
So it doesn't have to be thefive grand they made, they just
have to have the earned incomethrough the year.
Okay, so those are some uhthings to worry about by year

(43:07):
end.
I'm gonna come back to the megabackdoor Roth.
That's a big one.
Can't believe I skipped that.
Okay, April 15th deadline.
Remember that's your traditionalIRAs, Roth IRA, even the
backdoor Roth IRA.
You don't get to file anextension and get an extension
of time to do the IRAcontributions.
Those are due on April 15th.

(43:28):
Um, for any of you solo Kowners, you can still make those
contributions.
You may not be able to maximize,but you do get the tax return
deadline extension as well.
It's based on your companyreturn, not your personal
return, your company return.
So if you're an S-corp, thatwill be March 15th plus
extension up to September 15th,of when you can get solo K

(43:48):
contributions in for 2025.

SPEAKER_02 (43:51):
I have a question in there from an anonymous attendee
to talk about the matterbackdoor, right?

SPEAKER_01 (43:55):
The same anonymous attendee?
Okay.

SPEAKER_02 (43:56):
I mean, they have the same name, so I assume it's
the same person.

SPEAKER_01 (43:59):
Okay.
Um, well, anonymous attendeesjust like a default if you click
the button to say, I don't wantto say my name, you know.
Okay.
All right, which is fine.
Same last name, attendee.
Yeah.
Okay.
Um, yeah, we need we needthere's like I think there's
like an AA meeting for anonymousattendees.
Oh, okay.

(44:20):
There's a meeting.
All you guys need to go andattend to and say, Hi, my name
is Matt.
I'm an anonymous attendee.
But then you're not anonymousanymore.

SPEAKER_02 (44:30):
But then you're not anonymous anymore.

SPEAKER_01 (44:31):
Well, amongst amongst other AA members.
Okay, okay.
Because it's a circle of trust.

SPEAKER_02 (44:35):
You know what I mean?
Yeah.
Are you a part of it?
No.
All right.

SPEAKER_01 (44:39):
Okay.
That might not have been funnyat all.
I don't know.
Daniel's maybe giving me somecourtesy laughs here.
Okay.
I thought that was pretty good.
Okay.
We'll we'll edit that for therecording.
Okay.
Um, mega backdoor Roth.
Okay.
Great question.
And that is something you wantto be making sure you are
hyper-focused on by year end.

(45:01):
A lot of our clients that domega backdoor Roth to do it with
their employer 401k, or maybeit's their spouse's 401k.
You can do it in a solo K aswell.
The mega backdoor Roth issomething you're going to do if
you're trying to get a lot ofmoney in.
You've already maxed out yourregular employee contributions.
You've gotten your match fromthe employer 401k where you
work, or this could be yourspouse's.

(45:22):
And you're like, hey, I've got30 grand in for my 401k through
the year, through my owncontributions, through the
match, I've got 30 grand in, butI still have another 40K to go
to get up to 70, but the companydoesn't match anymore.
And I can't put in any regularemployee contributions anymore.
What else can I do?
Well, you can do the megabackdoor Roth.
Okay.
The next thing you can do, over60% of 401k plans allow for

(45:46):
something called an after-taxemployee contribution.
This is a this is not adeductible contribution.
Okay.
This is not a Roth contribution.
It's an after-tax employeecontribution.
So let's say that I had alreadyput in 30 grand through the
year.
I have another 70, sorry, I haveanother 40K to go to get me to
the total 70K max that you canput in a 401k for 2025.

(46:09):
So I could drop 40 grand inafter-tax employee contributions
into the company 401k.
That money is not hostage in the401k.
You can roll after-tax employeecontributions out to a Roth IRA,
where that's a directed IRA or abrokerage IRA, doesn't matter.
But that is the mega backdoorRoth.

(46:30):
It essentially is enabled bydoing an after-tax employee
contribution, as long as yourplan allows for it.
Most of them do.
There's still some that don't.
You've got to do this by yearend because your plan
administrator and an employer401k at a job that you might
have is not going to let youexecute on this in 2026.
So we got to get this done now.
Now, again, this is not going toget withheld from a paycheck.

(46:51):
You might be thinking, well,Matt, my regular 401k
contributions, I had itscheduled out.
So it was withheld from mypaycheck and I was getting the
match, and yeah.
So how do I get this in now?
Most 401k providers allow you tosend money into the 401k.
It's not getting deducted fromyour paycheck.
You're ACHing, or if you'redoing it this time of year,
wiring the money to get it in asa contribution in for 2025.

(47:14):
Now, the rollout part to a RothIRA is what most people will do.
In a Mega Macdoor Roth, theconcept is why would I let that
money stay in my 401k where Ihave some target date funds or
some mutual funds?
I'd rather that money get out toa Roth IRA.
Now in 2014, the IRS put outsome guidance on this and said,

(47:36):
hey, after tax employeecontributions can leave the 401k
and they can get rolled directlyinto a Roth IRA, no conversion,
no Roth conversion, and they areRoth IRA dollars.
Now you never took a deductionon it.
That's because it's after tax.
Pre-tax would mean you took adeduction.
So it's after tax.
You didn't take a deduction toput the 40K in.

(47:58):
It has to hit the 401k in anafter tax bucket of dollars, and
then it can get rolled out to aRoth IRA account.
All right.
Now again, that's a December31st thing because your employer
401k, they think in terms ofwe've got to get everything done
by December 31st, and they do.
So you're not executing on themegaback to a Roth in an

(48:18):
employer 401k in 2026 for 2025contributions.
However, solo K owners, youdon't need to worry about it by
year end, okay?
Because you can get yourcontributions in later.
Now, if you're an S-corp owner,I'd still try to do this by
January because even yourafter-tax employee
contributions, your regularemployee contributions, these
are all going on your W-2 to berecorded properly.

(48:41):
Uh so don't be delaying on thisstrategy, even if you're a solo
K owner.
But that would be the megabackdoor Roth.
Um it requires these after-taxcontributions.
Check with your planadministrator on that.
Um the I've probably were I'veworked with a lot of clients
over the years on this.
Um, what I will say, the firstthing you're gonna encounter is

(49:04):
a lot of no's because that's theeasiest answer.
And the and and I know you knowsome people talk to so-and-so in
HR.
They don't know.
They don't know.
You know, okay.
You've got to go through andbreak through to a few people.
The first thing to ask for issay, I want a copy of the
summary plan description.
It's called SPD.
That will say what type ofcontributions are allowed.

(49:27):
There's usually a box forafter-tax employee contribution.
If that box is checked, thatmeans you can do it.
Okay.
And in fact, that's probably thefirst thing you should do is
say, hey, I want a copy of thesummary plan description.
It's typically available fromyour plan provider or whoever
the administrator is of yourplan.
And that'll give you the answerof whether it's allowed.
Then you got to go throughlogistics of doing it.

(49:49):
In a lot of bigger companies,this is kind of an executive
thing that a lot of them do.
So they will be used to it.
If it's a smaller or mid-sizedcompany and they haven't done
this yet, sometimes you might bethe pioneer doing it for the
first time and it will be alittle more painful.
Okay.
So just know this is not likethe 101 retirement account

(50:09):
contribution that your plantadministrator or HR department
does.
This is definitely advanced, um,but is a very viable strategy
and it's something very commonfor high income earners to
execute on.
So that's the mega backdoorRoth.
This is done in a 401k.
And those after-taxcontributions you drop in can
get rolled out to a Roth IRA,even though you're not 59 and a

(50:33):
half, even though you still workat that employer.
After tax employee contributionsare not hostage in the 401k
plan, all they have to becontributed there, but they can
get rolled out.
Okay, I'm hoping that madesense.
It made sense to me.
So if I lost you, well, it is myfault, but it is tricky.
We'll do it next year.
Yeah, if I lost you, it's anadvanced strategy.

(50:55):
Don't worry about it.
If you're like, Matt, I made alot of money.
Okay, I want to execute on this,I love Roth accounts, I want to
maximize this, great.
Get to our law firm, KQSlawyers, one of the tax lawyers
can consult you through this.
This is not something anyretirement account company is
going to be able to give youenough advice.
Now, if you've got a good CPA oraccount and you're fine, you'll
be okay.
Um, but if you're doing yourstuff on TurboTax or you know,

(51:18):
you're using Chat GPT to try tofigure this out, um stop, drop
and roll, and get someone whoknows what they're doing that
can walk you through thisbecause it's definitely more of
an advanced strategy.
So we're here to help.
If you need a solo case set upby a year end, a kids' Roth IRA
account, you want to pay yourkids through the business,
you've got to pay them byDecember 31st.
If you want a tax deduction foryour business, um, remember the

(51:42):
backdoor Roth IRA.
We can certainly help get thoseset up.
Any of these accounts, I mean,we're here.
We want to be a resource.
Daniel's, you know, you can booka call with Daniel.

SPEAKER_02 (51:50):
I'm here.
Matt, trust me, he brought mein.

SPEAKER_01 (51:52):
Yeah.
I mean, you know, so we want tomake sure we can help you.
Um, because this is one of thegreatest ways to grow and build
wealth using retirement accountsthat have tax-advantaged funds
in them, whether it's Rothaccount, growing and coming out,
no tax, or it's a traditionalaccount, you got a tax deduction
for it's growing tax deferred.
These are tax-advantagedaccounts.

(52:13):
There's$45 trillion in U.S.
retirement accounts.
It's been a staple way forpeople to grow and build wealth
in America.
And we let you invest it in whatyou want to invest in.
You want to buy a stock ormutual fund?
Knock yourself out.
But most clients here, they'reinvesting in real estate or a
private asset or crypto, a fund,whatever it is.
That's the um open architectureinvestment we allow here at

(52:33):
directed IRA.
Um, get over here to book acall, directed IRA.com slash
appointment.
Remember to use the promo codeHOLIDAY150.
That'll save you 150 bucks.
Daniel would love to talk toyou.

SPEAKER_02 (52:45):
I love talking to everybody.

SPEAKER_01 (52:48):
All right.
Any other final questions?
We got maybe one minute.

SPEAKER_02 (52:51):
Yeah, let's uh can I can I try and get as many as we
can and I'll just I'll stop you.
I'll be like, Matt, you'reyou're going into the weed.
Stop it.
Okay.
Uh can I tax, can a tax-deferredannuity I earned before I
participated in it in my defdefined contribution IRA be
converted over to myself-directed Roth?

SPEAKER_01 (53:10):
No.

SPEAKER_02 (53:10):
Next question.
Solo 401k, can the company,either a C or S Corp, take an
expense for tax purposes?

SPEAKER_01 (53:19):
The company's contributing to the 401k?

SPEAKER_02 (53:22):
Yeah, that's what I believe.

SPEAKER_01 (53:24):
If it's traditional dollars, so if the company match
that you did as traditionaldollars, actually let me say
this either way, the companytakes the tax deduction.
There's a new rule.
This is again secure 2.0.
This went to fact two years ago,actually, this one, where the
company can do a Roth match.
And in that case, the companydoes take a deduction, but
1099's you, so you pick theincome back up if you did

(53:46):
employer contributions that areRoth.
Generally speaking, though, ifthe company does traditional
contributions, they are takingan expense to that um
contribution.

SPEAKER_02 (53:56):
Okay.
Can I pay kids earned income in2025 if my rental properties are
not part of any business?

SPEAKER_01 (54:03):
Um, I don't know how they're not.
Your rental properties are gonnabe on your 1040 as a rental
property.
You have expenses, you can paypeople to work on the properties
and help manage them.
So that's where you would payyour kids if you have a rental
property.
That is a business.
Now, that's to make a Roth IRAcontribution form.
Yes.
Okay, we're not justifying asolo K.
It's not a business in terms oflike 401ks are you to in order

(54:27):
to do a solo 401k, you have tohave a business that provides
goods or services.
Rental real estate is rentalincome, but you can pay your
kids for services they'reworking on your properties to
get them earned income to do akid's Roth IRA account.
Okay, like I mowed the lawn atmy dad's duplex when I was a
kid.
I got 20 bucks for it.
That was pretty good.

(54:47):
Yeah.

SPEAKER_02 (54:47):
I got well, especially back then.
Whoa.
Exactly.
Soda was a nickel, right?

SPEAKER_01 (54:52):
Yeah.
So it went 20 bucks went a longway.
So it was a fight to who, youknow.
Now it took a day because youhad to get out on the other side
of town to go do it.
And then my dad was theredinking around at the property,
you know, all the time.
So dinosaurs moved real slowback then.
Yes.
So what I'm saying here is isthat work that's happening at
the rental property, you mayalready be paying your kid.

(55:14):
You might need to pay him morein order to make a meaningful
Roth contribution.

SPEAKER_02 (55:19):
And I think last one to wrap it up, is there a
minimum age for a kid's RothIRA?

SPEAKER_01 (55:23):
There's no minimum age, but they have to have
earned income.
So if I got like athree-year-old that has a Roth
IRA, I'm like, what did they do?
Okay.
I I did Roth IRAs for my kidsabout when they were 13.
And they would come, theyliterally came to my office
every weekend and then cleanedthe office for years.
Okay, my kids were the cleaningcrew.
My staff didn't love it, theydidn't hate it.

(55:45):
You know, it was cute.
They would come play office fora little bit too, and you know,
the the stapler would be in thewrong place on someone's desk.
But um, but I liked teachingthem how to work.
I would go do some work onSaturdays too.
It was a it was for many yearswe did that routine.
But I now had they now hadearned earned income and I was
paying them out of my business,taking an expense that reduced

(56:07):
my taxable income.
They now had earned income.
They didn't even file a 1040because they were below the
standard deduction.
And but they had justifiableearned income to make
contributions to a Roth IRA.
So I open up Roth IRAs for them.
So now some people will do it ata younger age, seven and eight,
but they've really got to beworking in the business.
And you can't just pay themseven grand, the max

(56:28):
contribution amount, unless theyreally did seven grand worth of
work.
But even if it's a couplethousand bucks, it's a great way
to like teach them investing,get them a couple grand if they
have worked in your business oron your rental properties,
wherever it may be, and um getthem started.

SPEAKER_02 (56:43):
Especially if you're already doing self-direction,
you can show them what it lookslike.
Exactly.
You can start helping them.
I mean, that's what Mark doeswith his kids.
I mean, they're older now, butyeah, exactly.

SPEAKER_01 (56:53):
And just teaching them the principle of investing
and growing and building wealth.
And I know one of the thingswe've all seen as investors and
savers is if you had a Roth IRAwhen you were 17 years old, you
and you know, now you're 60 andyou just put the minimum
contribution up, it'll be worthsix million dollars.
And that's true.
But most people read thatarticle and hear that and

(57:14):
understand that when they're 40.
And they're like, I need aDeLorean, some plutonium, and I
need to go back in time to go dothat.
But you can start now with yourkids.
Help them, give them a headstart.

SPEAKER_02 (57:25):
Don't make them be the 40-year-old that looked back
and says, I wish I would havedone this.
I wish I had this.

SPEAKER_01 (57:30):
Yeah, yeah.
Help them, you know.
So um, all right.
Well, that's it for us heretoday.
Thank you so much for tuning in.
Thanks for those that asked thequestions.
Thank you, Daniel, for um beingan amazing co-host over there.
He looks so good.
Look at that cinematographythere.
You look like you'd be onbetween two ferns.
Like Zach Galfinakis could beright next to him.

SPEAKER_02 (57:48):
A little bit skinnier, less beard, but yes.

SPEAKER_01 (57:50):
No, you're the guest.
You're the start.
Oh, yeah, yeah, yeah.
I'll take that one.
I'll take that one.
I'm not saying you look likeZach Galfinakis.
I'm saying, but you could be onthe show with him.

SPEAKER_02 (57:57):
Yeah, my other fern is missing.
He just can't see, but it'syeah.

SPEAKER_01 (58:01):
So, all right.
Thanks everybody.
Enjoy the holidays.
Uh thanks for being on.
See you next time.

SPEAKER_00 (58:06):
And thank you everyone for listening.

A quick disclaimer and reminder: this presentation does not (58:08):
undefined
constitute an attorney or CPAclient relationship.
And it is always in your bestinterest to consult competent
legal and tax professionals whenconducting your own personal
transactions.

SPEAKER_01 (58:23):
We also want to make sure you know this is not
investment advice or financialadvice.
We're just trying to give youeducation, ideas, and strategies
you can take to yourprofessionals or conduct your
own research on.
We'll see you next time.