- Hi, Clint Coons here with Anderson Business Advisors.
And in this video, I'm gonna teach you
How To Put $57,000 A Year Into A Roth IRA
so you can live a tax free retirement.
Okay, let's get started.
(upbeat music)
Now here's the thing.
If you go to your financial planner and you say,
"I saw this guy in the internet and he told me I can put
"$57,000 a year into a Roth IRA."
What is he gonna tell you?
He's gonna tell you, the guy you listen to
is nuts and he doesn't know what he's talking about.
Well, what I'm gonna tell you is
the person you're talking to
doesn't know what he's talking about.
You know why?
Cause they haven't figured out how to do it.
It's actually quite simple
if you have the right tools in place,
it's just like anything we do.
If you're investing in real estate
and you have the right tools in place,
you can do more with your investing,
you can look better to lenders, you can avoid dealer status
you can make sure you have real estate professional status.
It's all on the entities you choose to create for yourself
and you're setting yourself up to achieve
the desired results.
Now, a lot of people don't understand this
and so they miss the whole entity
formation component of real estate investing.
They failed to treat it like a business,
and they're gonna miss out on what I'm about to show you.
So you know that you can put inside a Roth IRA 6K let's say
on an annual basis.
But if you have a 401k, you can put in $19,000.
So many people operate under this assumption right here.
The most I can fund into a Roth type account
is gonna be through my IRA, I'm gonna have a Roth IRA.
That's gonna be my 6K I'm gonna put in there.
I'm gonna do a Roth 401k, and that's gonna be 19K
then imma put in there.
Now I know there's higher limits based upon
how many gray hairs you have,
but we're not gonna cover that right now.
But I'm proposing you put in $57,000
and every time I talk about this
people start scratching their head then go
"I've never heard of this before
"I don't think it's possible"
but they're open to it.
So here's what you need to do.
First thing you need to do is create your very own
solo 401K okay?
So create a solo 401k like this.
Now, when you set it up, this isn't your
run of the mill solo 401k understand that 401k plans,
they can be drafted like this where you have
all these provisions way out here
that you can do with your plan, or it can be very narrow.
And most of us operate with those very narrow plans
that our employer provides and they don't give us
all the bells and whistles that are available.
Okay, it's like buying the basic car
versus the luxury version.
Your employer doesn't want to provide you the luxury version
with all the sensors and the DVD player
and the massaging seats and whatever else they have now
because of the fact that it's too expensive,
they want to give you basics.
And that's what you get with the basic 401k
so they don't have provisions in there
that allow you to make different types of contributions
to your plan.
But when you have a plan that's custom drafted for you,
like what we do here at Anderson,
we start with this approach as long as it's just you,
your spouse, and you don't have any other employees
we have to deal with, let's go to the fringes,
let's give you everything that's available out there.
Because by doing that and putting the plans together
in that way, it then opens up the possibilities
for you to make this higher contribution,
to create that tax free retirement.
And the way it's done is as follows,
first you have to understand that a solo 401k solo,
solo 401k has four different buckets for contributions
that can go into it.
This is your Roth bucket, this is your traditional
401k bucket, this is your employer bucket
that means the employer can put money into
your plan for you none of you have ever experienced
this probably before, because employers don't do it
it's too expensive.
And this is your after tax bucket over here.
Of these four buckets, this bucket right here,
this bucket right here, and this bucket right here,
all three of these buckets are employee driven, alright?
Employee makes contributions to those.
The only one that's different is this bucket right here
this comes from the employer, employers funding.
So amongst all these buckets, your total contributions
for the year can not exceed $57,000
that's the total we can't go above that.
So that's what I'm working with here.
Now, here's how we get to $57,000.
First off, you need to be making money
outside of your current employer.
So you have to have some other type of
active business income,
if you don't have active business income,
you can stop right here.
Unless of course you want to learn
so when you do have active business income
what you could be doing with it.
So let's assume that I have this C corporation
set up over here and I'm an employee of my company,
my company it could be any line of business
it does not matter, you can't have employees here.
So I have my company set up and my company is paying me
$60,000 a year in salary, so I'm pulling out $60,000.
Now it doesn't have to be a company
it can be a sole proprietor as well.
So if you're pulling out 60K as a sole proprietor
it doesn't matter I just want to see 60K.
So of this 60K I can elect to make a contribution
non-deductible to my Roth bucket of my 401k.
So I'll put in $19,000 into my Roth bucket.
Okay, so that money goes in there
I don't get a deduction for it.
So now I have left after I make that $19,000 contribution,
I'm gonna have $51,000 left or no excuse me,
$41,000 left in my name.
So what I wanna do then is look at how do I get
more money into my plan?
Well, have an option, my employer can put money
in my own business I can make a contribution for myself
to bring me up to the 57,000.
But the problem, if I did that, although it benefits me
because it goes into my solo 401k for my benefit,
when the employer makes a contribution,
just like your normal 401k contribution
that you would put in, any gains off of that
will be taxable to you when you take it out,
With the Roth, *YOU ARE TAXED GOING IN
and you won't get tax going out
that's how we live that tax free retirement.
So that's a problem and I may not want to do that
because I want tax free money.
I didn't make a contribution to my 401k side,
because again, I want tax free money when I retire.
So I forego the current tax deduction
in order to get tax free money in the future.
So this bucket I decided to ignore,
I ignore this bucket because I contributed to the Roth
that leaves me with my after-tax bucket that's left here.
So what the after tax bucket,
this comes from you the employee
and the rules inside of the 401k plan states that,
"if there's any amounts left over
"that you wanna contribute to push you up to that 57,000
go ahead and do it yourself it goes in after tax.
So in order to get there, I take 19K
I can contribute an additional $38,000 to my plan
in order to get up to that 57K right?
So I'll take that 38,000
and I'll make a contribution to that after tax bucket.
Now here's how that after tax bucket works,
if you put $38,000 in and you leave it there in that bucket
and so this is all done internally
when I talk about buckets, it's just on your spreadsheet,
how you keep track of all this
cause you're the administrator of your own plan.
You put that money in and that 38,000 grows
to a hundred thousand dollars by the time you retire.
So you have gain inside of that plan of 62K.
When you pull out that $62,000,
that's gonna be taxable to you.
The original 38 will not be taxable to you
because that went in after tax.
Now I can tell you, a lot of people make this mistake
they put money into that bucket
and they just leave it there.
And that is the biggest mistake you can make
cause you're gonna be missing out
on one of the greatest opportunities
to building a tax free retirement.
Because once you've put that money into the bucket,
what you should do then is take those funds
and roll them over into the Roth bucket.
Do a Roth rollover inside of your plan
or conversion that...
It's not a conversion, it's a rollover
you can roll from here to here.
So you see what I just did.
I originally accounted for it as an after tax contribution
then I treated it as an employee role
from the after tax bucket into the Roth bucket.
Now I have $57,000 sitting in my Roth
bucket in my 401k plan.
All of the gains that I earn off that money
will be tax-free to me in the future.
So don't let the money sit here, move it over there.
This is how you build a tax free retirement
by making contributions of $57,000 a year,
while the financial planner is telling his client,
"the most you can contribute to 6K
"or the most you can put in is $19,000."
They're gonna go,
they're gonna put that money in and they're never
gonna be able to get to where you're gonna be in 10 years
in 10 years, you'll have $570,000.
If all you did was set your money aside in your Roth IRA,
you'd have 60.
Where do you want to be?
Now, the last thing I'd leave you with here,
when you're a little bit skeptical on this,
and you're wondering Clint, I don't believe
this sounds too good to be true.
I'll tell you this, the IRS supports us,
in fact, they have it on their website
that you can actually do this inside of your 401k plan.
If get this, your 401k plan allows it.
So you got to have a 401k plan drafted
that allows this type of contribution.
One other thing, if you're thinking,
I'm not making 60K a year.
I've got a little job set up
and it's only paying me a $40,000 a year.
Okay, fine your limits 57,000 dumped the whole 40 in
that's better than six.
This is how we can do it
and you can put that money there,
you can put it into real estate,
and you do so much more with it.
This is a $57,000 Roth contribution strategy
it's so many people are missing out on it's available.
Take advantage of it, get your solo 401k plan set up,
call us we can help you establish this plan,
what you don't want to do though,
is go with someone else that gives the plans away for free
cause many times this is not permitted inside of the plan
because of the way they drafted.
My name's Clint Coons with Anderson Business Advisors
and I hope you enjoyed this video.
(upbeat music)