WCI #245: The Backdoor Roth Lives On

This is the White Coat Investor Podcast where we help those who wear the white coat get a fair shake on Wall Street. We've been helping doctors and other high income professionals stop doing dumb things with their money since 2011. Here is your host, Dr. Jim Dali. This is White Coat Investor podcast 245. The BackDoor Roth lives on. Welcome back to the podcast. This is the first one we're recording in 2022. It's been a heck of a year. Last year made twice as many podcasts as we normally do. Now that we've been doing the Milestones to Millionaire podcasts. By the way, if you'd like to be featured on that, you can apply@whitecoatinvestor.com Milestones. But after having recorded, what, 104 podcasts last year, we're excited and back and looking forward to having another great podcast. 104 podcast episodes this year, two for each week, the Monday Milestones to Millionaire podcast as well as the one that drops on Thursday, which is the classic White Coat Investor podcast. No more wading through dozens of books at the library, scrolling through hundreds of blog posts on dozens of blogs, or checking in daily with online forums, trying to gain a financial education the way the hobbyists do for a fraction of the price of hiring a professional financial planner. The the Fire your financial advisor online course will take you from feeling anxious and having no plan to having a written financial plan. You can follow the rest of your investing career as a professional and a retiree. This course is the material that should have been taught to you in college, medical school or residency, but never was. Fire your financial advisor also has a version eligible for CME credit. Get your financial life in order today. Go to whitecoatinvestor.com courses to sign up. You can do this and the White Coat Investor can help. All right. We just got back from Greece. We took the kids to Greece for the holidays. It's off season in Greece. Most people there vacation during the spring, summer and fall. We decided to go in the winter. Nice thing about that is it made social distancing really easy. In fact, we had the Acropolis to ourselves when we went up there first thing in the morning wearing ski hats and gloves. It was a nice experience though. One of my favorite parts of it was going to Meteora. If you've ever been there, it's a pretty cool place where they built a bunch of monasteries in the 1300s, 1400s, 1500s on top of these peaks. I'm amazed at the first monk that got up there, but for hundreds of years afterward. The only way anybody got into those monasteries was either by going up a rope ladder or by being hauled up in a net using a winch. They actually put staircases in in the 1920s, but at that point, I think they realized that they weren't as safe as they used to be. Now that air power existed. At any rate. Very cool place. Beautiful, beautiful monasteries on top of these craggy peaks, really pillars of stone. In Meteora, we spent a little bit of time in the islands. Wasn't quite the balmy experience I think a lot of people have in the Greek islands. But it's still wonderful to again be there in the off season and be able to enjoy that without too many other people around. We're traveling again. I know a lot of people are not out of concern for Covid, but at a certain point, it seems to me that Covid is not going away. And if there is something that is less risky than going in and seeing COVID positive patients that are coughing all over their room, I'm going ahead and doing it. At this point, our whole family has been vaccinated. Everybody but the youngest one has had a booster shot. We have masks. We wear them when it's appropriate. And. And at a certain point, you gotta get back to life, it seems like. So take appropriate cautions, get your vaccinations, wear your masks, and find moderation in all things so you can get back to life. All right, we have a survey. We want you to fill it out. We want your feedback so we can make the white coat investor better. And without knowing what you guys are enjoying, what you'd like to see, we can't do that as effectively as we can with. With your help. So please fill out our survey. You can do so@whitecoatinvestor.com survey. We're going to bribe you to do it. We're going to have a drawing for 20 people to win WCI T shirts that fill them out. And we're going to give away one of our online courses, the CFE Las Vegas course that's good for like 50 hours of material, qualifies for CME credit. It's a great value. Please fill out the survey. It'll only take you a few minutes. Provides us some valuable information to help serve you better and gives you a chance to win some cool stuff. All right, let's listen to our first question off the speak pipe. This is going to be a question we're going to talk about for a while because all of you have been talking about it. For a while. Let's take a listen. Hey Jim, this is Greg from the Midwest. One more quick question for you on a topic that I'm sure you'll be discussing frequently this year, which is the backdoor Roth ira. Now that Congress has kind of pushed off making a determination on whether they will or will not squash the backdoor Roth IRA until 2022, do you think it's safe for me to make my backdoor Roth contribution for my spouse and myself for the year 2022, or would you wait until we hear more from Congress and do this closer to the middle of the end of the year? Thanks so much for your advice on this. All right, let's talk about this. I sent out an email on the 1st of the year talking all about this. It's in the White Coat Investor Monthly newsletter. This is a free newsletter. By the way, if you're not signed up for this, you should totally sign up. Whitecodeinvestor.com Newsletter is where you sign up and I talk all about this information Now. People are going crazy on social media. The Facebook group, the moderators actually had to start closing the threads asking this question because it was being asked five times a day. It was overrunning the entire forum. But obviously lots of people thinking about this, lots of people talking about this. Let me give you the bottom line. Yes, it's safe to do your backdoor Roth ira. Now let's get into some of the details. Congress has spent the last few months fighting about infrastructure and budget reconciliation bills. Republicans and moderate Democrats were successful in that they were able to break these two bills into two bills. The progressive Democrats were trying to lump it all into one bill, hopefully to try to increase the likelihood of it passing. But they broke it into two bills. They passed the infrastructure bill that was passed in a bipartisan manner with support from both parties, and most agreed that that was a pretty good bill. However, the other part of the bill, which included a lot of the social spending, there was a great deal of disagreement on. In fact, there wasn't a single Republican that was willing to support it and in fact not all of the Democrats were willing to support it. Now that didn't matter to have a few defections in the House. They were still able to pass the bill through the House. However, when it got to the Senate, the fact that a couple of Democrats had some major problems with the bill spelled its doom. Remember, the Senate right Now is split 50, 50. It's 50 Republicans, 50 Democrats with a tie breaking vote for the Vice President. However, basically that means if any Democrat says no to the bill, it's not going to pass. Well, there was a very prominent Democrat from West Virginia by the name of Joe Manchin who said, I'm not passing this bill. I don't think it's a good bill. I think it needs more work. And I, et cetera, between him and Kyrsten Sinema of Arizona, it didn't pass. It was a major setback for the administration. And the reason that it didn't pass, aside from those two senators being against it, was that they were trying to pass it through budget reconciliation. Now, budget reconciliation is a process where, by the Senate rules, the bill has to be revenue neutral. So whatever additional expenses you put in there, you also have to raise taxes by a supposedly equal amount. That's a tall order for such a large spending bill. And so that caused him to really not like it. Part of it was basically Senator Manchin was correctly pointing out that the bill really wasn't going to be revenue neutral. It was a bunch of sleight of hand tricks to try to pay for it. Now, if they hadn't tried to pass it through budget reconciliation, then the it could have been filibustered, meaning that Republicans could have stopped the bill. And so that was their only option, was to pass it through this budget reconciliation process without making significant changes to the bill. The Trump administration passed a pretty significant law through budget reconciliation. The 2018 tax cuts were passed through budget reconciliation, but it was not quite as closely divided in the Senate back then. I guess President Biden thought, and his administration thought maybe they could get this through. It did not work out. Now they're kind of spinning it that, hey, you know, we're just going to get started on it again in the first couple months of 2022 and get this thing done. But there's a lot of people skeptical out there that because they didn't get it done in 2021, they're probably not going to get it done at all, at least in any sort of similar form to what it was when they were talking about it in the Senate late last year. Now, Congress can always do whatever it wants. It can pass this bill in 2022. I think it's less likely that it's going to be passed at all. In fact, I'd give it probably a 75% chance that this bill doesn't pass at all. If it does pass, it's most likely that they're going to put the tax law changes off until 2023. It's just the cleanest way to do it right to start it on January 1, 2023, they might make it so that those tax changes happen as soon as the bill passes. So if it passes in March or April or May or whatever, maybe that's when these tax changes take place. But most likely they push it off to the end of the year. It's very unlikely that they're going to make these tax law changes retroactive to the first of 2022. It could happen. Congress can do whatever it wants. They have passed retroactive taxes in the past, but I'd give that a 1% chance. I just don't see that happening. And so under any situation other than that retroactive change to bring it back to start on the 1st of January, 2022, the best thing to do with your backdoor Roths, et cetera, is to do them now. That way, if the law changes, you're good. If the law doesn't change, you're good. Right. And if the law changes such that it becomes illegal at mid year, you'll be really glad you did it early in the year. But if they do it retroactively such that you can't do it in 2022, despite the fact that they don't pass the law till halfway through 2022, then they've also got to provide another change to the law, which is to allow you to undo it. Because right now, under current law, you cannot recharacterize a Roth conversion, which is an important step in the backdoor Roth IRA process. And so they would have to change that law to allow you, those of us who have already done it, to undo it. I just don't see that happening. I don't think it's going to happen. So if you like doing backdoor Roth IRAs, if you do it every year, nothing's changed. The law has not changed. You can still do a backdoor Roth IRA for yourself and your spouse. And so I've already started mine. By the time you hear this, I'm recording this on the 3rd of January. By the time you hear this next week, mine's going to be complete. Another thing that that tax law was going to change was to get rid of nega backdoor Roth IRAs, which is something that Katie and I have been doing the last few years. Well, that didn't. The law didn't pass, and so that's still legal too. So we're doing that this month as well for the same reason. Okay, now here's the promise I'll make to you. If it changes retroactively, I Think this is very unlikely, but if it changes retroactively, I will do a blog post that walks you through step by step, how to undo your backdoor Roth ira and you can do it together with me. Otherwise, I would not give any fear to going ahead and doing your backdoor Roth ira. I don't see any need to wait a few months to see what Congress does. I think there's risk that they could pass it and outlaw the backdoor Roth IRA at midyear. If you wait, you might miss the opportunity to do it for 2022. I think that risk is a lot higher than the risk of it being retroactively implemented to the 1st of January. All right, hope that's helpful to you. Anyway, what they were talking about in the bill that did not pass was making it so that you cannot do conversions of after tax money, which affects both the backdoor Roth IRA process as well as the mega backdoor Roth IRA process. They're also going to outlaw all Roth conversions for anybody making $400,000 or more. There were a lot of other changes in it. I was grateful for some of them. The talk about changing the estate tax exemption was enough to get me off my duff to go do some serious estate planning. But hopefully you didn't do anything out of fear of this bill passing that you now regret. Okay, hope that's helpful. As far as the backdoor Roth ira, I'm doing mine. I think most white code investors are doing theirs. I would not necessarily wait to do it. If they make it retroactively illegal, I will show you how to undo it. All right, let's go on to our next question here. This one is also a good one that I talked about in that recent newsletter. Seriously, if you're not subscribed to these newsletters, you should be. Let's take a listen. Hey, Dr. Dali, this is Ryan from Arizona. Thanks for taking my question. I just want to know your opinion on if I should refinance my student loans now to potentially capture a low interest rate or wait until January 30th, you know, in case the government decides to pause the student loan interest rates again. I'm definitely not going for PSLF and plan to pay these loans off as soon as possible. Thank you for all you do and Merry Christmas to everyone. All right, obviously this one came in a few weeks ago because lo and behold, the Biden administration did extend the student loan holiday. It's had another three month extension. So instead of the student loan holiday ending on January 31st, it now ends on April 31st. So you will start having to make payments on your federal student loans in May and interest will start accruing on federal student loans in May under current law. Will it be extended again? I have no idea. In fact, I have been wrong more times than I've been right, speculating about whether they're going to extend this student loan holiday. I mean, it's been extended now a full two years. There are white coat investors who are going to get public service loan forgiveness without ever having made a real payment. As an attending physician, it's pretty impressive if you think about, you know, you don't really pay much the first year because you have income based on your Ms. Four year, and then you spend, say five years in residency, a couple years in fellowship. By the time you come out, you've got eight years of payments already. Then you got two years of student loan holiday payments and you get public service loan forgiveness. It's a pretty good deal. So for anybody going for public service loan forgiveness, this has been a massive, massive boon. It's been great for them. They love it. The problem is maybe it's not the best policy out there. I mean, if you think about who benefits from the student loan holiday, it's the same people that benefit from widespread mass forgiveness of student loans, right? Educated people that generally have good jobs and good incomes. Whether that's good policy or not, I'll leave up to you. But it is a problem with this student loan holiday continual extension thing. However, for a lot of white coat investors, this is a very good thing. You're saving thousands in interest. You're able to use your money for other things. Maybe you're still qualifying for public service loan forgiveness despite not actually making any real payments. There's no doubt this is good for many of our readers. So the right answer to this question that was given to us back in December was, yeah, you should wait because they're going to extend it again, right? And so they did extend it. Are they going to extend it again? I think it's quite reasonable that they might. And the reason why is it's an election year. It's an election year. So it wouldn't surprise me at all to see them extend this until after the election. Right? To say, hey, look what our party's doing for you. Vote for us. Right? Wouldn't surprise me at all. Do I think it's good policy? Not really. But nobody really asks my opinion about stuff like this, so you might as well take advantage while you can. Now, there is a dilemma here, though. The dilemma is that inflation is up. You may have noticed this inflation is up almost a 7% right now. I don't see any reason why in the next few months it won't go even higher. Now, I'm hoping by the end of the year it's trending down. But the point is, the Federal Reserve has finally decided they're going to have to do something about this inflation. So they've announced that they're going to be raising interest rates in both 2022 and 2023. They're also ending their asset purchases more rapidly than they had previously planned. So estimates right now are that interest rates are going to be 0.6% higher at the end of 2022 than at the beginning. What does that mean for you? Well, that means if you wait until May to refinance your student loans, you're likely going to get a higher interest rate than someone who refinances their student loans in January. So this is a dilemma. Are a few more months of 0% worth paying a higher rate in the long run? Well, it basically comes down to the long run. How long is the long run? Now, this obviously only applies to those who aren't going for forgiveness programs. If you're going for public service loan forgiveness, don't refinance your loans. If for some reason you're going for the much less attractive IDR forgiveness programs, don't refinance your loans. But if you're expected to refinance them and pay them off eventually, your question is whether you should refinance now or refinance later. Well, the big risk of refinancing now is not only do you lose a few months of 0% and have to start making payments, which affects your cash flow, but if that gets extended longer or, heaven forbid, a mass forgiveness program comes into place, well, you miss out on that. The downside of holding on to federal loans for now and not refinancing is when you do refinance them, you might be paying 0.6% or 2% more than you are right now. And that has a real effect. So you're basically weighing how long you're going to be making payments. If you're going to be making payments for 10 more years, you might be better off refinancing now and getting that lower rate. Truly been making payments for 18 months. Well, getting three or four more months at 0% is probably going to be better off than having 18 months at a little bit lower rate. So you got to run the numbers yourself. Take a guess on what they're going to do and make a decision. I think if it was me, I would probably wait to refinance my federal loans until at least you get close to the May 1 deadline and it looks more clear whether they're going to extend it again again or not. Now obviously if you have private student loans, refinance them early and often. Make sure you go through our affiliate links. You'll find those in the show notes. You can also go to the main White Coat investor website, very prominent there. It's the first tab. Under our recommended tab, not only do you get hundreds of dollars of cash back that you wouldn't get if you went directly to the company, you get the same low interest rates, same service. And if you refinance from now through May 1st, we're going to throw in our flagship online course, fire your financial advisor. So you get another $800 value absolutely free. So you put that together with the cash back and you're getting more than $1,000 for going through our links that you wouldn't get if you went directly to the refinancing companies. So good luck with your decision about what to do with that dilemma. Those are the factors to weigh. If you need some help running the numbers. By the way, make sure you contact andrewtudentloanadvice.com he's been really busy the last few weeks with all kinds of people looking at their New Year's resolutions as well as this upcoming ending of the student loan holiday. So make sure you book your consultation in advance there or you may find that you have to wait a few more weeks to get it done. All right, let's talk about sign on bonuses. This is our next question coming in. This one from Dave. Hi Jim, this is Dave from the Midwest. I'm a general surgery resident who is getting ready to graduate and have accepted a position in a neighboring state. Part of the recruitment package included a pretty substantial sign on bonus and my initial instinct was to ask for them to delay funding this until after the new year. That way this year I would still be making the low resident income and I could continue to make my Roth contributions. But I was wondering about any advice that you could give about the timing of accepting, such as sign on bonus and also advice that you can give to residents who are getting ready to make the transition from a resident income to attending income and the tax implications that we should be aware of. Thank you for all that you do. Hey, I appreciate you guys leaving questions on the speakpipe. They make for great content on the podcast. If you want to get your questions on here? You can go to whitecoatinvestor.com speakpipe and we'll get them on. However, realize there's a little bit of a delay in between the time you leave us a question on the speak pipe and when you actually hear it on the podcast, right? It takes some time to produce the podcast. Sometimes we're producing them four or even six weeks in advance and so you may not get your answer for a while if you leave it on the speak pipe. If you have something that's really timely and you're looking for help from me on it, you might try sending an email editorwhitecoatinvestor.com but let's answer this question anyway. It may not matter today, but it probably does matter to somebody else and it'll matter next year anyway. Here's the deal with sign on bonuses. As a general rule, when people want to give you money, you should try to get the money as soon as possible. Then you can put it to work. You can use it to pay off your debts. You can use it to bump up your emergency fund. You can use it to max out retirement accounts. You can get it in the market and get it earning money. So getting money earlier is almost always a good thing. The only time it might not be a good thing is if your tax bracket is going to go up or if some other way you're able to delay the tax payment on it. But in this sort of a situation where you're going from a low tax bracket as a resident to a tax bracket that's higher as an attending, you want to get it in the previous year, right? So you pay a lower percentage of tax on that bonus. So if someone's offering you a sign on bonus, try to get it in that year where you don't have any attending income, right? It'll be taxed much lower. Now remember, some of these bonuses, they withhold some money from it, right? Sometimes 25% is the number they withhold. That's not your tax that you owe on it, though. You'll owe tax according to your tax brackets. Just because they withhold something doesn't mean you're going to have to pay that. You may get it back at the time when you file your taxes as a tax refund. But in general, you want to bring expenses forward to lower your tax bill. You want to move income into the year. Sometimes you want to push it off if your tax bracket is exactly the same, and that helps you to delay paying taxes on it. But for the most part, someone coming out of training, you want it in the earlier year where your tax rate is lower. Hope that's helpful. All right, those of you out there on the front lines, nobody said thank you today. Let me be the first. It is not an easy job you do. That's why they pay you so well to do it. And a lot of you aren't even getting paid that well to do it. You're still in residency or fellowship and you're just getting hammered right now. I know emergency departments everywhere in the country are boarding patients much more than they normally do and being run ragged. While the docs have it bad, I think the nurses have it even worse right now. I can't believe how many nurses are quitting or going to do travel nursing bouncing around because they can get paid more as a travel nurse than they can as a, you know, regular job. So it makes for very stressful moments at work these days. No beds, you know, everybody doing more than they expected to have to do. So it's difficult. Thank you for what you do. Stay safe out there. Our next question comes out of my email box. I'm an employed physician with income that typically places me in the highest marginal tax bracket due to the nature of my work as a W2 employee of a health system. My savings plan has always been fairly straightforward. Contribute the max to the employer sponsor 401. The plan did allow for an additional $24,000 in pre tax contribution called tier 9 on top of the standard 19.5 thousand employee contribution. As an aside, I'm not sure if this was considered an employer contribution or what, but this wasn't really employer money. They just reduced my negotiated salary by 24,000 and paid me that amount into the 401 instead. I'm not sure what to make of that. It sounds like an employer profit sharing kind of match to me. It's essentially the same thing I do with my profit sharing contributions from my partnership. The questioner says now this is changing. The old 401 is going away. The new plan does seem a little better as it allows for traditional Roth and after tax contributions and it allows in plan conversions. That's great. Assuming Congress doesn't change the laws on mega backdoor Roths, you'll be able to do that going forward. It also provides a $0.40 per dollar match, which is something the old plan did not offer. It's great. It's always nice to get a match. The rep told me that in order to maximize the match, 8% of salary with a max of $305,000. For the calculation purposes, I need to contribute $24,400, which is obviously above the $20,500 limit for 2022. In order to circumvent this, he said I should make an additional after tax contribution of $3,900 to the plan to get all the match. Does this make sense to you? Sure. They're going to match after tax contributions. It's a little weird, but you know, if that's what it takes to get the match, that's part of your salary, you want to get that. If I'm doing the math, it seems that this would earn me another $1,500 per year. So it seems to be worthwhile. Although I couldn't help but feel like it was some kind of sales pitch. Plan does have a fidelity S&P 500 fund where I keep 100% of my funds. It doesn't seem like sales pitch to me. I mean, if you can get an extra match, I'd take it. If you can put more into the plan, I'd take it. That's usually a good thing. I mean, assuming the plan doesn't have some terrible expenses or something. But even then, most of the time it's worth using a 401 because your money won't be in there that long. You may change jobs or you may roll it out to an IRA or whatever. Okay, the second question is, because they're doing away with the Tier IX plan for additional savings, my employer will now offer a defined contribution plan. It is a non qualified plan called a 409 where the money is held in a rabbi trust. Now I've listened to nearly every one of your podcasts and read the blog since its inception. I'm not sure I'd ever heard either of these before. Would love to hear your thoughts. Tentatively. I'm planning on contributing reparably the same amount, but my skip and just use a taxable account instead. Looking to you for advice once again. You know it's a little bit tricky when you start getting these odd plans, you know, when they're non qualified it means you gotta read the details very carefully. When it's a new type of plan like a 401A or whatever where the money gets put in a rabbi trust. The devil is in the details. A lot of times these plans end up being some sort of weird whole life insurance or variable life insurance plan plan that somebody's talked to your employer into offering you. In those situations, it really depends on how much of it your employer is paying for and how much of it you've got to pay for it. So you got to get the plan documents, you got to read them, you got to understand how the thing works. You need to understand the expenses, you need to understand the available investments. You need to understand if it is your money or if it is someone else's money. Right? Is it the employer money or is it your money? Because in some situations, that's an asset protection concern. If your employer goes bankrupt, they can get that money. That's the employer's money. Still, if you get sued, you know, most of the time in a qualified plan, that money's protected in most states. But you got to look at your state's asset protection laws as well. But also important is to look at the distribution options for that plan. If they're terrible, like you got to take all the money out as you leave the employer, you have to take it all out at once. And you may not want to use the plan, but otherwise, if it's a reasonable plan with reasonable distribution options, reasonable investments, reasonable expenses, go ahead and use it and take advantage of that benefit. Hope that's helpful. Without seeing more details of this 409, the Rabbi Trust, et cetera, then it's a little hard to say whether you should use it or not. If you want to look up more on that, you can look up section 409 of the tax code. It talks about basically non qualified deferred compensation compensation plans. All right, let's do our quote of the day. This one comes from Eleanor Roosevelt who said it takes as much energy to wish as it does to plan. If you need a plan, get a plan in place for your finances. I'm amazed how many doctors out there do not have any sort of written financial plan. It's not that hard put together. If you don't want to hire a financial advisor to help you, you don't want to pay those thousands of dollars, consider taking our fire your financial advisor online. Course it's about 800 bucks, but by the time you finish it, you will have a financial plan that you have written and that you understand that you can follow to investment success. You can get more details for that on the main website. All right, let's take a listen from Robert. He's got a great question on the Speak pipe about super savers. Jim, there have been many times on the podcast where you have mentioned how certain strategies might not apply to super savers. At what point do you consider someone a super saver? How are the strategies different? I've Been blessed to work myself into a position where I'm 39, debt free, and can invest an additional 300 to 400,000 a year in addition to the 57,000 in my 401k. Thanks for your dedication to helping professionals not do dumb stuff with their money. All right, Robert, you definitely qualify as a super saver, but there's no cutoff here where somebody becomes a super saver. The concept we're talking about here most of the time is whether you should do Roth 401 contributions or traditional tax deferred 401 contributions. A typical physician in their peak earning years is going to want to do tax deferred contributions. And the reason why is that you get that tax deduction when you put the money in at a very high rate, at your marginal tax rate during your highest income years. And then when you take that money out in retirement, you're able to use it to fill the brackets some. It comes out maybe at 0%, 10%, 12%, 22%, et cetera. And you can fill the brackets. And so you put the money in, you might save 37%. You take the money out and maybe you pay 20%. And that's a winning strategy. However, if you save so much money or you have so much other retirement income that you're still going to be in the top bracket in retirement, then this might not apply to you. You may be better off actually making Roth contributions even during your peak earnings years. Now, wherever that additional income comes from in retirement to fill those brackets, whether it comes from rents from real estate properties, whether that comes from a huge tax deferred account, whether it comes from a working spouse, whatever it comes from, if it's enough that you're still in high tax brackets when you're taking that money out, then you qualify as a super saver. But there's not any exact cutoff of that amount. But if you think about it, we're generally talking about people with IRAs that are bigger than $5 million. If you think about the RMD at age 72, it's something like 3.8%. And so if you got a $5 million IRA and you're taking out your RMD at 72, that's less than $200,000, okay? That's not enough to get you into the top tax brackets. If that's your only income, you're still going to be taking money out at moderate tax brackets. So if you're putting it in at 35 or 37% and you're taking it out at 22, 24%, you're not a super saver. Okay? And don't take that wrong. Most people aren't super savers. But it wouldn't be smart for you to be doing Roth 401 contributions. But if you got five or six rental properties that are paying you several hundred thousand dollars in income every year, and you got this big, huge traditional IRA and you got a big, huge taxable account spitting out all these dividends, then yeah, you're a super saver and you're going to be in a high tax bracket. And you might want to consider doing at least some Roth 401 contributions during your peak earnings years. Now, are there other things that apply? Sure. When you have a lot of money, you don't care as much about certain things, like your investment return. You might care more about asset protection than you do about your investment return. And so you may do some things that give you additional asset protection, even if they cost you more in taxes or they cost you more in your investment return. You may also want to be looking at estate planning issues. If you have so much money that you're going to have an estate tax problem right now that's in a state of more than 24 million million when you die if you're married, 12 million if you're not married, you may want to make some other changes as well. Super savers often have estate tax problems. But the main thing I'm talking about when I say super savers should be careful, we're talking about Roth versus traditional 401 contributions. We're not talking about IRAs. Right. Because almost everybody listening to this can't make direct Roth IRA contributions and they can't deduct traditional IRA contributions. So the right answer for most white coat investors for IRAs is to do a backdoor Roth IRA. But as far as the 401k, it's more of a dilemma for some people. Hope that's helpful to you. No more wading through dozens of books at the library, scrolling through hundreds of blog posts on dozens of blogs, or checking in daily with online forums, trying to gain a financial education the way the hobbyists do, for a fraction of the price of hiring a professional financial planner. The fire your financial advisor online course will take you from feeling anxious and having no plan to having a written financial plan. You can follow the rest of your investing career as a professional and a retiree. This course is the material that should have been taught to you in college, medical school, or residency, but never was. Fire your financial advisor also has a version eligible for CME credit. Get your financial life in order today. Go to whitecoatinvestor.com courses to sign up. You can do this and the White Coat Investor can help. Hey, it's actually not too late to come to WCICON 22. We still have slots available. By the time you hear this, you won't be able to stay in our room block. Our room block will have been released. It was released last week. You can book a room at the hotel if they have room available, but they'll be charging you a higher price. But you could stay off site. You can actually register for in person conference up until January 24th. You can register for virtual registration until the last day of the conference February 12th. This is going to be February 9th through 12th, 2022. Hundreds of white coat investors. You count the virtual people as well. It's well over 1,000 white coat investors are coming to this conference. It's going to be awesome. If you'd like to register whitecoatinvestor.com WCICON22 thanks to those of you who have told your friends about the podcast or better yet, left us a five star review. Latest review comes in and says more episodes on equity and financial literacy please. Longtime listener, but this is my first review of the podcast. I've been listening to the podcast for the past three or four years and Jim Dali has helped me beyond words. As a straight white male physician, it was refreshing to hear Michelle Singletary on the podcast discussing financial literacy and overall experience from black perspective. Although Jim could have transitioned a bit smoother from race racism in the finance world to WC Icon. Read more of these types of podcasts. I literally stayed in my car while parked in the driveway when I got home just to listen to the end. Great stuff. Thanks for that review. We appreciate you guys giving us five star reviews. It does help spread the word about this important financial literacy message for white coat investors. Keep your head up, shoulders back. You've got this and we can help. We'll see you next time on the White Coat Investor Podcast. My dad, your host, Dr. Dahl, is a practicing emergency physician, blogger, author and podcaster. He is not a licensed accountant, attorney or financial advisor. So this podcast is for your entertainment and information only and should not be considered official personalized financial advice.