Thanks Travis! This is very detailed and it's nice to know I can replay it whenever I want. Putting the final touches on the 2019 return before the October 15 deadline. It's been a strange extended tax season to say the least. You're the best.
Key is tax brackets if you invest when your young you will most likely be in a lower tax braket however as your career advances your tax braket may be much higher saving more money trough a Roth IRA . Key point is if you see your tax bracket changing in the future by the time you retire.
Hi Travis. Can you stack retirement accounts outside of your IRA? I have a Roth IRA, but I am maxing contributions at the start of each year. Can I open something else, like say a 401K or 403B or something and have an entirely separate growth account going alongside my Roth IRA? So when I go to retire I will have a stack of different retirement accounts to draw from? Thanks again!
Wsup Travis good looking on the video. For the sep, is the taxed amount on the gains or all money that is withdrawn including the principle? Can you help me better understand? Thanks
SEP IRA can only be contributed on a pre-tax basis, therefore, all distributions are taxed as ordinary income. Don't think of this as a negative, just a fact.
Is it worth converting SEP IRA to Roth IRA in a low income bracket year? Also how does it differ to converting from Traditional IRA to Roth IRA. It doesn't seem like I can do a backdoor Roth conversion from SEP, and is required to "sell" my shares for the year of the conversion instead of reporting as none deductible for the year prior like I can with Traditional?
I'm a business owner with 10 employees. I currently have a Roth IRA, and plan on opening a Simple IRA(i know this video is about SEP) for myself and employees. I know i have to match them, but being i already have a Roth IRA, am I able to max out a Simple IRA as well? So $6k for Roth and $13.5k for Simple for a total contribution of $19.5k as the Employer?
I also have a question in regards to contribution. If the maximum amount it $6,000, is it possible to contribute money to traditional IRA and roll it over to Roth IRA in the same day?
Don't taxes always increase? So, wouldn't it be a bit riskier to have traditional or SEP ira since they're pre taxed as you may not know how the tax rate will be by the time you retire. Right?
@@Parsa1837 I have a ton of videos on why you should not just jump into using the Roth vs Traditional accounts but it's a great topic. I'll see if I can do another version later today or tomorrow.
As an employee- how can I contribute to the sep before it’s taxed... am I wrong to think that my income paid direct deposit has already been taxed ... so wouldn’t I paying double tax
English is my first language, I understand all of the words you are saying, but I still don't understand what you are actually saying. I would love to have a dumbed-down video on this "for dummies" where you go really slow and explain every single part in detail, as if you were explaining to a 3rd grader. XD
But the fear is that in the future the tax will be HIGHER because our govmt spends money quicker than they collect it. Therefore Roth hedges for that future higher tax that is coming - and coming FOR SURE.
Travis. I like your video! It is well done and coming from a good place. However, your calculations and examples are not really correct Travis. The tax brackets are marginal tax brackets. You only pay the percentages on the amount above the limits, not on the whole amount. I have a feeling you are giving misguided advise to clients. To me, the decision comes down to the limits allowed on each account. Since the SEP limits are so much higher, that would be the preferred account on any small business that is making/reporting over $30k Net Income each year. That will ensure the FV is ultimately higher, regardless of the tax implications.
Appreciate the perspective but respectfully disagree. Looking at the contribution limits of the SEP vs Roth IRA misses the concept. It's progressive taxation. The marginal bracket is the highest bracket you're taxed. It's how you should be thinking of this math as that's where the decision makes the most sense. I agree, it's very challenging to speak on a specific topic when there are so many other factors. All things being equal in considering the Roth vs. the SEP IRA, this is arguably the best way to conceptually understand it. Sounds like you're up to speed on taxes but I did a video on the brackets too. czcams.com/video/f0TIwsVHH88/video.html
@@TravisSickle I watched your other video and yes, that is what I was referring to on the marginal tax rate. Glad you know! :) Roth's are the way to go if you qualify (I don't) because you are not taxed on the plant, just the seed. So I would rather be taxed on the contributions, not the pile of money it can grow over time. So it makes sense to maximize the Roth each year, then contribute to the SEP accordingly with each allowable contribution (assuming net income fluctuates). It should be possible to do that and I believe that would be a good strategy for a sole proprietor. Thanks for your reply!
There is really no right answer for everyone. That’s what I was hoping the take away was on this video. One of the biggest mistakes actually has nothing to do with the plans. It’s missing a credit or deduction that you could otherwise qualify had you looked a little closer and not blindly contribute to the Roth or pre-tax plan.
Thanks Travis! This is very detailed and it's nice to know I can replay it whenever I want. Putting the final touches on the 2019 return before the October 15 deadline. It's been a strange extended tax season to say the least. You're the best.
I like how your voice is so catchy and clear
Key is tax brackets if you invest when your young you will most likely be in a lower tax braket however as your career advances your tax braket may be much higher saving more money trough a Roth IRA . Key point is if you see your tax bracket changing in the future by the time you retire.
This was extremely helpful. Thanks, Travis!
You are awesome your video is helpful thank you for your explanation
You are welcome!
This was super helpful! Thank you!
Hi Travis. Can you stack retirement accounts outside of your IRA? I have a Roth IRA, but I am maxing contributions at the start of each year. Can I open something else, like say a 401K or 403B or something and have an entirely separate growth account going alongside my Roth IRA? So when I go to retire I will have a stack of different retirement accounts to draw from? Thanks again!
Is sep ira same as traditional ira??,
Wsup Travis good looking on the video. For the sep, is the taxed amount on the gains or all money that is withdrawn including the principle? Can you help me better understand? Thanks
SEP IRA can only be contributed on a pre-tax basis, therefore, all distributions are taxed as ordinary income. Don't think of this as a negative, just a fact.
GOD BLESS YOU 😂
When we retire, is our tax bracket calculated also by returns in our investments in our sep ira account?
no, only on distributions/withdrawals from the SEP. It will be as ordinary income.
Is it worth converting SEP IRA to Roth IRA in a low income bracket year? Also how does it differ to converting from Traditional IRA to Roth IRA. It doesn't seem like I can do a backdoor Roth conversion from SEP, and is required to "sell" my shares for the year of the conversion instead of reporting as none deductible for the year prior like I can with Traditional?
Conversions are not contributions. Yes it’s possible to convert and not sell positions.
Hey I have a question for you is there a law that states that you have to pay taxes it you can do a video on it
Which taxes?
I'm a business owner with 10 employees. I currently have a Roth IRA, and plan on opening a Simple IRA(i know this video is about SEP) for myself and employees. I know i have to match them, but being i already have a Roth IRA, am I able to max out a Simple IRA as well? So $6k for Roth and $13.5k for Simple for a total contribution of $19.5k as the Employer?
I also have a question in regards to contribution. If the maximum amount it $6,000, is it possible to contribute money to traditional IRA and roll it over to Roth IRA in the same day?
Not if the ROTH IRA is maxed out
Don't taxes always increase? So, wouldn't it be a bit riskier to have traditional or SEP ira since they're pre taxed as you may not know how the tax rate will be by the time you retire. Right?
No, taxes do not always increase.
Also, if you only use Roth contributions you may miss out of deductions or credits only available in the year of your contribution.
@@TravisSickle could you elaborate on that? Or if it's too long, it would mean a lot if you could make a video about it, appreciate it.
@@Parsa1837 Watch this video. czcams.com/video/Fhd2bWm76cg/video.html
@@Parsa1837 I have a ton of videos on why you should not just jump into using the Roth vs Traditional accounts but it's a great topic. I'll see if I can do another version later today or tomorrow.
wait, if I invest $1 into each account and turned in into $1 million, the SEP will be taxed $200k and the Roth was only taxed $.20? Is that correct?
Yup. Roth grows untaxed.
As an employee- how can I contribute to the sep before it’s taxed... am I wrong to think that my income paid direct deposit has already been taxed ... so wouldn’t I paying double tax
Are you a w2 employee or independent contractor?
@@TravisSickle w2
English is my first language, I understand all of the words you are saying, but I still don't understand what you are actually saying. I would love to have a dumbed-down video on this "for dummies" where you go really slow and explain every single part in detail, as if you were explaining to a 3rd grader. XD
But the fear is that in the future the tax will be HIGHER because our govmt spends money quicker than they collect it. Therefore Roth hedges for that future higher tax that is coming - and coming FOR SURE.
I hear you but you're missing the point. It's not going to be higher for everyone. Think tax credits and deductions.
@@TravisSickle Travis, what tax credits does one have when in retirement? How does one calculate what tax bracket they will be at retirement?
if you make alot over 500,000 a year as an individual can i have a ROTH IRA or is that not allowed
If I made that much I invest some of that in Real estate or other businesses. :)
Only traditional but you can roll it over to roth later congress is trying to add laws to this hopefully it doesn't come down to that
You can also do non-deductible and Roth 401k accounts all day long.
Travis. I like your video! It is well done and coming from a good place. However, your calculations and examples are not really correct Travis. The tax brackets are marginal tax brackets. You only pay the percentages on the amount above the limits, not on the whole amount. I have a feeling you are giving misguided advise to clients. To me, the decision comes down to the limits allowed on each account. Since the SEP limits are so much higher, that would be the preferred account on any small business that is making/reporting over $30k Net Income each year. That will ensure the FV is ultimately higher, regardless of the tax implications.
Appreciate the perspective but respectfully disagree. Looking at the contribution limits of the SEP vs Roth IRA misses the concept. It's progressive taxation. The marginal bracket is the highest bracket you're taxed. It's how you should be thinking of this math as that's where the decision makes the most sense. I agree, it's very challenging to speak on a specific topic when there are so many other factors. All things being equal in considering the Roth vs. the SEP IRA, this is arguably the best way to conceptually understand it. Sounds like you're up to speed on taxes but I did a video on the brackets too. czcams.com/video/f0TIwsVHH88/video.html
@@TravisSickle I watched your other video and yes, that is what I was referring to on the marginal tax rate. Glad you know! :) Roth's are the way to go if you qualify (I don't) because you are not taxed on the plant, just the seed. So I would rather be taxed on the contributions, not the pile of money it can grow over time. So it makes sense to maximize the Roth each year, then contribute to the SEP accordingly with each allowable contribution (assuming net income fluctuates). It should be possible to do that and I believe that would be a good strategy for a sole proprietor. Thanks for your reply!
There is really no right answer for everyone. That’s what I was hoping the take away was on this video. One of the biggest mistakes actually has nothing to do with the plans. It’s missing a credit or deduction that you could otherwise qualify had you looked a little closer and not blindly contribute to the Roth or pre-tax plan.