Can You Use a Taxable Brokerage Account to Max Out Your Roth?

If you don’t have the cashflow to maximize your Roth IRA, should you use money in your taxable brokerage account to max out your Roth?

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[bingoknows]

This video is 8 months old and I searched YouTube to find out answers to my question and it brought me here. Thanks for the words of wisdom guys, you're the best.

[daheni]

That's exactly what I do. I max out Roth IRA in the beginning of the year, then set aside money each month into a money market so I am ready to transfer/max out the Roth IRA the beginning of the next year. Works great for me, plus the money market contains 2/3's of my 6 months expenses.

[celestial_sphere]

I max out tax-advantaged accounts before contributing to brokerage accounts

[jaschris]

deadline for 2023 tax year contributions to a Traditional or Roth IRA is April 15th, 2024. Have more than just 2-3 weeks here in Dec to make decisions.

[JCJourney]

do some backdoor roth if you have a sep ira and less income on that year.

[learning.finances]

Thank you guys, that was helpful. I have enjoyed your show for the past 4 years and have learned so much. Keep it up the great work! We, individual investors, enjoy "free" and "trustworthy" information :)

[kevinschultz]

Another way of thinking about this is that a Roth (or backdoor Roth, or Mega-backdoor Roth) is just another way to have an investment account. It's just that it has a limit on how much you can get in every year (due to the tax benefits), so it makes sense to max it out first, before you maximize your traditional account.

And in years where you're not able to add money to it? Well, assuming you have all of your other ducks in a row (ie, you have your emergency fund, as well as mid-terms savings [such as for a car or housing down payment]), then yes - it's totally fine to shift from the account that is taxable to the one that isn't.

Worse comes to worst you can withdraw the principal, but assuming you've covered your bases elsewhere, you shouldn't have to do that.

...as long as you're aware of the implications of selling in your taxable account - ie, what Beau and Brian talk about.

[rogrs]

The past 3 years I've been using my Tax refund and Year end bonus to max out my Roth IRA. Then for the rest of the year, my 401k full match is the only thing I save on a monthly basis. It feels nice to be able to spend my extra income on whatever I want knowing I already took care of my future. I've also had a 6 months emergency fund that's been touched only once in the 3 years and it's easy to replenish when I have disposable income that I can redirect. Its not difficult or stressful if you learn how to navigate your income from the get go.

[ryjoph]

1:22 Sometimes we never outlive our mistakes haha

[kylefredrickson]

And if no money in a brokerage account, maybe consider reimbursing yourself from HSA expenses tax-free and put that into a Roth as a contribution. That way it is still growing tax free but for any purpose vs just health expenses.

[eldersprig]

can't say his name ... rhymes with ... prion