Step by Step Series: How to Roll Over Your Old 401k Into an IRA the Right Way | Episode 21

Step by Step Series: How to Roll Over Your Old 401k Into an IRA the Right Way | Episode 21

If you have changed jobs in the past 10 years and never rolled over your 401k, you have money sitting somewhere right now with high fees, limited investment options, and zero attention. That money could be working for you. Today we are fixing that. This is Episode 21 of What the Wealthy Do, part of the Step by Step Series. Today Stephanie Dorsey walks through exactly what to do with your old 401k when you leave a job, step by step, click by click. When you leave an employer you have four options: leave it, roll into your new employer's plan, roll into an IRA, or cash it out. Cashing out means losing 30 to 40% instantly in taxes and penalties. The right move for most people is an IRA rollover. But here is what most people do not know: there are two types of IRAs to consider. A traditional IRA at a brokerage like Fidelity, Vanguard, or Schwab gives you stocks, bonds, ETFs, and mutual funds. A self-directed IRA gives you access to alternatives like real estate, private equity, private credit, venture capital, and crypto — the investments the ultra wealthy use to build generational wealth. Stephanie walks through how to choose between them, how to execute a direct rollover without triggering taxes, what to do with multiple old 401ks scattered across employers, and the mistakes that can blow up your backdoor Roth strategy. Also covered: Roth 401k rollovers, the five year rule, and why you should open a Roth IRA today even with just $100. Browse all What the Wealthy Do episodes: https://docs.google.com/spreadsheets/d/1TaUUVivqfjSckA1oyhbjNRlbY_m0DMPLWbfH-eoHnDY/edit [https://docs.google.com/spreadsheets/d/1TaUUVivqfjSckA1oyhbjNRlbY_m0DMPLWbfH-eoHnDY/edit] Join the next Sovereign Collective cohort: joinsovereign.co [joinsovereign.co] This podcast provides financial education and not financial advice.

Step by Step Series: When to Convert Your 401k to a Roth and When to Leave It Alone | Episode 20

Peter Thiel used a Roth account to turn a small investment in PayPal stock into $5 billion the IRS cannot touch. That is not a loophole. That is a strategy. And today Stephanie Dorsey breaks down exactly how Roth conversions work and how to use them to pay less tax over your lifetime. This is Episode 20 of What the Wealthy Do, part of the How Does This Actually Work series. Every dollar in your traditional 401k or IRA will get taxed eventually. The question is not whether you pay. It is when and at what rate. A Roth conversion lets you choose to pay tax now at today's rate so that everything inside your Roth grows tax free forever and your heirs inherit it tax free too. This episode covers why the wealthy convert even when they do not have to, including rising future tax rates, required minimum distributions at 73, and estate planning. Stephanie walks through a real case study showing how a 15-year conversion window saves a family from a brutal tax bill in retirement, covers the five best times to convert, and explains when you should absolutely not convert. For entrepreneurs: the ROBS 401k Roth conversion strategy is also covered, the exact move Stephanie is personally executing at Margins Capital, where converting your business stock to a Roth while the valuation is still low could save you over a million dollars in taxes at exit. Browse all What the Wealthy Do episodes: https://docs.google.com/spreadsheets/d/1TaUUVivqfjSckA1oyhbjNRlbY_m0DMPLWbfH-eoHnDY/edit?usp=sharing [https://docs.google.com/spreadsheets/d/1TaUUVivqfjSckA1oyhbjNRlbY_m0DMPLWbfH-eoHnDY/edit?usp=sharing] Join the next Sovereign Collective cohort: joinsovereign.co [joinsovereign.co] This podcast provides financial education and not financial advice.

Step By Step Series: How to Open a Backdoor Roth IRA Even If You Earn Too Much | Episode 19

If you earn too much to contribute directly to a Roth IRA, the wealthy found a completely legal way around that. It is called the backdoor Roth IRA. And today Stephanie Dorsey walks you through every single step. This is Episode 19 of What the Wealthy Do, part of the How Does This Actually Work series breaking down the exact mechanics of wealth building strategies so you can actually execute them. A backdoor Roth IRA works because Congress removed the income limits on Roth conversions in 2010 while keeping the limits on direct contributions. That created a loophole: contribute to a traditional IRA, immediately convert it to a Roth IRA, and pay zero taxes if you do it right. The IRS knows about it. It is completely legal. This episode covers every step from opening your accounts to contributing, converting within one to two days, investing the cash in your Roth, and filing Form 8606 with your taxes. Stephanie also breaks down the pro rata rule, the number one thing that trips people up, and exactly how to deal with old traditional IRA money before you do your first backdoor conversion. Join the next Sovereign Collective cohort: joinsovereign.co [joinsovereign.co] Browse all What the Wealthy Do episodes: https://docs.google.com/spreadsheets/d/1TaUUVivqfjSckA1oyhbjNRlbY_m0DMPLWbfH-eoHnDY/edit?usp=sharing [https://docs.google.com/spreadsheets/d/1TaUUVivqfjSckA1oyhbjNRlbY_m0DMPLWbfH-eoHnDY/edit?usp=sharing] BACKDOOR ROTH IRA QUICK START CHECKLIST Step 1: Open accounts if you do not have them- Open a traditional IRA- Open a Roth IRA- Use the same brokerage (Fidelity, Vanguard, or Schwab) Step 2: Clear out any existing traditional IRAs- Roll old traditional IRAs into your 401k to avoid the pro-rata rule Step 3: Contribute to your traditional IRA- Transfer $7,000 (or $8,000 if 50 or older) to your traditional IRA- Keep it in cash, do not invest it yet Step 4: Convert to Roth IRA (1 to 2 days later)- Log into your brokerage- Convert the entire traditional IRA balance to your Roth IRA Step 5: Invest your Roth IRA- Buy index funds or target date funds Step 6: File Form 8606 with your taxes- Use tax software or work with a CPA Step 7: Repeat every January This podcast provides financial education and not financial advice.

Step by Step Series | How to Open, Invest and Use an HSA Like the Wealthy Do | Episode 18

You have probably heard that you should open an HSA. But has anyone actually walked you through what to do after you open it? That is what today is about. This is Episode 18 of What the Wealthy Do and the first episode of the Logistics Series, breaking down the exact mechanics of how these wealth building strategies actually work in real life. The health savings account is the only account with a triple tax advantage: tax deductible contributions, tax-free growth, and tax-free withdrawals for medical expenses. Most people open one, get the debit card, and spend it on copays. That is the wrong move. Stephanie Dorsey walks through every step: how to check eligibility, employer HSA versus opening your own, how to invest the contributions, and how the wealthy use the HSA as a stealth retirement account worth hundreds of thousands of dollars by paying medical expenses out of pocket, saving every receipt, and reimbursing themselves tax-free decades later. A real example: maxing out your HSA at 40 for 25 years at 7% annual growth gives you $290,000 tax free at 65 from $107,500 in contributions. The HSA Quick Start Checklist is in the show notes below. Join the next Sovereign Collective cohort: joinsovereign.co [joinsovereign.co] HSA QUICK START CHECKLISTWeek 1:- Check if you have an HDHP (ask HR or check benefits portal)- If yes, check if your employer offers an HSA- If yes, enroll during next open enrollment- If no, open one with Fidelity Week 2:- Max out contributions ($4,300 individual / $8,550 family)- Set payroll deduction or automatic monthly bank transfer Week 3:- Log into your HSA provider- Move funds to investments (keep $1,000 to $2,000 in cash)- Invest in low-cost index funds Week 4:- Set up a system to track medical expenses- Pay all medical expenses out of pocket- Save every receipt Every Year:- Max out contributions- Rebalance investments- Keep saving receipts- Watch it grow tax-free This podcast provides financial education and not financial advice.

What Are Bonds and Why Does Smart Money Live There Part 3 | What the Wealthy Do Ep 17

This is the episode where everything comes together. This is Episode 17 of What the Wealthy Do, Part 3 and the finale of the Bonds Series. In Part 1 we covered what bonds are and why smart money never ignores them. In Part 2 we broke down how interest rates and the yield curve affect bond prices. Today Stephanie Dorsey builds the actual strategy. How much should you allocate to bonds? The old school rule of investing your age in bonds is outdated. The wealthy allocate based on where they are in life, what is happening in the market, and what their goals are. This episode walks through a framework by life stage, from investors in their 20s through 40s holding 5 to 15% in bonds, all the way to investors 60 and beyond thinking about 40 to 60% bond allocation and using bond ladders to create predictable retirement income without selling stocks during a downturn. Which bonds should you buy? This episode covers US Treasury bonds, TIPS, I-bonds, municipal bonds for high earners, investment grade corporate bonds, and bond ETFs for investors with less than $50,000 to put into bonds. The bond ladder strategy is explained in full, including how to reduce interest rate risk, create regular cash flow, and control when and how you reinvest as bonds mature. Stephanie also covers when to increase or pull back bond exposure and the most common mistakes to avoid. Join the next Sovereign Collective cohort for high-earning Black women ready to build real generational wealth: joinsovereign.co [joinsovereign.co] If this series changed how you think about your portfolio, share it with someone who needs to hear it. Leave us a five-star review and follow the podcast so you never miss an episode. See you next week. BACKDOOR ROTH IRA QUICK START CHECKLIST Here is your action plan: Step 1: * Open accounts if you do not have them * Open a traditional IRA * Open a Roth IRAUse the same brokerage (Fidelity, Vanguard, or Schwab) Step 2: * Clear out any existing traditional IRAs * Roll old traditional IRAs into your 401k to avoid the pro-rata rule Step 3: * Contribute to your traditional IRATransfer $7,000 (or $8,000 if 50 or older) from your bank to your traditional IRAKeep it in cash, do not invest it yet Step 4: * Convert to Roth IRA (1 to 2 days later) * Log into your brokerage * Convert the entire traditional IRA balance to your Roth IRA Step 5: * Invest your Roth IRA * Buy index funds or target date funds Step 6: * File Form 8606 with your taxes * Use tax software or work with a CPA Step 7: * Repeat every January HSA QUICK START CHECKLIST Here is your action plan: Week 1: * Check if you have an HDHP (ask HR or check benefits portal) * If yes, check if your employer offers an HSAIf your employer offers an HSA, enroll during next open enrollmentIf your employer does not offer an HSA, open one with Fidelity Week 2: * Set up automatic contributions to max out the HSA ($4,300 individual / $8,550 family) * If employer HSA: set payroll deductionIf self-directed: set automatic monthly transfer from bank Week 3: * Log into your HSA providerMove funds from cash to investments (leave $1,000 to $2,000 in cash) * Invest in low-cost index funds (80% stocks, 20% bonds or target date fund) Week 4: * Set up a system to track medical expenses (spreadsheet or app) * Commit to paying medical expenses out of pocket, do not touch the HSA * Save all medical receipts * Every Year:Max out contributions * Rebalance investments if neededContinue saving receipts * Watch it grow tax-free This podcast provides financial education and not financial advice.