Backdoor Roth Club w/ Brian O'Neill CFP®, EA, MQFP®
Rob Moore, MQFP® and Omen Quelvog CFP®, MQFP® welcome former fighter pilot and financial planner Brian O’Neill, CFP®, EA, MQFP® to explain how high-income earners can continue funding a Roth IRA. They also discuss higher mortgage rates, home affordability, and why financial decisions should reflect your family’s goals rather than headlines.
Email The Fiscal Foxhole at fiscalfoxhole@gmail.com
🇺🇸 Background: The Star-Spangled Banner
- During the 1814 bombardment of Fort McHenry, Francis Scott Key watched through the night to see whether the American flag remained.
🏠 Intel Update: Mortgage Rates and Buying Power
- A $2,000 monthly principal-and-interest budget supports roughly a $475,000 mortgage at 3%, but only about $300,000 at 7%.
- Higher rates affect home prices, inventory, rents, and buyer competition.
🚪 Backdoor Roth IRA Basics
- Confirm that you have no balance in any pre-tax traditional, rollover, SEP, or SIMPLE IRA.
- Make a nondeductible cash contribution to a traditional IRA.
- Convert the contribution to a Roth IRA, generally without tax withholding.
- Report the transaction correctly, including on IRS Form 8606.
⚠️ The Pro Rata Rule
- The IRS generally views your pre-tax IRAs as one combined balance.
- If pre-tax and after-tax dollars are mixed, a conversion will include a proportional share of each, potentially creating a tax bill.
📅 Timing and Common Mistakes
- Completing the process early in the year can maximize time in the market.
- Contributions must be made in cash, not by transferring fund shares.
- Do not leave nondeductible contributions sitting unnecessarily in a traditional IRA.
🎯 Commander’s Intent
- Run the numbers before deciding higher mortgage rates have priced you out.
- Consider the backdoor Roth process if your income prevents a direct Roth IRA contribution.
- Verify IRA balances, understand the pro rata rule, and ensure the transaction is reported correctly. When in doubt, work with a qualified tax or financial professional.
🔗 Resources
Washed Up Fighter Pilot
Hi, I’m Brian, founder of Winged Wealth Management and Financial Planning. After 23 years flying and commanding in F-16s and F-35s, I became a Certified Financial Planner® and started my firm to become what I could not find on my own financial journey: an advisor that specializes in helping wealth-minded, DIYer’s get fiduciary advice on their own terms. I provide organization, objectivity, education, accountability, proactivity, and partnership to help families navigate transitions, clarify complexity, and sleep well knowing their dreams are on track.
I became a fee-only financial planner to help the military and veteran communities build wealth and achieve their dreams. As I came up through the ranks, I could never find a financial professional that wasn’t either a salesman in disguise, or just trying to gather assets to manage. I needed professional, military-experienced advice, but I still wanted to keep my hands on the stick and throttle. As I evaluated my transition back to civilian life, I found the community of fee-only financial planners that truly serve their clients as fiduciaries—obligated to put the client’s interests first at all times. I knew I was in the right place!
In the last half of my Air Force career, I often felt that my career field was “squadron financial advisor,” and I was usually happiest when I was helping my fellow airmen analyze financial challenges, plan ways to surmount them, and then execute the plans to a successful conclusion.
Of course, as is often quoted, “Plans are nothing. Planning is everything.” I believe that … Read More