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.

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🇺🇸 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

1. Confirm that you have no balance in any pre-tax traditional, rollover, SEP, or SIMPLE IRA.
2. Make a nondeductible cash contribution to a traditional IRA.
3. Convert the contribution to a Roth IRA, generally without tax withholding.
4. 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

• Winged Wealth Management and Financial Planning
• Military Financial Advisors Association
• https://getchipdrop.com/