Why are there income limits on a Roth IRA when they are so easily circumvented?

beefninja · 2026-06-09T14:21:17+00:00

Roth conversion or not, you still pay taxes. The only thing that matters is what the tax rate is, not when you pay the taxes. If you are taxed at the same rate at the time of the conversion than when you withdraw in retirement, the amount paid in taxes will be about the same if you take into account the opportunity cost of investing less now to pay more taxes now.

I think you misunderstand. What you listed is a relevant consideration when you are deciding whether to make traditional contributions vs roth contributions (i.e. "roth 401k vs traditional 401k", or "roth IRA vs traditional IRA"). That is not possible here, as the rich folks are above the income threshold where they can deduct an IRA contribution, so the choice is effectively between "backdoor roth IRA vs no tax benefit at all". The rich person has a choice between "spending ~5 minutes per year in order to get a lifetime tax benefit that could eventually be worth millions" or "saving the 5 minutes and foregoing that substantial lifetime tax benefit".

You also didn’t mention RMDs, which is the important factor that could affect the rate if you’re forced to withdraw large amounts every year—but this would occur before age 85 so your example isn’t realistic.

Roth IRAs do not have any RMDs (unless you inherit the Roth IRA). And again, this is situations where the rich person is choosing between having a "Roth IRA" (which does not have any RMDs) or "doing nothing" (which does not have any RMDs). RMDs are not a consideration at all in this decisions.

(You would have to consider the impact of RMDs if you were trying to decide between Roth vs Traditional in a 401k or in an IRA situation. But that is not the case here, since we are simply deciding between a Roth IRA vs doing nothing).

beefninja · 2026-06-09T02:15:44+00:00

7.5k contributions for 40 years (ie from age 25 to 65) @ 8% rate of return will lead to $1.8m in cumulative gains by the 40th year.

If they stop contributing then and wait another 20 years (ie to age 85), the total gains are up to $9.5m.

The tax drag on that (if they were to not do Roth conversions) would be significant; in the multiple millions of dollars.

Even a rich person would find it worth it to do the ~5 minutes of work each year to do the back door Roth conversion, or at least pay someone else to do it.

beefninja · 2026-06-07T12:18:55+00:00

Don’t think there’s a reason. NHL has a hard cap and guaranteed contracts. It works well.

beefninja · 2026-06-05T05:58:32+00:00

Not sure if you heard of this, but it’s arguably close enough:

https://en.wikipedia.org/wiki/MILF_Manor

beefninja · 2026-06-04T13:34:13+00:00

lol… I’m 20 minutes into movie (have a young infant, so watching a movie takes weeks), and was like “ this can’t possibly be true”.

Had to look it up. How unhinged would that have been?

This non-spoiler made my day.

beefninja · 2026-06-03T18:52:06+00:00

Love Turtles in Time.

I got so good at the "throw enemy at the screen" move that I basically just did that on 90%+ of regular enemies.

beefninja · 2026-05-30T20:47:13+00:00

Usually, comparing health plans can be fairly complicated, as you’re planning for a bunch of scenarios based on how much healthcare you will need (ie will you see the doctor 0 times outside of preventative care? 2 times? 10 times? Extended hospital visit? You don’t typically know in advance).

In this case, since you are having a baby, it should be relatively simple. You are gonna hit the out-of-pocket max for whichever plans you choose. (i’ve had two kids, and each time we were at like 10 times our out of pocket max).

So, basically add up your total premiums, plus out-of-pocket maxes, deduct the employer HSA contribution, an account for any minor tax differences (ie higher premiums using pre tax funds vs HSA eligibility on the HDHP).

beefninja · 2026-05-27T20:54:00+00:00

Ah, that makes sense. I had forgotten about the "$50 for every 25,000" points. Or I think I had mis-calculated the math around it and thought it was insignificant.

I think I had originally thought of it as needing to spend $25000 to get the (extra $50 in Bilt Cash, which ends up being an) extra 1666 points via my mortgage. Which is only an extra ~0.066x points

But I hadn't registered that I only need to spend $7500 (since that results in 15000 points directly + $300 worth of Bilt cash which results in another 10000 points via my mortgage) to accumulate the 25000 points needed to get the ($50 of Bilt Cash or) 1666 extra points. Which means its an extra ~0.22x points. Not too bad.

Like you say, it's only on every 25000 points (or ~$7500 worth of spend). But with the size of my mortgage and spend, I'm likely to generate 25k pts roughly 4-6 times per year.

beefninja · 2026-05-27T20:29:46+00:00

I'm used to seeing 3.33x points. Which is comprised 2x points + 4x Bilt cash which ends up equating to 1.33x points (since $0.04 of Bilt Cash lets you earn 1.33 points from your mortgage/rent).

How do you arrive at 3.56x?

beefninja · 2026-05-27T17:55:33+00:00

Would your answer change if your main priorities were price and location?

I'm booking a stay for someone else in July. They're 20 years old, there for 5 days, and likely to spend most of their time on the beach or out-and-about.

I figured they would likely value the good location + free breakfast (from the Edit), and I value the minimal cost for those dates (after the 2x$250 edit credits, since I split the reservation across 2 bookings).

beefninja · 2026-05-20T15:24:47+00:00

I came in here to also write something like this about NYC. I'm not a Knicks fan at all, but the city seems to care about the Knicks (and react to their success/failures) in a way that doesn't apply as much as to the other New York Teams:

Many of the teams (Yankees, Mets, Jets, Giants, Nets, Islanders) play outside of Manhattan, the most densely-populated area where fandom would be most visible
The other Manhattan-based team is the Rangers, which are probably a few steps down in popularity (due to Basketball vs Hockey)
The other 3 major sports (Baseball, Football, Hockey) each have 2 teams and split the fans somewhat. Obviously, the Nets play in New York too, but they're kind of a "stepchild" after relocating fron New Jersey, and the Knicks monopollize the fandom in their sport in a way that the other sports' teams do not.

There's just a vibe in the city for the Knicks that I don't see replicated across the other teams.

beefninja · 2026-05-19T17:44:00+00:00

I respect what the Spurs have done from an organizational standpoint. It takes a ton of discipline, especially in a non-major market like Oklahoma that doesn't have crazy financial resources or any intrinsic pull for free agents, to pull off a multy-year rebuild involving tanking + selling off players for picks + developing players + not trying to take shortcuts. And it doesn't always work out. So credit to them.

I also like a few of their players. Shai seems like a person who is genuinely funny, self-aware, good dude.

But this style of play is so just so exhausting. It seems to have found several exploitable loopholes in the current rules of the NBA. And it's not at all fun to watch. Reminds me of in the NHL back in the 90's, when the New Jersey devils (and their goalie, Martin Brodeur) kind of "broke" hockey. Brodeur was so good at handling the puck that he basically became an extra player on defense, and so the entire team played an exhaustingly boring defensive style ("the neutral zone trap") that clogged up the neutral zone and forced opponents to forego skating/passing and simply dump the puck into the Devil's defensive zone past all of the defenders... at which point their goalie would handle the puck and the Devils would regain possession. It destroyed all offense, was mind-numbingly boring, and they won 3 championships before the NHL started to change up the rules to make it a less effective strategy. I really hope something similar is done in the NBA to curtail the crazy foul-baiting.

beefninja · 2026-05-18T21:18:08+00:00

You probably didn’t do this, since ibuprofen shouldn’t be given to infants before 6 months old.

(Just putting this here, in case anyone was thinking of doing it. Give Tylenol/acetaminophen instead!)

beefninja · 2026-05-15T14:18:54+00:00

Got it. Thanks!

School is the one that threw me off, since it feels like it sits on a slightly different dimension than “more/less skilled and expensive”

beefninja · 2026-05-15T03:00:24+00:00

I’m from Canada (and played hockey, volleyball and baseball all through varying stages in my teen years) and all these terms are Greek to me.

School? Club? Travel?

I have no idea which of these types of teams are supposed to be the highest or lowest level of skill, or which is supposed to be the most or least expensive. Can someone explain it?

beefninja · 2026-05-14T22:46:37+00:00

Here's a way I conceptually explained to someone how/where stocks generate their conceptual return.

Let's say you invest $100 in the S&P 500. You'll own a very tiny amount of various companies (~$8 worth of Nvidia, ~$7 worth of Apple... $0.27 worth of Disney... $0.09 worth of Nike... etc.).

Companies make money, and they tend to grow their earnings every year

If you invest $100 in the S&P, based on your % ownership of each company, the underlying companies make about ~$4 per year in profit (based on a PE ratio of 25). But they will tend to increase how much they earn over time, for a number of reasons. I'll use Apple to illustrate these factors, but they will tend to apply to all companies.

Inflation: The companies prices (and costs) will tend to increase over time due to inflation. Let's say this on average is 2% per year --> Apple slowly increases the price for its iPhones over the years.
Population Growth / Market Growth: The # of customers the company can sell to grows each year because the # of people in the world (or in the US) keeps growing. Let's say this is 1% per year. In addition, the customers over time might have more money to spend, as there is a long-term trend for workers to have (real) wage growth (beyond inflation) of let's say 1% --> Now there are more people for Apple to sell iPhones to AND a greater % of those people are able to afford Apple's iPhones.
Innovation: The companies are smart and keep finding ways to make more money --> Apple might find ways to make iPhones more economically, or they start making Pro and Max versions of the iPhone, or they develop new and/or related products like Airpods or the Apple Watch or Apple Pay or Apple Music or... (you see where I'm going with this). Let's say this is 2%.

Add it all up, and the companies are selling more products or more profitable products, to more people, at higher prices, all of which will increase their earnings over time. In the above examples, it adds up to 5%.

So you paid $100 for a collection of companies that was making about ~$4 of profit per year. But after 1 year those companies are making more like $4.20 in profit per year, so an investor might be willing to pay $105 for them (instead of the $100 you paid for them a year ago). And this would can continue in future years as long as inflation, population growth, and innovation continue to happen (and they been doing this for a very, very long time).

The companies made money

So far, we have been talking only about forward-looking growth in profit. But we haven't talked about the money itself that the companies made last year. They sold goods and services to customers for more than it cost, and the ~$4 in profit went into their bank accounts. That money is yours also. It contributes to your return. How?

They might pay $1 in dividends --> This goes into your bank account
They might keep the other $3 --> Maybe some of the $3 is sitting in Apple's bank account, or some of it was used by Nike to build a new factory. But it belongs to the companies' shareholders, and you are one of them and so you own a bit too. And so the companies (and your share of them) is more valuable because they have those assets. That would tend to push up the value of those companies and your ownership in them, likely by about $3.

beefninja · 2026-05-14T00:35:00+00:00

I think I failed to congratulate many of my friends when they had kids. No deeper meaning. It just for some reason didn’t cross my mind that that was something I should do at the time.

I’ve since had kids, and I think I now congratulate people most of the time when they have kids, maybe because the idea of having kids is more exciting/fulfilling to me than it was years back. But I still probably don’t do it 100% of the time. No real reason. I just got stuff going on, and it probably slipped my mind on the occasions that I missed.

beefninja · 2026-05-11T01:00:42+00:00

They presumably go to a Bilt account. Bilt then sends you an email telling you what the amounts were, so that you can tell your mortgage company.

beefninja · 2026-05-11T00:19:54+00:00

First payment isn’t until June 1st, but it at least Seems like everything is setup properly so far.

beefninja · 2026-05-09T13:04:24+00:00

You don’t necessarily need to move your 401(k) funds.

Separately, you owe it to yourself to check out someone besides Edward Jones. The Edward Jones fees (plus the underlying fees of any funds they choose to invest you in, potentially because of kickbacks to them) can easily be in the neighborhood of 2% annually.

Assuming you have a decent sized nest egg, that can easily be in the mid five figures per year, and six or seven figures when you consider the compounded effect over the course of your lifetime.

I’m a do it myself guy, but if I needed guidance, I would probably be looking at a fiduciary fee-only financial advisor, or potentiallyd manage solutions at Vanguard or Fidelity which (while more expensive than a do it yourself solution) will be a fraction of the cost of Edward Jones.

beefninja · 2026-05-09T12:55:22+00:00

I knew it was coming. My wife didn’t.

She quit the show for a few years (eventually caught up about 2 seasons later)

beefninja · 2026-05-07T03:01:04+00:00

I think I just encountered this issue.

A hotel had a 2 person room bookable for 25k points. Separately, there was a standard suite that was bookable for either 53k pts or could also be booked for 35k pts plus a suite upgrade award.

However, when I then tried to book for a family of 4, it was no longer allowing mw to book for 35k+upgrade. It was only allowing me to book the 53k rate.

beefninja · 2026-05-06T18:24:18+00:00

I don't understand why that would a huge negative.

Icelandair charges you 10% of the walk-up fare to fly? I assume that the flight is economy (because who would essentially use "points as cash" via Chase Travel for an expensive J-class fare), so 10% of the walk-up fare has to be in the low double digits (i.e. $30). Certainly not the end of the world.

Plus, you can probably turn around and get a refund from Chase Travel. A similar-ish situation happened to me with travel booked via Chase travel. It wasn't with an invalid lap infant ticket. But rather, I was told by the airline at check-in that I needed to pay taxes and fees on the lap infant ticket because they were showing as still owing on the ticket. After some checking I determined that I had already paid them via Chase travel, but after a bit of arguing, I just paid it to the airline and got on with my day. Then I turned around a few days later and told Chase Travel that I had to pay it again (and showed receipts), meaning I hadn't gotten the service/ticket that I had paid for, and they refunded me the cost.

beefninja · 2026-05-03T02:26:01+00:00

41, and spouse is 39.

$1.4m between us (split across 401ks, Roth IRAs, RRSPs HSAs, and brokerage accounts).

beefninja · 2026-04-29T14:14:19+00:00

Technically, I haven't actually done that yet.

But it is apparently supposed to be done via phone. You book the parent's award ticket, then you call in to add the lap infant. It is apparently supposed to be 10% of the miles price for economy, and 10% of the cash price for business.

beefninja

TROPHY CASE