This week’s newsletter:

• Consistently showing up
• Backdoor IRA, the secret weapon for those with income too high for a standard Roth IRA.

Hi friends and fam, ♥️

Every time we sit down to write this newsletter, we ask ourselves—where does the motivation come from? 🤷🏻‍♀️ It takes hours to push out a 3-minute read.

But when we really think about it, it probably comes down to three things:
✨ Our commitment to writing 100 emails
✨ The quiet joy of growing by giving 100% in whatever we do
✨ And the fulfillment when a friend told us our newsletter helped them

Ever heard the phrase, “sometimes happiness doesn’t make you happy”?

Because sometimes, happiness comes from challenge. From effort. From simply showing up—consistently.

🧘🏻‍♀️ Showing up for our mental well-being by meditating daily.
💰 Showing up for our future freedom by investing consistently, even when instant gratification is tempting.
✍️ And showing up here, writing this newsletter—even when inspiration runs dry.

Today was one of those days. But the commitment, joy and growth carried us through.

May we all find happiness not just in what feels good—but in what helps us grow. 💛

Remember that wonderful Mega-Backdoor Roth 401(k) we talked about? Well, there's another backdoor you should know about.

Say hello to the Backdoor IRA 🚪

Your new best friend for tax-free growth, perfect for those with income too high for a standard Roth IRA.

So, why go Backdoor? 🧐

✨ Max out your tax-advantaged space
More money growing tax-free = more money later.

🚫 No RMDs
Roth IRAs don’t make you take Required Minimum Distributions in retirement. You’re in control.

🕵️‍♂️ And no—it’s not a shady loophole
We don’t know who named it “Backdoor,” 🤨 but it sounds way sneakier than it is. This move is 100% IRS-approved—a legit way for high-income earners to still enjoy Roth perks. Just follow the rules and you’re golden.

⚠️ Wait, traditional IRA contributions aren’t always deductible? 🤯
Yep, that surprised us too!! For the longest time, we thought there were no income limits for deducting Traditional IRA contributions.

But apparently those deductions start phasing out at surprisingly modest income levels. Like, really modest. 😔

So double-check the current IRS limits to see if you’re actually getting a tax break (the whole point of a Traditional IRA 🤦🏻‍♀️)—or if you’re just teeing yourself up for a Backdoor move. 🥷🏻

🚪 How to do a Backdoor IRA (4 easy steps)

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1. 💰 Contribute to a traditional IRA

• Open a traditional IRA account at Vanguard, Fidelity, or wherever you like.
• Contribute up to the max limit for IRA, $7,000 ($8,000 if 50+) in 2025.
• Let the contribution settle (don’t buy index funds yet — just let it sit in a cash-like settlement fund).

2. 🔄 Convert to a Roth IRA

• Open a Roth IRA if you don’t already have one (follow Vanguard instructions)

• Here’s the magic part. ✨ Go back to the traditional IRA and hit the button “Convert to Roth IRA”. Follow the steps & Done!

• Pro Tip: Convert ASAP to avoid earnings (which are taxable when you convert). Need help? Consult with a tax pro to avoid surprises.

3. 🧾 File form 8606

• This tells the IRS your conversion was non-deductible = no double taxation.
• Use a CPA or tax software to get it right. No skipping this step.

4. 🎉 Sit back & enjoy tax-free growth

• Now your funds are in the Roth IRA—tax-free growth and tax-free withdrawals in retirement.
• The beauty of Roth is you can also withdraw your contributions (principal) at any time tax- and penalty-free.
• You win! 🏆

🚨 But Wait — The Pro Rata Rule!

Here’s where things can go sideways.

If you have other Traditional, SEP, or SIMPLE IRAs with pre-tax money, the IRS blends it all together when you convert. That could make part of your conversion taxable.

Example:

If 80% of your IRA money is pre-tax, then 80% of your Backdoor conversion is taxable. Yikes! 😬

What to do??? 🙉

Option 1: Roll Pre-Tax IRA into a 401(k)

Ask your HR

• if your 401(k) accepts roll-ins
• then the exact step-by-step process to move all your Traditional IRA dollars in there

Angie rolled over all her IRAs (old employer plans and years of traditional IRA contributions) from Vanguard into her Fidelity 401(k).

It took a few days—and yes, it involved actual mail. 🐌 Vanguard mailed a check to our house, and Angie deposited it digitally using the NetBenefits app.

Her 401(k) does have a fee, but after Tyler crunched the numbers, the rollover was totally worth it to avoid the pro-rata mess.

Moral of the story: do your math—the peace of mind might be worth the hassle.

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Option 2: Convert all your pre-tax IRA to a Roth IRA

but here’s what you need to know before diving in:

When you convert, you pay income tax on the entire pre-tax amount converted.

• Example: Convert $50,000 → add $50,000 to your taxable income this year.

It could bump you into a higher tax bracket if you convert everything at once — so be ready with extra cash for the tax bill.

But honestly, if you’re even doing the Backdoor IRA, you’re probably already in a high tax bracket. 😅 Unless the market is in a deep dip (hello, discount!), a full conversion might still be worth seriously considering.

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Either option, handle it before doing the Backdoor conversion.

☑️ Action Items

• Eligible for a Roth IRA? Then skip this entire newsletter. You’re all set! 😎

• Not eligible?

  First, check if using the Backdoor IRA would trigger the pro-rata rule

  If YES:
  ✅ Decide which option suits you best (roll over, convert, etc.).
  🕒 Spend about 1 hour on calculations, 20 minutes chatting with your platform(s) to confirm the process, and (for roll over option) a few days waiting for that check to arrive and deposit it.

  💰 With the pro-rata rule out of the way, start converting!

  If NO: What are you waiting for? Start converting and get those tax-free gains rolling! 🚀

  Spend a total of 30 minutes on your computer and wait 2-3 days for the funds to settle before converting.

• Also if you’re not getting a tax break (check the IRS income limits)—the whole point of a Traditional IRA 🤦🏻‍♀️, just plan for your Backdoor move.

Hope it's helpful for your journey to Freedom 🙏

Love you to freedom and back, 🫰

Angie & Tyler

Things We are Loving Right Now ❤️‍🔥

🌲 Hiking

• 🥾 Hiking poles: Angie has a completely torn ACL, and we did an ~8-mile hike last Friday with a long descent—those trekking poles absolutely saved her legs. 😮‍💨
• Eco-friendly containers: A sustainable alternative to food wrappers, Ziploc bags, and trash bags. We use them whenever we go hiking—they're lightweight and better for the environment. 💚