Episode 029:
Your Annual IRA Contributions – When, Why & How Much!


Episode 029 Summary:

We’re at the dawn of 2023 and Co-Hosts Josh Bretl and Dave Schmidt are here to help us all fill our buckets – financially and otherwise!

Join us for a special New Year Edition of the Retirement Equals Freedom Podcast focused on figuring out how traditional and Roth IRAs as well as 401k plans can work for you!

#TaxNerds: You’ll come away understanding the benefits, limitations and rules of the road on contributions just in time for tax season – with a little historical context about retirement investing and pensions thrown in for good measure!

Don’t miss breaking news about everything from big plans for entertaining in the Bretl’s new kitchen to Dave’s secret passion for the harmonica to some fun reading recs. Let’s make the year ahead a great one!

Check out this cool new pod.link resource with all the latest and greatest about Retirement Equals Freedom and one-click access to your favorite platform for listening!

And don’t forget to join the conversation at our private Facebook group, which you’ll find here.

Click here to explore the services that FSR Wealth Strategies offers and schedule a discovery call with one of the team’s CPAs. When it comes to living your best life, it’s never too early to get started!

New hashtag. Reading. Pig the Pug. Fill your bucket. Harmonicas.

New hashtag. Reading. Pig the Pug. Fill your bucket. Harmonicas.

Talking Points

New Year Updates! Big ideas for the pod, craft cocktails, new countertops, pickleball and other hijinks on the horizon for 2023.

Then & Now: IRAs are a relatively new investment vehicle that has largely replaced the pensions that were retirement mainstays for generations.

Fun Fact: The first pension in the U.S. was established in 1875 by American Express and by 1960 half the private sector workforce had a pension.

The old pension framework started to unravel in the 1980s, due to regulatory changes that made them harder to administer and the increased incidence of job changes.

Employees today are statistically likely to hold at least 11 jobs between the ages of 18 and 48.

401k and IRA options were designed to make retirement savings portable while giving employees more control over time and reducing administrative costs for employers.

Reality Check: Many people don’t actually want to be in charge of their retirement investment choices and savings.

Rules of the Road:

  • 401ks:
    • If you’re under 50, you can put in a maximum of $22,500 in 2023.
    • If you’re over 50, you are allowed “catch-up contributions” of up to $30,000.
    • Word of Advice: Save as much as you can, but don’t go into debt to save.
    • Employer sponsors can impose restrictions on account management.
    • Generally no income thresholds.
    • Some companies offer Roth 401k options.
  • Traditional IRAs:
    • Funding source must be earned income.
    • Income thresholds apply.
    • Get to Know: Form 8606! Ask your tax specialist or see IRS details here!
  • Roth IRAs:
    • Individuals making less than $138,000 of earned income are eligible to make direct contributions. The upper limit is $153,000 annually.
    • Couples making less than $218,000 can contribute with the upper limit at $228,000.
    • Make a contribution when you’re above the earned income limit and risk BIG penalties on earnings.
    • “Back Door” Roth: Put non-deductible earned income into a traditional IRA and then instantly convert it to a Roth. There are no limits.
    • #Josh Tips: Illinois residents are almost always better off putting money into an IRA (with its federal and state deductions), then converting.

Let’s Take a Break! And Get to Know Josh & Dave:

  • What would you do with an extra hour in every day?
    • Dave has a list of things he wants to tackle in 2023, including learning Spanish and how to play the harmonica or guitar.
    • Josh: Read more! Business, motivational, fiction – all kinds of books!

Dave Relates to Retirees: Contributing to retirement accounts is like filling each other’s buckets in life – a good deed that yields rewards. But, uh, it’s a little more self-interested than selfless, so only kinda sorta the same? Josh clarifies.

Stay tuned for a fun-filled ‘23. No crystal ball predictions for retirees, but definitely the promise of lots of laughs and insights about all things financial planning.

Quotable Quotes

“We are rambling the (BLEEP) out of this right now.” ~Josh

“Bored Off Your Gourd. That might be a new hashtag!” ~Dave

“In the grand scheme of things, IRAs are relatively new … Your parents or grandparents never even knew what the heck they were.” ~Josh

“They created 401ks and IRAs with the idea that they can travel with you and the savings get built up over time. It gives the employee more control and it cuts cost for the employer, which all sounds great.” ~Josh

“Savings is always a good thing. It’s just a matter of where you save.” ~Josh

“If you’re a high income earner you probably can’t put money into a Roth directly.” ~Josh

“We’re totally going to start a band, Zach!” ~Dave

“Our first podcast of 2023 is in the books and I’m excited to see what the year holds for us and the podcast listeners as well.” ~Josh

Episode Extras

About your Co-Hosts

A certified public accountant, Josh Bretl has spent the past two decades growing FSR Wealth Strategies into a firm that specializes in tax-focused retirement planning. Because taxes have the single biggest impact on how much you can spend in retirement, Josh is dedicated to developing individualized financial plans that extend and grow his clients’ retirement savings. Based in Elmhurst, Illinois, FSR Wealth strategically preserves and maximizes resources through tax-efficient strategies designed to fulfill retirement dreams.

Apart from producing and co-hosting The Retirement = Freedom Podcast, Josh's longtime friend Dave Schmidt is a content production and marketing adviser to local businesses and nonprofits. He’s also an advocate for t-shirts, all things 90s (especially the music), short walks and long naps. A serial “wallet forgetter,” Dave nonetheless swears that he has picked up the check on at least one or two meals with Josh over the years. Evidence pending.

Standard Disclaimer:
FSR Wealth Management is a registered investment advisor located in Elmhurst, Illinois. Information and opinions contained in this audio have been arrived at by FSR Wealth advisors. All information herein is for informational purposes and should not be construed as investment advice. It does not constitute an offer, a solicitation or recommendation to purchase any security. FSR is not providing legal, tax, accounting, or financial planning advice in this audio. These views are as of the date of this publication and are subject to change.

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