Bola Sokunbi tells us the amazing story growing up with a mother who was initially left out, like many women, of the family’s financial decisions. Whether you’re a man or woman, today you’ll hear the reality of your financial life: you can’t delegate it to other people. There’s nobody better to tell this story, so we’re super excited that today Bola, the mind behind Clever Girl Finance, joins us.

In our headlines segment, we’ll take a call from our long-time friend and Detroit Free Press reporter Susan Tompor. Susan has written a piece on a new money scam which involves receiving an email from your “boss” asking you to buy a few costly gift cards. This is definitely one to watch out for, and we’ll find out all the details on the scam from Susan.

And after we give Doug a chance to deliver some buffalo wing themed trivia, we’ll throw out the Haven Life Line to a caller who’s wondering what to do with her cash from a discontinued retirement plan. Brooke works for a small startup, and her employer recently discontinued a fee riddled 401k offering. Brooke had $2000 in her 401k, and wonders what should she do with the money now?

We’ll finish out the show with a letter from Brian, who wants to make sure his thinking on the pro-rata rule and backdoor Roth conversions is solid. Could he avoid the tax hit from a traditional-to-Roth conversion if he does it in in his wife’s name? What’s a backdoor Roth IRA? How does a pro-rata rule work and will it kill you? All good news: we’ll explain the rules AND define all of these technical terms.

Show Notes:

Headlines

• A HUGE thanks to Susan Tompor for talking about her news piece with us today. You can the article here:
  • Don’t do your boss any favors buying gift cards — it’s likely a scam
• The World’s Luckiest Intern Just Made $1.82 Million in a Single Day. Here’s the Incredible Story (Inc.)

Bola Sokunbi

Want more from Bola? Check out her sites below:

• BolaSokunbi.com
• CleverGirlFinance.com

Interested in getting Bola’s book? By ordering through our Powell’s link you can get yourself a copy of Clever Girl Finance AND help the show:

Would you rather order through Amazon? Click here.

Doug’s Trivia

• Who was the inventor of buffalo chicken wings?

Haven Life Line

• Brooke works for a small startup. Her boss discontinued their 401k offering. She has about $2000 in the account. What should she do with the money?

Letter

Brian wants to make sure his thinking on the pro-rata rule and backdoor Roth conversions is solid. Could he avoid the tax hit from a traditional-to-Roth conversion if he does it in in his wife’s name? You can check out the details of the question below:

Hey guys! I have a question about backdoor Roth conversions and the pro-rata rule. My wife and I both have defined-benefit plans through our employers and we both contribute to employer-sponsored retirement plans (403b and 457). I also have a separate IRA that I rolled over from a previous employer’s 401k.

Because our current marginal tax rate is relatively low (historically speaking) and we are likely to continue to draw income through our pensions, social security, and other retirement savings after we stop working, I think it makes sense to start Roth savings now.

We have Roth options through our employer programs, but I’d prefer the tax savings of traditional 403b and 457 contributions. Our income is too high for straight Roth contributions, so I’m considering a backdoor Roth. My rollover IRA has about $100,000 in it and I want to avoid the tax hit of the pro-rata rule. I would prefer not to roll my IRA over into my employer’s program because of its limited fund choices and fees.

So my idea is to open a traditional IRA for my wife and after making the maximum contributions each year, convert it to a Roth. She does not have any IRAs, only her existing pension and employer plans.

Am I thinking about my options correctly and am I right that we avoid the pro-rata tax hit if the traditional-to-Roth conversion is in my wife’s name? Thanks!

Join us Wednesday!