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Triple tax advantaged Roth! (sort of)

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  • Triple tax advantaged Roth! (sort of)

    2017 was the first year we did a dependent care FSA. My husband had $5k withheld from paychecks spread out over the year and submitted the receipt from daycare proving we spent more than $5k total, then got a check for $5k of income which was not subject to income tax.

    As soon as it was deposited we put $5500 into his Roth via the backdoor, where of course it will not be taxed for dividends nor capital gains. So most of his Roth contribution for this year was essentially triple tax advantaged! I'm calling it a win. Too bad $5k is the family limit so we couldn't both do it.

  • #2
    ...what?

    You're suggesting people make Roth IRA contributions and use FSAs made available to them by their employers?

    I mean, sure, obv one should do that in any case, but...what about the remainder of the $6,000 you can contribute to IRAs for 2017?

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    • #3




      …what?

      You’re suggesting people make Roth IRA contributions and use FSAs made available to them by their employers?

      I mean, sure, obv one should do that in any case, but…what about the remainder of the $6,000 you can contribute to IRAs for 2017?
      Click to expand...


      Of course. We just did the Roth right after we got that check, so it *felt* like we put pre-tax money into the Roth.

      We already did my Roth the first week of Jan.

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      • #4




        2017 was the first year we did a dependent care FSA. My husband had $5k withheld from paychecks spread out over the year and submitted the receipt from daycare proving we spent more than $5k total, then got a check for $5k of income which was not subject to income tax.

        As soon as it was deposited we put $5500 into his Roth via the backdoor, where of course it will not be taxed for dividends nor capital gains. So most of his Roth contribution for this year was essentially triple tax advantaged! I’m calling it a win. Too bad $5k is the family limit so we couldn’t both do it.
        Click to expand...


        Sounds like a smart idea for those with kids.  If we ever end up with kids I'll remember to look into this.  Thx!

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        • #5
          Not really triple tax advantaged. You're just using the tax advantage you get from the FSA and attributing it to the Roth.

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