CrossleyShear Wealth Management's Media

The Scoop on Backdoor Roth IRAs

– Evan Shear, CFP® and Dale Crossley, JD, CrossleyShear Wealth Management

If you’re in a higher-income bracket and have been saving for retirement, you likely have a traditional IRA in your portfolio. There are two types of IRAs for individual investors: traditional and Roth. Meanwhile, businesses can set up SEP IRAs or SIMPLE IRAs. However, higher-income individual investors can also set up what are called back door Roth IRAs. You may also be able to rollover your 401k into a Roth IRA.

We receive many questions about the tax advantages of the various types of IRAs. Routinely, we help our clients determine the feasibility of converting traditional IRA or 401k assets to Roth IRA assets, even if they earn more than the income limits determined by the IRS.

Only two things are guaranteed in life, and one of them is taxes.

If you're saving for retirement and looking for efficient tax strategies, traditional IRAs can be a great choice. They're a valuable tool to save money for your golden years.
If you're okay with making after-tax contributions for retirement, a Roth IRA may be a better choice.

Let's start with a quick overview of IRAs.

Traditional and Roth IRAs

According to the Internal Revenue Service (IRS), "An individual retirement arrangement (IRA) is a tax-favored personal savings arrangement, which allows you to set aside money for retirement." While these accounts can’t be held jointly with your spouse, your spouse can be a beneficiary in the event of your death.

  • Traditional IRAs allow you to save for retirement with pre-tax funds. If you make early withdrawals, you incur fees and tax penalties.
  • Roth IRAs require after-tax contributions. There are no taxes or penalties if you withdraw funds after the Roth IRA has been established for 5 years. Otherwise, you will be responsible for paying taxes and penalties. It’s important to know that the Roth five-year rule applies to the following instances: you withdraw account earnings, convert a traditional IRA to a Roth, and if a beneficiary inherits a Roth IRA.

IRAs have income limits, however, and we'll get to that in a moment.

Each system has advantages and disadvantages, depending on your tax bracket and retirement saving goals. However, both types of IRAs will likely earn better interest than a savings account and are virtually risk-free compared to other investments.

Traditional IRAs: Great for Keeping Your Taxable Income Low

The IRS strictly limits contributions to traditional IRAs. Currently, that cap is $6,000 per year if you're under 50. If you're on the cusp of a higher tax bracket and can stay in a lower bracket by opening a traditional IRA, it may be the perfect time to invest.

Roth IRAs: Retirement Savings When You Can Manage the Tax Bill

According to the IRS, contributions to a Roth IRA aren't tax-deductible. You don't report contributions on your tax return. Therefore, qualified distributions or distributions that are a return of excess contributions (and withdrawn by the tax-filing deadline in April) aren't taxed. Roth IRAs must be designated as such when they're set up.

The challenge for many high earners, though, is Roth IRA income limits. For the 2020 tax year, the government allows only married couples filing jointly with modified adjusted gross incomes below $206,000 or $139,000 for a single individual to contribute to a Roth IRA. In 2021, the limits are $208,000 / $140,000.

However, you can transfer funds from a traditional IRA to a Roth IRA! It's called a backdoor Roth IRA, and you'll need to pay some taxes to get it done.

The Scoop on Backdoor Roth IRAs

According to the IRS, "Regardless of the amount of your adjusted gross income, you may be able to convert amounts from either a traditional [IRA]into a Roth IRA."

In other words, a backdoor Roth IRA allows high-income individuals to sidestep Roth's income limits.

Here's how it works:

  • You put money in a traditional IRA
  • Convert contributed funds into a Roth IRA.
  • Pay some taxes on those funds.
  • You now have a “backdoor” Roth IRA

Even though your earnings exceed the Roth IRA income limits, this back door allows you to grow your savings tax-free!

That said, you’ll want to take steps to minimize costly mistakes and reduce your legal liabilities. Before making any major moves with your retirement savings, be sure to talk to your financial advisor as well as qualified tax professional and consider these drawbacks to backdoor IRAs:

  • Don’t forget, money converted from a traditional IRA to a Roth IRA falls under a Roth five-year rule.
  • So, if you need that money soon and can’t wait five years to withdraw it, you may owe taxes and a 10% penalty.
  • The withdrawal may push you into a higher tax bracket. You want to avoid that, so only convert enough funds to keep you below that threshold.

In addition, if you're thinking of using money from your withdrawal to pay the required taxes, don’t. You'll be sacrificing any interest your money could be earning. There's also a risk if you're under 59-½: you may incur a 10% early withdrawal penalty.

Rollover your 401k into a Roth IRA

In addition, you may be able to rollover your 401k directly into a Roth IRA if you meet certain requirements.

  • You separate from your employer, retire, or in some cases, if you are 59-½.
  • Depending on your current employers’ rules, they may permit an in-service rollover, but it’s best to discuss the pros and cons of this option with your financial advisor.

Like the traditional IRA conversion, you’ll owe taxes, so it’s important to carefully review this strategy with your financial advisor as well as qualified tax professional to determine whether paying taxes now, to reduce the burden later, is truly the best option for you.

At CrossleyShear Wealth Management, we know you've worked hard to plan for a retirement you'll enjoy. If you'd like to learn more about whether a backdoor Roth IRA, 401k rollover or traditional IRA is the best financial strategy for you, we're here to help. Schedule an appointment today.

The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of the author and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Past performance does not guarantee future results.

Contributions to a traditional IRA may be tax-deductible depending on the taxpayer's income, tax-filing status, and other factors. Withdrawal of pre-tax contributions and/or earnings will be subject to ordinary income tax and, if taken prior to age 59 1/2, may be subject to a 10% federal tax penalty.

Like Traditional IRAs, contribution limits apply to Roth IRAs. In addition, with a Roth IRA, your allowable contribution may be reduced or eliminated if your annual income exceeds certain limits. Contributions to a Roth IRA are never tax deductible, but if certain conditions are met, distributions will be completely income tax free.

Unless certain criteria are met, Roth IRA owners must be 59½ or older and have held the IRA for five years before tax-free withdrawals are permitted. Additionally, each converted amount may be subject to its own five-year holding period. Converting a traditional IRA into a Roth IRA has tax implications. Investors should consult a tax advisor before deciding to do a conversion.

While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional.

Any opinions are those of the author and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Past performance does not guarantee future results.

*Trust services offered through Raymond James Trust, N.A., a subsidiary of Raymond James Financial, Inc. CrossleyShear Wealth Management and CSsports are not registered broker dealers and are independent of Raymond James Financial Services. Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC.

Investment advisory services are offered through Raymond James Financial Services Advisors, Inc. Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.

Securities are offered through Raymond James Financial Services, Inc., member FINRA/SIPC. Investment advisory services offered through Raymond James Financial Services Advisors, Inc. CrossleyShear Wealth Management is not a registered broker/dealer and is independent of Raymond James Financial Services.

CrossleyShear Wealth Management’s Evan Shear and Dale Crossley Named to Forbes’ 2021 List of Top Wealth Advisors

HEATHROW/MERRITT ISLAND, FLORIDA, February 23, 2021 – CrossleyShear Wealth Management (CrossleyShear), a team of premier financial planning and wealth management advisors, announced today that both founding partners, Evan Shear and Dale Crossley, have been named to Forbes Magazine’s prestigious list of America’s Best-in-State Wealth Advisors. The annual ranking spotlights more than 5,000 advisors who are researched, interviewed, and assigned a ranking based on an algorithm of qualitative and quantitative criteria.

“It’s truly humbling for me and the entire CrossleyShear team to be recognized for a fourth consecutive year with the tremendous honor. This achievement clearly demonstrates our entire team’s passion for providing our clients with the very best in care and financial planning expertise,” stated Evan Shear, Co-Founder and Branch Manager of CrossleyShear Wealth Management, and CERTIFIED FINANCIAL PLANNER™ professional. “Our focus is always first and foremost on our clients. Helping them succeed and making a positive impact on their lives each and every day is the core of our mission,” added Dale Crossley, JD, Co-Founder of CrossleyShear Wealth Management, Branch Manager and Financial Planner – RJFS.

The Forbes ranking of Best-In-State Wealth Advisors, developed by SHOOK Research, is based on an algorithm of qualitative criteria, mostly gained through telephone and in-person due diligence interviews, and quantitative data. Those advisors that are considered have a minimum of seven years of experience, and the algorithm weights factors like revenue trends, assets under management, compliance records, industry experience and those that encompass best practices in their practices and approach to working with clients. Portfolio performance is not a criteria due to varying client objectives and lack of audited data. Out of approximately 32,725 nominations, more than 5,000 advisors received the award.

To learn more about CrossleyShear Wealth Management and the practice’s financial planning and wealth management solutions, visit CrossleyShear.com. For more information about CSsports, visit CSsports.net.

About CrossleyShear Wealth Management | Since 1998, CrossleyShear Wealth Management has served as a premier financial planning team dedicated to helping provide clients and families with innovative financial solutions and wealth management strategies. With offices in Heathrow and Merritt Island, Florida, their tailored customer care philosophy and customized planning process helps empower its clients to achieve their financial goals and financial independence. The company’s CSsports division exclusively serves the unique needs of professional athletes – before, during and after their sports career – providing customized solutions ranging from everyday spending advice and retirement planning to managing investments, insurance and business planning. For more information about CrossleyShear Wealth Management and CSsports, visit CrossleyShear.com.

1515 International Parkway, Suite 2019, Heathrow, FL 32746 | 407.215.7575

2395 N. Courtenay Parkway, Suite 201, Merritt Island, FL 32953 | 321.452.0061

CrossleyShear Wealth Management and CSsports are not registered broker dealers and are independent of Raymond James Financial Services. Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC.

Investment advisory services are offered through Raymond James Financial Services Advisors, Inc. Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.

The Forbes ranking of Best-In-State Wealth Advisors, developed by SHOOK Research, is based on an algorithm of qualitative criteria, mostly gained through telephone and in-person due diligence interviews, and quantitative data. Those advisors that are considered have a minimum of seven years of experience, and the algorithm weights factors like revenue trends, assets under management, compliance records, industry experience and those that encompass best practices in their practices and approach to working with clients. Portfolio performance is not a criteria due to varying client objectives and lack of audited data. Out of approximately 32,725 nominations, more than 5,000 advisors received the award. This ranking is not indicative of an advisor's future performance, is not an endorsement, and may not be representative of individual clients' experience. Neither Raymond James nor any of its Financial Advisors or RIA firms pay a fee in exchange for this award/rating. Raymond James is not affiliated with Forbes or Shook Research, LLC. Please visit https://www.forbes.com/best-in-state-wealth-advisors for more info.

CrossleyShear Wealth Management Team Member Shaun Jones, AAMS, Earns Accredited Asset Management Specialist Designation

HEATHROW/MERRITT ISLAND, FLORIDA, January 27, 2021 – CrossleyShear Wealth Management (CrossleyShear), a premier financial services and wealth management company based in Merritt Island and Heathrow, Florida, announced today that Shaun Jones, AAMS®, Financial Advisor, has successfully earned the Accredited Asset Management Specialist (AAMS) designation through the College for Financial Planning. The AAMS program is designed to impart strong fundamental financial knowledge on advisors enrolled in the program, with a particular emphasis on asset management and investments. The curriculum not only includes identifying new investment opportunities, but also covers a wide range of planning topics including insurance, tax, retirement and estate issues.

“The AAMS designation requires mastery of a comprehensive curriculum that ultimately empowers advisors to provide a more in-depth and holistic financial planning strategy for the clients that they serve,” stated Evan Shear, Co-Founder and Branch Manager of CrossleyShear Wealth Management, and CERTIFIED FINANCIAL PLANNER™ professional. “We’re extremely proud of Shaun for taking on this valuable professional development opportunity and have witnessed first-hand how the program has resulted in tremendous professional growth for Shaun in all aspects of financial planning.”

“Shaun has been a critical addition to the CrossleyShear team and this achievement is a testament to his commitment to providing our clients the very best in asset management and financial planning expertise,” stated Dale Crossley, Co-Founder of CrossleyShear Wealth Management, Branch Manager and Financial Planner – RJFS. “He has always had an innate understanding of how to provide the utmost in client care and earning this designation will allow him to build even stronger relationships with the clients he serves.”

To learn more about CrossleyShear Wealth Management and the team’s financial planning and wealth management solutions, visit CrossleyShear.com. For more information about CSsports, visit CSsports.net.


About CrossleyShear Wealth Management
| Since 1998, CrossleyShear Wealth Management has served as a premier financial planning team dedicated to helping provide clients and families with innovative financial solutions and wealth management strategies. With offices in Heathrow and Merritt Island, Florida, the company’s tailored customer care philosophy and customized planning process helps empower its clients to achieve their financial goals and financial independence. For more information about CrossleyShear Wealth Management and its client-centric approach to financial planning, visit CrossleyShear.com.

About CSsports | CSsports is a division of CrossleyShear Wealth Management exclusively dedicated to serving the unique needs of sports professionals. Our success is driven by a promise to deliver personalized care and customized solutions for all aspects of our client’s financial life – before, during and after their sports career – ranging from everyday spending advice and retirement planning to managing investments, insurance, college savings and business planning. Visit CSsports.net to learn more about our sport’s professional services and solutions.

Securities are offered through Raymond James Financial Services, Inc., member FINRA/SIPC. Investment advisory services offered through Raymond James Financial Services Advisors, Inc. CrossleyShear Wealth Management is not a registered broker/dealer and is independent of Raymond James Financial Services.

1515 International Parkway, Suite 2019, Heathrow, FL 32746
407.215.7575

2395 N. Courtenay Parkway, Suite 201, Merritt Island, FL 32953
321.452.0061

Trust services offered through Raymond James Trust, N.A., a subsidiary of Raymond James Financial, Inc. CrossleyShear Wealth Management and CSsports are not registered broker dealers and are independent of Raymond James Financial Services. Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC.

Investment advisory services are offered through Raymond James Financial Services Advisors, Inc. Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.

For the Fourth Consecutive Year, CrossleyShear Wealth Management Recognized as One of the Region’s Top Philanthropic Companies

HEATHROW/MERRITT ISLAND, FLORIDA, December 10, 2020 – CrossleyShear Wealth Management (CrossleyShear), a premier financial planning and wealth management team based in Merritt Island and Heathrow, Florida, announced today they were recognized for the fourth consecutive year on the Orlando Business Journal (OBJ) List of Top Philanthropic Companies and Organizations. The list acknowledges metro Orlando businesses with a physical presence or office in Orange, Seminole, Osceola and Lake Counties that deserve recognition in the community for their valuable corporate-sanctioned giving and volunteer programs.

CrossleyShear has consistently fostered a culture of social responsibility among its employees and traditionally contributes both financial support and hands-on volunteer time to benefit many local and national charities. In 2019, the company committed its efforts to providing much-needed financial support to local organizations that are personally meaningful to the team, including the Holocaust Memorial Resource and Education Center of Florida, Tools 4 Seminole Schools and The Treatment Advocacy Center. They also provided support to several national organizations hand selected by the team including St. Jude Children’s Research Hospital and Boys and Girls Club of America.

“This is an honor that’s extremely meaningful to our entire team because it demonstrates our commitment over the past four years to make a consistent and concerted effort to foster a deeply philanthropic corporate culture. With 2020 being such a challenging year, we’re pleased to continue making an impact,” stated Evan Shear, Co-Founder and Branch Manager of CrossleyShear Wealth Management and CERTIFIED FINANCIAL PLANNER™ professional. “We understand that charities are really feeling the decrease in funding due to the economic downturn from COVID-19. At the same time, charitable organizations are challenged with maintaining their level of support while meeting a dramatic increase in demand over last year. This year, more than ever, we’re proud to be able to carry on our tradition of supporting both local and national charities.”

“In addition to our team’s charitable efforts, we also get great satisfaction by helping our clients maximize their contributions to their favorite charitable organizations. Due to the recent CARES Act, we’re currently helping clients navigate the changes and determine the best way to strategize their contributions,” stated Dale Crossley, Co-Founder of CrossleyShear Wealth Management, Branch Manager and Financial Planner – RJFS. “Required Minimum Distributions (RMD) from an IRA are often earmarked as a charitable donation to help offset tax liability in the form of a Qualified Charitable Distribution (QCD). This year, however, RMDs are temporarily suspended. Clients are pleased to learn that they can still achieve their charitable goals despite the CARES Act and we’re honored to help them in the most tax efficient way possible.”

The advisors at CrossleyShear manage $600 million in client assets* and offer a wide variety of services, including retirement planning, investment and asset management, trust and estate planning, education planning and executive wealth management. The company also serves the complex financial and wealth management needs of sports professionals through CSsports, a division of CrossleyShear Wealth Management.

To learn more about CrossleyShear Wealth Management and the team’s financial planning and wealth management solutions, visit CrossleyShear.com. For more information about CSsports, visit CSsports.net.

About CrossleyShear Wealth Management | Since 1998, CrossleyShear Wealth Management has served as a premier financial planning team dedicated to helping provide clients and families with innovative financial solutions and wealth management strategies. With offices in Heathrow and Merritt Island, Florida, the company’s tailored customer care philosophy and customized planning process helps empower its clients to achieve their financial goals and financial independence. For more information about CrossleyShear Wealth Management and its client-centric approach to financial planning, visit CrossleyShear.com.

About CSsports | CSsports is a division of CrossleyShear Wealth Management exclusively dedicated to serving the unique needs of sports professionals. Our success is driven by a promise to deliver personalized care and customized solutions for all aspects of our client’s financial life – before, during and after their sports career – ranging from everyday spending advice and retirement planning to managing investments, insurance, college savings and business planning. Visit CSsports.net to learn more about our sport’s professional services and solutions.

1515 International Parkway, Suite 2019, Heathrow, FL 32746 | 407.215.7575

2395 N. Courtenay Parkway, Suite 201, Merritt Island, FL 32953 | 321.452.0061

*As of 12/2020.

This ranking is not based in anyway on providing investment advice or management. This ranking is not indicative of advisor's future performance, is not an endorsement, and may not be representative of individual clients' experience. Raymond James is not affiliated with Orlando Business Journal.

*Trust services offered through Raymond James Trust, N.A., a subsidiary of Raymond James Financial, Inc. CrossleyShear Wealth Management and CSsports are not registered broker dealers and are independent of Raymond James Financial Services. Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC.

Investment advisory services are offered through Raymond James Financial Services Advisors, Inc. Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.

Happy Holidays from CrossleyShear

Dear Valued Clients and Friends,

We hope this letter finds you and your loved ones well and enjoying the holiday season. We truly thank you for your business and for placing your trust and confidence in us all throughout the year. As this challenging year draws to a close, continuing our tradition of giving back in honor of our clients seems especially fitting. We’re very pleased to once again have each team member and their family select a charity to be the recipient of a CrossleyShear Wealth Management donation. Near and dear to our hearts, we have each selected the following charities for a donation.

Evan Shear, CERTIFIED FINANCIAL PLANNER™
Our family’s choice this year has been especially difficult to narrow down. This has been a very trying year for many of us as we have personally seen so many close to us struggle with mental illness, addiction, cancer, COVID-19, and a number of other illnesses and disorders. As many of you know, we lost my mother, Sheila Shear, unexpectedly in July this year. Although not the cause of her passing, she had been battling kidney issues throughout her life. We have decided to make this year’s donation in her honor and memory to The American Kidney Fund.

Dale Crossley, JD, Financial Planner
This year, I’ve selected Canines for Disabled Children for a donation. Their mission is to help children with medical needs gain more independence with the use of a service dog. I have witnessed first-hand the positive life changes, companionship and joy a service dog brings to a child with special needs with my own son and his complex medical issues. My youngest daughter has dedicated countless hours of service to this organization and has taken her own road in humanitarian service. I am honored to contribute and share in her passion for such a worthy cause.

Karin Hobin, Marketing Director
My family’s choice this year is Harvest Time International, a nonprofit humanitarian organization with a mission to bring help and hope to those who need it most. For more than 25 years, they have distributed much-needed supplies in times of disaster and supported our communities by providing food, clothing, and household essentials to children and families in need of help. This local organization is really making
a difference in our community during these difficult times.

Shaun Jones, Financial Advisor
I am thrilled that the Pancreatic Cancer Action Network is my charity of choice. I selected this foundation because my stepfather battled pancreatic cancer and their mission is very important to me. All donations support much needed patient programs, research, clinical initiatives, and advocacy.

Jenny VanTassel, Client Services Associate
This year, our family would like to donate to the Celiac Disease Foundation. Celiac disease is one of the most prevalent genetic autoimmune diseases and is often overlooked for funding and research. Diagnosed individuals have difficult symptoms to endure and have little knowledge and understanding of their disease due to under-diagnosing and a lack of awareness.

Tracy Stuck, Operation Coordinator
Due to COVID-19 and the economic downturn, many homeless students or students of low-income households have felt the burden. As a single Mom with an adult son, I understand these struggles and I’ve been touched to see how schools have stepped up to support these students. There is an urgent need, which is why I am proud to put my support behind The Foundation. Food, school supplies and essential items are necessary for students to thrive and The Foundation is helping get students exactly what they need during this difficult time.

Catalina Mejia-Hensel, Financial Advisor
Our family would like to donate to the Boys and Girls Club this year. The club promotes a safe and
positive environment for youth and teenagers to reach their full potential as productive, kind and responsible citizens.

We hope the holiday brings you great joy and we wish you much health and prosperity in 2021!

Evan, Dale, Karin, Shaun, Jenny, Tracy and Catalina

Raymond James is not affiliated with any of the above-mentioned organizations.

Find us on Facebook