David N. Waldrop, CFP

10/09/2026

Honored to support this great organization!

Big thank you to David N. Waldrop, CFP with Bridgeview Capital Advisors, Inc. for supporting our 25th Anniversary Buy A Day Charity Golf Tournament as our Cart Sponsor! We are very grateful for your support to help us raise funds for our local amazing nonprofits 🎉💚😊⛳

10/09/2026

The Backdoor Roth IRA: Watch Out for the Pro Rata Rule!

You want to contribute $7,500 to a Roth IRA, but your income exceeds the limit.

Instead, you make a $7,500 nondeductible IRA contribution, intending to convert it tax-free to a Roth IRA.

Here's the catch!

You already have $75,000 in a rollover IRA from an old 401(k).

The Pro Rata Rule requires you to consider ALL your non-Roth IRA balances when calculating taxes on the conversion.

Here's the math:

💰 Existing IRA: $75,000

💰 Nondeductible contribution: $7,500

💰 Total IRA balance: $82,500

Tax-free portion: 9.1%

Taxable portion: 90.9%

⚠️ The result? Approximately $6,818 of your $7,500 Roth conversion is taxable!

The takeaway: A backdoor Roth IRA isn't necessarily tax-free. Understanding the Pro Rata Rule before converting can help you avoid an unexpected tax bill.

10/02/2026

Backdoor Roth IRA Tax Trap

The Backdoor Roth IRA sounds simple. But there’s a catch: the Pro Rata Rule.

You can’t simply choose to convert only your after tax IRA dollars and avoid taxes on the rest.

Instead, the IRS looks at your Traditional, Rollover, SEP, and SIMPLE IRAs as one combined pool when determining how much of your Roth conversion is taxable.

It doesn’t matter which IRA the money actually comes from.

That means having other pre tax IRA balances can create an unexpected tax bill when using the Backdoor Roth IRA strategy.

Before doing a Backdoor Roth IRA, it’s important to understand what else you already have in your IRAs.

We’ll walk through the calculation details in our next post.

09/25/2026

The Backdoor Roth IRA Has a Catch

A backdoor Roth IRA is a strategy that allows high income earners to fund a Roth IRA even when their income is too high to contribute directly.

The strategy generally involves two steps:

1. Make a nondeductible contribution to a Traditional IRA.
2. Convert those funds to a Roth IRA.

While Roth IRA contributions are subject to income limits, Roth conversions are not. This creates a “backdoor” for getting money into a Roth IRA.

It sounds simple, but there is an important catch.

If you already have money in a Traditional, Rollover, SEP, or SIMPLE IRA, the Pro Rata Rule can make part of the conversion taxable.

We’ll explain how that rule works in our next post.

09/19/2026

Hey friends! 👋

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Would you mind heading over to my Nextdoor business page and clicking “Fave”?

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09/18/2026

What is a Roth IRA conversion?

A Roth IRA conversion is the process of moving money from a Traditional IRA or non-deductible IRA into a Roth IRA.

Why consider a Roth IRA conversion?

You’ll pay taxes on any pre-tax dollars converted, but once the funds are in the Roth account, they can grow and be spent tax-free in retirement.

In addition, Roth IRAs are NOT subject to required minimum distributions (RMDs).

When is a Roth IRA conversion ideal?

A conversion may be especially valuable in years when your current tax rate is lower than you expect it to be in the future.

09/11/2026

Roth IRAs can be powerful tax planning tools, but income limits apply.

These limits are based on Modified Adjusted Gross Income or MAGI. This can make things a bit confusing because we don't often think of our income in these terms.

Referring back to your tax returns can help but tax planning is key.

It's best to think of MAGI as your Adjusted Gross Income with certain deductions added back in.

09/04/2026

Roth IRAs: The Tax Free Retirement Account

Most retirement accounts require withdrawals in retirement to be taxed as ordinary income. Roth IRAs allow withdrawals to be taken tax free.

With a Roth IRA, there is no upfront reduction in taxable income in the year of the contribution is made. These retirement accounts are funded with after tax dollars.

Once these funds are added to the Roth IRA, they grow without annual tax on dividends, interest, or capital gains.

So long as the future withdrawals are “qualified distributions,” they are considered tax free.

08/28/2026

Tax Planning Mistakes To Avoid With NUA

Net Unrealized Appreciation or NUA is a retirement plan distribution tax strategy for those who hold highly appreciated company stock.

Withdrawing 401(k) funds in this manner can result in significant tax savings versus the more common rollover method.

However, there are some common mistakes impementing this tax strategy that can undo the savings and create additional tax headaches.

08/21/2026

Who Should Consider the NUA Tax Strategy?

The primary consideration for the Net Unrealized Appreciation (NUA) strategy is having a highly appreciated stock position.

Remember, your basis in the stock is taxed at ordinary income rates. If your stock position isn’t highly appreciated, it means a large portion of the stock value is basis that won’t be eligible for the more favorable capital gains rates.

It should be noted that highly appreciated is subjective. There isn’t a specific amount of appreciation that indicates an ideal scenario. Instead, it is based on each person’s unique tax and financial situation at the time.