I should have posted a blog post last week. Being consistent with blogging is difficult, and I'm working on improving. Thank you for joining me today for two minutes on the economy, an interesting story, and a financial planning secret.
Economy – Wrong
We see an interesting trend with more significant mistakes in overestimating employment figures. From April 2023 to March 2024, payroll growth was substantially adjusted downward by 818,000. 2.1 million jobs were added instead of 2.9 million.
Professional and business services were hit the hardest, followed by leisure and hospitality. Health services and government sectors saw increases. QCEW data is supposed to undergo further updates to become more accurate.
With inflation cooling and the labor market worsening, almost all sources suggest a September rate cut.
Interesting Story – Diversity, Equity, and Inclusion Canceled
This reverses the trend of mandating diversity, equity, and inclusion in large companies. Ford and Lowes were two companies this week that canceled their plans for DEI commitments after influencers pressured them. Other notable companies that have followed suit are Tractor Supply, John Deere, Harley Davidson, and Jack Daniel's. We are seeing a trend of companies trying to avoid divisive or political stances on issues.
Financial Planning Secret – Backdoor Roth IRA
You can't contribute to a Roth IRA if you make too much money. Right now, a couple's income (MAGI) limit is less than $230,000 and phases out at $240,000. Typically, MAGI is calculated by taking your income and subtracting 401k/IRA contributions before taking a deduction. Some other adjustments may apply.
However, a backdoor Roth IRA can get around this rule. It's accomplished by first making a nondeductible contribution to a traditional IRA and, before investing, doing a Roth conversion into a Roth IRA. You won't have to owe taxes on the Roth conversion. It typically only makes sense to do this if you don't have money in a traditional IRA, Rollover IRA, or SIMPLE IRA because you'll owe taxes on the conversion. Check out my Roth VS Traditional IRA article for more information on contributing to IRAs.
Meet with one of our Spokane financial advisors for any questions.
About the Author
Noah Schwab CFP® is a financial advisor in Spokane, Washington, specializing in helping couples with 401k five years from retirement.
- Fiduciary. No commission, no products
- Investment management and financial planning
