Main Street Business

#588 Tax Strategy Q&A: Mega Backdoor Roth, RV Write-Offs, and LLC Mistakes

• Mark J Kohler and Mat Sorensen

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Mark Kohler and Mat Sorensen are back for another Open Forum episode of the Main Street Business Podcast — answering real tax, legal, and wealth-building questions from listeners across the country.

In this episode, they cover advanced strategies and insider tips for:

  • The Mega Backdoor Roth: How it works and who can use it
  • Maximizing vehicle deductions and depreciation the smart way
  • Fixing a broken S-Corp partnership structure
  • LLCs vs. business trusts in California
  • Solo 401(k) contribution strategies to hit the $70K cap
  • Combining multiple accounts in a Multi-Member IRA LLC
  • RV write-offs: What full-time RV entrepreneurs can (and can’t) deduct

Whether you're a business owner, investor, or just want to stop overpaying the IRS — this episode is packed with strategies and answers that could save you thousands.


Speaker 1:

Welcome to the Main Street Business Podcast with your distinguished hosts, mark J Kohler and Matt Sorenson. Both are bestselling authors and have over 25 years of industry experience, with 10,000 client consultations, making them the leading tax and legal experts in the nation. Together, they'll unpack the most complex tax, legal and financial strategies crucial for saving more, stressing less and building generational wealth. Crucial for saving more, stressing less and building generational wealth. Today they're your personal advisors, ready to break it down for you and make the tax and legal game easier than ever. Here is Mark and Matt.

Speaker 2:

This is how you build wealth. This is how you build your American dream.

Speaker 3:

The business trust is the same and you don't have to pay 800 bucks to the state of California. I know you want me to give you that answer, william, but I'm not, because there's no such thing as a business trust in the state of California.

Speaker 2:

Three partners have equity ownership in the same S corporation. You're in the wrong structure. Whoever recommended an S corp for the three of you and didn't fix this when you added your last partner? That would have been a great time to do it. They just made it worse. This is bad. This has cost you thousands of dollars. So here's the perfect structure. Welcome everybody to the Main Street Business Podcast. My name is Mark Kohler. I'm here with the infamous Matt Sorenson, author of the self-directed IRA handbook, second edition, the best-selling book in the industry. Boy, this sounds really. Was that too commercially, matt? Because I don't know. I appreciate the plug.

Speaker 3:

I mean, we had a special going for Amazon Prime just a couple weeks ago.

Speaker 2:

You could have got the book for a dollar. Well, I'm excited to be here again with Matt. I learn something new every time Matt and I hold a podcast Again with Matt. I learn something new every time Matt and I hold a podcast. It always blows my mind when CPAs and attorneys think they know it all, because the more I learn, the more I realize I don't know. An open forum is a great opportunity for you, the listener to. I guess and I hate to say it some tough love is feel the same way, because when you hear these questions, you're like, oh my gosh, I never thought to ask that. So we're excited to be here with you today. Open forum I know, matt, this is one of your favorites.

Speaker 3:

I love open forum because we got to hear what people want to know. A lot of times Mark and I are like you know, we're in the weeds. Sometimes we're like we're like we got to pop our head out for open forum, like, oh, this is actually what people are asking about, because you get to submit your questions. At MainStreetBusinessPodcastcom you can submit your questions. I've looked up a couple of these because sometimes we know I'm off the top of our head. Mark and I have done the 10,000 consults as lawyers for 20 plus years, so we've had a lot of the same questions over and over again and this is what we do every day. But every once in a while I'm like I got to look that one up a everyone for submitting the questions and can I be lead-off hitter?

Speaker 2:

Yeah, yeah. And if you're watching here on YouTube, you're going to see Matt and I doing a lot of kind of research in between questions while Matt's covering something and I'm prepping for the next one. These are not easy questions, so some are, but, matt, you're up to bat. What do you got?

Speaker 3:

Okay, lead off hitter. This question is from Dave. Dave said do most 401k plans allow for an after-tax contribution and in-service distribution so that I can do the mega backdoor Roth strategy? For those of you that don't know what the mega backdoor Roth is, this is a way if you have a 401k plan maybe this is your employer you work at in corporate America in your day job We'll get to a solo K here in a second, but let's talk about your 401k at your day job. You can put up to $69,000 a year into that account If it allows for an after-tax contribution which you can roll out and do what's called this mega backdoor Roth strategy.

Speaker 3:

Now what Dave's asking here is hey, but I have to do an after-tax contribution in order to let this strategy work. Do most 401k plans allow that? Great question. Vanguard did a study on that in 2024, and they came out and said about 25% of 401k plans in the US allow for an after-tax contribution, which is what enables this mega backdoor Roth strategy. So short answer here is Dave, about a fourth of the 401k plans out there allow for this after-tax contribution that enables this mega backdoor Roth strategy. So you want to check with your company's 401k whether they allow for it or not.

Speaker 3:

For you business owners that are like well, I own the business, I'll just allow it in my 401k. The mega backdoor Roth doesn't work for you business owners that own your own business. There's a snag in that. Unfortunately, for solo K owners, where you don't have other employees, it's just you or business partners, you can do the mega backdoor Roth, and our solo 401k plan certainly allows for after-tax contributions, so you can execute that with a solo 401k.

Speaker 3:

So a little detailed, nerdy question there. Loved it, though, dave, because we do love the mega backdoor Roth strategy and, by the way, it is alive and well. I saw a lot of Yahoo's on YouTube posting videos saying the backdoor Roth is gone. The mega backdoor Roth is gone, and those idiots were talking about build back better bill that never passed when Joe Biden was in office. They didn't realize the other BBB big beautiful bill was a different law that actually passed. So careful who you get your advice from, particularly people with zero credentials on YouTube trying to give you tax advice. We're actually taxed lawyers, so we know what we're talking about. Those strategies are alive and well.

Speaker 2:

Yeah, and if you go to Grok or ChatGBT and put in what was the rule under BBB, you will get the bill back better. So I want to remind all of you the actual bill name is the one big beautiful bill. So you put in there, let it start with the letter O. And, by the way, I am holding it right here, the entire bill, double-sided bill, the act, and it's a monster. I think I got my social media manager in the house, jolie helped me get this thing printed, so it was funny.

Speaker 2:

When I went to Kinko's to pick it up, I was like, oh, I got to pick this up and they're like geez, what the hell is this? I go oh, this is the big beautiful bill. And everybody in the whole, there was a waiting line. You know, waiting in line, that's it. I go, this is it, this is what it looks like. And it was like oh, my gosh, you know. And they were like can I look at it? And it was kind of cool. You know people are like never seen a bill and how big it really was. Yeah, yeah, kind of fun.

Speaker 3:

All right, I thought you were like a senator or congressman having a vote on this thing or something right.

Speaker 2:

And you're like oh, we voted on that last week.

Speaker 2:

I guess I better read it pen at the King Ghost table and a desk, all right. Well, this next question is from Collins M13. Now he says. He asks does the IRS cap total first year depreciation at $11,600 per vehicle? This is what my accountant told me. Everything I've researched said in 2024, I could deduct 12,400, plus the 8,000 of bonus depreciation is my vehicle is less than a 6,000 pound vehicle truck, so he's got dealing with an auto and for a total of 20,400. Is this true about first year depreciation limits? I'm considering amending my tax return. I don't know what to do. Is this inaccurate or accurate? And he says, finally, I'm considering amending my tax return. I don't know what to do. Is this inaccurate or accurate? And he says, finally, I'm actively looking to switch to someone in the Mark Kohler Tax Pro Network. And thank you, colin, we would love to have you. We have a network of over a thousand accountants that have been trained by Matt and I in our Main Street Tax Pro certification, where we try to be on the cutting edge and be on the same page, frankly. So on this question, this is a good one, colin. Yeah, your accountant was right. For 2023, sorry, the limit was $11,600 in 2023, plus you got the $8,000 bonus kicker. Plus you got the $8,000 bonus kicker. So that was 2023. In 2024, it is 12,400 plus 8,000. And you were correct. So that's a total of 20,400 in 2024.

Speaker 2:

This year, everybody, the first year depreciation limit for vehicles. Now, again, if you've got a 6,000 pound greater vehicle, it's a whole other equation is 12,200 plus bonus, matt. It went down. So it's very fascinating that maybe it's fuel costs going down. The depreciation limit actually was adjusted downward in 2025. Now, with that, said everybody, this is a great question, to downward in 2025. Now, with that, said everybody, this is a great question.

Speaker 2:

Just because you can do it doesn't mean you should. How many of you 21-year-olds have faced that one right? So let's be careful, because we hear about bonus depreciation. I got to take bonus. I got to do it. It's in the big beautiful bill. No, you got to think, should I? So I'm just going to quickly say this when you look at a vehicle, say, am I going to put on more miles than if I went with mileage deduction? I might get more bang for my buck, rather than going with gas fuel repairs and maintenance and depreciation because there's going to be a limit and depreciation, because there's going to be a limit. So if you buy a $40,000 vehicle, the most you can write off the depreciation in year one is $20,400 plus your fuel. Well, if you're going to burn a bunch of miles in the first couple of years maybe three years, if you're a realtor, you're on the road a lot, you might put on 20,000 miles and your deduction could be well over $12,000, $13,000 a year. In two years you've surpassed what you've gotten with actual doing bonus. So just because you can do it doesn't mean you should.

Speaker 2:

Now, last thing I'll say. This is that limit is after you look at business use percentage. So let's say that realtor out there says I got one vehicle I'm cranking, I'm out there. It could be Uber. You could be an Uber driver and say I'm going to be using it 10% or 20% for personal use. I only have one vehicle. So 10% to 20%. Going to the grocery store and out to the movies and up to the lake on the weekend. Okay, so 80% business use.

Speaker 2:

So if I buy that same vehicle for $40,000, new or used, cash or credit, doesn't matter I have to take off 20% for personal use. So that would be, in that example, $40,000. I would take off $8,000. So now my depreciable basis is $32,000. So in the first year I might write off $20,000. I've only got another $10,000 or so to write off in year two. So then it's just fuel. You're going to put on a lot of miles by year. Three bonus would have screwed you. So be careful, be looking at your use, the cost of the car and the amount of miles and try to project. And, by the way, once you choose your method, you're stuck with it. So this is why a tax advisor might help you through that process. Great question, colin. Wish you the best.

Speaker 3:

Dang awesome tip Love that. So help you through that process. Great question, colin. Wish you the best. Dang Awesome tip Love that. So good, so well said. It's actually kind of a tricky analysis there, and some good rules of thumb are like the expensive car right, you may want to that you don't drive a lot of miles Maybe, but then you go with the.

Speaker 2:

L word lease it, ooh, lease it. There you go. See, I'm going to go with the 80% of the lease payment because I'm not going to put on a bunch of miles and I'm going to kick it back in three years anyway. High value cars I like the lease method.

Speaker 3:

I was going to say the low value cars with high miles. We're doing mileage? Oh, absolutely, yeah, rule of thumb, yeah, yeah, um, great question. Uh, incredible answer. Mark J Kohler. All right, here's this one's from. I don't even know if I can do this name, yan Zizo. I don't know, this has got to be a. This is a terrible handle, yan. I'm just going to go with that, all right. Yan's question is I have a Maryland LLC and a Pennsylvania LLC that hold title to rental properties. They are single member LLCs to a Wyoming LLC. I presume this means your Wyoming LLC owns the Maryland LLC and it owns the Pennsylvania LLC, and those LLCs own their respective rental properties in those states.

Speaker 3:

Question is when it comes to tax filing time, how many 1065 returns should I file? Do I need to file anything for the Maryland and PA LLC? Great question, let's go work backwards on this. Jan, if you have an LLC for a rental property in Maryland, you're going to need to be filing a tax return in Maryland Now. Whether this is a 1065 or this is your personal return getting filed in Maryland, it doesn't matter. Something's going to need to get filed in Maryland Now. Maybe you live in Maryland, so you're already filing and I'm not worried about it. But if you have a rental property in Pennsylvania for this Pennsylvania LLC, you're going to also need to be filing a state return into Pennsylvania for that property. So there's going to be a state filing, not because of the LLCs necessarily or not because of a 1065, but because you have rental properties in those states.

Speaker 3:

If these are single member, which I'm assuming they are here that's what you said. The Maryland LLC and Pennsylvania LLC is single member. I'm assuming the Wyoming LLC is single member here. We'll come back to that in a second. Everything's just flowing on your 1040. There is no 1065 LLC or partnership return being filed. This is simply going on your personal return. But you'll also need to file a state return into Maryland or Pennsylvania if you don't already live in one of those states. So yes, there's going to need to be something filed in Maryland and Pennsylvania. I just don't know if it's the LLC level because single member LLCs there's no tax return filed to the IRS. Everything's flowing down onto your personal return. Now, if that Wyoming LLC is a partnership, maybe this Wyoming LLC that owns the Pennsylvania and Maryland LLCs that owns the rental property. Okay, we're working down here If that Wyoming LLC is a partnership, then it would be filing a 1065 partnership return, all right, and then that would be flowing obviously down to your 1040 as well.

Speaker 2:

Great answer, matt Love it. I can't add or take away from that. Do I hit a gavel? Done, there you go. So let it be done. So ordered, so ordered, all right, okay. Brian Cato 69. This is a tough one. I'm going to try to hit the highlights quickly.

Speaker 3:

I hope Brian was born in the year 1969. I hope that's what that's about.

Speaker 2:

You know, usually that'd be something I'd say you let that ride, you didn't even touch it. I've been trusting my inside voice for way too long and after three separate lawsuits I thought I'm going to let it go, okay, no, I'm just joking. No lawsuits, all right. Okay. Patty says yeah, you have that inside voice moment. That's the key to not say it. But, matt, you got my back. I love it today, I'll get yours next time, okay. So Brian Cato 69 says hey guys, love the podcast. Here's the question.

Speaker 2:

Three partners have equity ownership in the same S corporation. The two founding partners have 45% equity each and the most recent partner was given 10% equity to come in and run sales. The two founding partners have salary of 90K. The 10% partner has a salary of 140 plus commissions. The company is in growth mode with a plan to sell down the road. Love it. Here's the question Can the two founding partners limit their reasonable comp to lower their Social Security and Medicare taxes without having to do the same for the minority owner who really needs to work on the FICA issue?

Speaker 2:

I'm all same myself really needs to work on the FICA issue. Seems like they could lower their pay salaries to maybe 40 K and then bonus out the extra to lower their FICA. Please advise. All right, brian, you're throwing out some loaded language there. I don't want to do any bonuses per se, maybe in concept, but all right, let's back up, brian, you're going to. You're going to love this answer and you're going to hate it. You're in the wrong structure. Whoever recommended an S-corp for the three of you and didn't fix this when you added your last partner? That would have been a great time to do it. They just made it worse. So if an accountant has talked you into this structure, I've got a major. I've got a major concern with that accountant. I would please recommend they consider joining our Main Street Tax Pro certification and upgrade their knowledge on this issue.

Speaker 2:

I literally have a chapter in my book, in the Tax and Legal Playbook, on how to structure a partnership. I want you to read it. You can get it on Amazon, brian, give it to your partners. You guys need to get on the same page because if one of you goes to this accountant that sold you this structure, that account is going to find every reason in the book to prove that they're right and then you're going to have three partners that start fighting. I would recommend, before you go to your accountant first let's all get on the same page get a second opinion, do your homework and I'm going to tell you what the answer is right now, and then you can decide to go to your prior accountant Notice how I said prior. Go to that accountant and say do you want to stay the current or do you want to become the prior? Because this is bad. This has cost you thousands of dollars for I don't know how many years.

Speaker 2:

So here's the perfect structure, the perfect structure. We've got to get there through a reorganization. It may just be a few thousand dollars and you're going to save that in taxes real quick. We need an LLC for your partnership and each individual partner has their own S corporationporation. Then they can regulate, dial up, dial down their salaries, have other expenses they might want to write off Auto travel, dining, family board meetings, electronics, all sorts of goodies at the individual level with their own S-Corp. Right now, brian, you can't even write off a trip to Florida for a conference in this S-Corp because you are an employee shareholder. There is no unreimbursed employee expense deduction on your 1040. And this is so bad in so many ways. Let alone, you can't control the FICA without screwing up your partnership compensation plan.

Speaker 2:

So what you want to do is a reorg, create a new LLC, start moving operations to that LLC, depending on your structure and your business. I know you can be doctors and have Medicaid billing issues or insurance. You could be in a construction scenario where you've got vendors and suppliers using the EIN of this company. I know sometimes it's easy to say this, sometimes it's not, but you want to get a new LLC, get S-Corps for everybody. Start pushing out money that direction. It's going to save you thousands in about four or five different ways.

Speaker 2:

Get a consult with one of the tax lawyers at my office, kkoslawyerscom. They'll give you the plan. They'll build your trifecta, they'll show you how it works. Then we'll hand you, if you need it, an incredible tax advisor out of our network to help carry out the orders and make it happen. Then you circle back once a year, just like your dentist. You're going to come back to the tax lawyer and go hey, by the way, we added some rentals. Or we're going to do this, or we're going to do that. Let's get our estate plans done. This is how you build wealth. This is how you build your American dream. You've gotten some bad advice. Let's get you turned around. Get you into that structure. Get over to kkoslawyerscom and get that second opinion of what this should really look like. Get a copy of my book, brian. You're going to love it and your intention is. You're right on, spot right, spot on. The FICA is out of control, so let's dial that in with a bunch of other strategies. You'll freaking love it.

Speaker 3:

Yeah, and I just not to pile on here and that was an awesome answer, mark. But it's like Mark and I have our own S corporations. We are not partners in an S corporation, we have an LLC, basically a partnership entity that employs the employees, that receives the income, that pays the business, it pays each of our S corporations. We do our salary and pay ourselves out of that structure. We recommend it for a lot of our clients. That's what the smart people are doing because it works. It's more efficient. It might seem a little more actually because you're like, wait, there's more entities in the mix, but it actually, once you start operating and the business is making some money, it's so much better, it's more efficient, it's less tax, it's a better structure. Okay question here. This was from William.

Speaker 3:

William has a question about business trust versus LLC. This is a good one. We used to get this one a lot more. William asks will setting up a business trust offer the same in California rather than an LLC? Will the trust need to pay the $800 tax to the franchise tax board like an LLC would? Great question, william. This is a question so many people in California want the answer to be the business trust is the same and you don't have to pay $800 to the state of California. I know you want me to give you that answer, william, but I'm not, because there's no such thing as a business trust in the state of California. I know you want me to give you that answer, william, but I'm not, because there's no such thing as a business trust in the state of California. Tell me where in the code in the state of California there is a business trust? There's not one.

Speaker 3:

Now a lot of people will point to some opinion from the franchise tax board that says, hey, business trusts don't have to pay $800 because California doesn't have them. And I know there's other states that have business trusts. I know that you can set up a business trust in those states and then you can come to California and say, hey, I'm operating in California with this business trust, but in the state of California, when you're in court in California, there's no law there that says you have any liability protection. But if you have an LLC in the state of California, there's a law there, and there's a law in all 50 states. California has one for LLCs that says, hey, if something happens in this company, you have a lawsuit against the LLC. They're stuck there. They can't come after you personally as the business owner or the management of this LLC. They're stuck at the LLC level. There's not the same equivalent thing for a business trust in the state of California. I know you want it to be so. We would set up tens of thousands of these for our clients in California if it were the case. We want that to be the case too, because you could pay us, instead of sending the California franchise tax board, 800 bucks every year. So I know I came off a little hot on that, but I just don't want you to fall into this trap. Okay, We've had clients fall into this.

Speaker 3:

The other problem I've seen with clients that actually have any business of significance is you try to go transact, you try to go get a loan, you try to make an agreement with a large company, you try to sell a property and you're done with the title company. They're going to be like what the hell do you have here in California? What is this business trust? What the hell do you have here in California? What is this business trust? And you're like well, somebody had sold it to me at a holiday inn and I, because they sell trusts and they have a document for it and I and I bought it.

Speaker 3:

So it's not a substitute for the LLC. I know you can get around the $800 franchise tax on it, but it is not the same thing. Most of the time you're using some document that has no context with California law or most state laws. There's not many states that offer actually a business trust, so be careful on that. I would recommend just do the LLC suck up paying the 800 bucks to the state of California. You get to go to the beach on the weekends, you have in and out, you got Hollywood Disneyland, you know. Just just chalk the 800 bucks up to that.

Speaker 2:

Great answer, man, I love it. I love it when Matt gets hot.

Speaker 3:

I just you know this one. Just I want you to be right, william, I really do.

Speaker 2:

Yeah, yeah, you know, Matt almost dropped an F-bomb in there, I could feel it. You know a well-placed F-bomb, you know it can be respected.

Speaker 3:

Yeah, you gotta. I mean, you have to be measured on them. If you overdo them, they just don't have effect.

Speaker 2:

No, no, it was funny. Donald Trump drops that F-bomb before he jumped on a helicopter out on the lawn Unbelievable, I mean, it was mic drop level. And then it was funny, there was a comedian saying you know, I think I have a problem swearing because I just can't say the F word anymore. I have to add adjectives to it to really get the emphasis I need, because I've blown it, I've used it too much. So it's like mother, this, that, this, you know. And I'm like okay, yeah, you've got a problem, let's just dial it back. You know, just bring it in.

Speaker 1:

All right.

Speaker 2:

Yeah, well, anyway, okay, anyway, okay Just another good tip.

Speaker 3:

You know, you didn't know you'd get that. That's another good tip for any of you on. You know appropriate use of the F word.

Speaker 2:

Yeah, that's right. That's right. Well, you dropped out with your kids. They're like Dad, are you serious? Dad's pissed. Yeah, I'm in trouble on several levels.

Speaker 2:

All right, okay, this question's from Becky. This is a great question. It's about a solo 401k, her S-corp and getting the maximum contribution. Now, becky, I'm going to turn you around a little bit on this, but you're going to love this answer. At the end of the day, she says I'm an S-corp and just set up my directed IRA, solo 401k. Congrats, she's in the family here.

Speaker 2:

Although I would love to hit the $69,000 cap which, by the way, is $70,000 in 2025, I don't think I can get there. I expect to bill between $230,000 and $300,000 this year. What is the strategy for splitting contributions into my solo as an employer and employee contribution? And she says I expect to build 233. I'm not sure if she's thinking there, but that may be gross revenue or in her business net prop, I don't know. So we're not going to worry about that.

Speaker 2:

Becky and everyone out there Don't worry about Becky's total income yet. Let's just look at her goal, and her goal is I would like to put away $70,000 in my 401k this year. How do I get there, is her question and then she goes through two or three points. Well, do I do the employer contribution of 25% based on my salary, and then that's going to be $80,000, and then I add that to the salary but then max out my employee contribution after that when my salary is 103, because I put that on top of the 80. Becky, you're all turned around here. She goes there's some software out there that says Roth or traditional and X dollars is employee versus employee. Okay, listen up. And everybody here that has a solo 401k and an S corporation. You are going to love this analysis.

Speaker 2:

Here's where I start. Number one what is your reasonable comp requirement Meaning? If you have an S corporation, you have to take a certain amount of W-2 income, pay your fair share of FICA to keep the IRS happy. I always want to know what that figure is first and see what that gets us before we start trying to play with our salary, which we can. But let's find out what our bare minimum needs to be. So in Becky's example, let's say she's going to net like a net profit of her S corporation and she's going to pull out all that money and live on it whatever. That's another issue for another day but say she's going to bring home 180 grand, okay, well, I'd want to at least peg 30 grand at 30%. I would at least want to peg 30% to salary. So I'm going to go 60 grand on salary and take the other 120 as K1.

Speaker 2:

All right, then I'm going to ask my client how much do you want to put in your 401k and what would make sense? Have you already funded your Roth IRA first? Oh no, I haven't. Have you already funded your Roth IRA first? Oh no, I haven't. Have you already funded your health savings account? Oh no, I haven't. Okay, well, let's kind of hit the base hits and take some of the easy things off the table. So I would say, based on a $60,000 salary first, I would love you to do your regular Roth IRA, so seven grand.

Speaker 2:

In this example we're going to assume Becky's under age 55. So she's going to do seven grand in her Roth IRA. Now, assuming she's married, she might be able to do over eight grand. If she's single, it'd be over four grand. But I'm going to say let's get that health savings account funded as well, which you can self-direct as also. So let's take that seven to gosh 14, 15 grand off the table and get that put away.

Speaker 2:

Even with health savings account I'll get a tax deduction With the Roth. I know I'm cranking away tax-free. Then I want to do you always do your employee contribution or deferral first. So this year she could do $23,000. Then we are going to stack the employer piece on that, which is 25% of her 60 grand. So right now we're at 38,000 in her 401k, 7,000 in her Roth IRA and I'll just let's throw in another five grand somewhere in the middle for good measure in the health savings account. So right there, we're at 50K.

Speaker 2:

Now what I would recommend when possible for my clients is they're going to go with Roth IRA and Roth solo always, because we know in the long run that Roth is going to give us a lot better bang for our buck with tax-free growth and tax-free withdrawals. So I've got my four pieces here put together the Roth, the HSA, the employee deferral and then the company match On 60 grand of salary. I put away 50. 50 grand between those four little pieces and I put it in a little cylinder and stack them together pieces. And I put it in a little cylinder and stack them together. That's 50K.

Speaker 2:

Now if you want to do more, then I've got to start taking more FICA. So if I add 20 grand of salary, I'm only going to get 25% in employer match and so this FICA. I'm going to be chasing a contribution after paying 15% in FICA. Sometimes that's not a good approach, so that's when the real strategy goes to another level. But I would stick with your current salary level. What does it need to be? How much could I put away with that? Make sure you always do your Roth IRA and possible HSA in that mix. Do your employee deferral, the employer match, then reevaluate. You can ramp up your salary from there and then decide from there should I take more in salary just to get a deferral? I don't know, that's going to be very personalized.

Speaker 3:

Yeah, I mean, that's so much tax advantage money you're putting away right there on such a little salary. Only thing I would just add on that too is if you're above 150K single, 230K married, that Roth IRA might need to be a backdoor Roth IRA. Just keep that in mind. If you're usually putting away 50K of money just from a living and cost, you might be in that category where your Roth IRA needs to be a backdoor Roth IRA. But don't believe any of this noise you might hear about. Oh, high-income earners can't do Roth IRAs. Yes, they can. They just do the backdoor Roth IRA.

Speaker 2:

And let me just say you don't have to figure this out with an online calculator on your own. Becky, you've done a great job getting to this point. You know exactly what you want. Do your comprehensive tax consult with one of our tax lawyers, have that annual review, look at this and 20 other issues. Make sure your structure's dialed in. Where are you at on your estate plan? What about all your other write-offs, your board meetings, family members and blah, blah, blah. This is just a piece of a quality plan that you could get for two grand approximately here at the law firm. So please make an appointment the link's down below and then we can help you choose that right dollar amount and then get you with a tax advisor. That will add even more bells and whistles throughout the year.

Speaker 3:

Awesome.

Speaker 2:

All right next.

Speaker 3:

Yeah, I got a question here from J Marm. J Marm says Hi, can I do a multi-member IRA LLC in order to simplify investments, including my children's Coverdell, my solo K, their Roth IRA, my wife's Roth IRA and a personal stake from myself in order to increase money into the business and, if this is permissible, if I need to add more money in a year and I add it personally would I just have to restructure the ownership percentage in the books? Thanks, you guys rock. All right. Well, we got a yes and no here, james Arms. The first part is absolutely you can combine Coverdell, solok Roth IRA, your account, your spouse's account, all into one LLC. You've all got to go in at the same time and this is the multi-member IRA LLC. We break up the ownership in that LLC based on those dollars invested from the different accounts. They'll have different ownership stake. So like, let's say, you put $100,000 total in this LLC and your Roth IRA, put in 10 grand, it would get 10%. Right, your kids covered, they'll put in five grand, they'd get 5%. Now if you put in a personal stake as well, you can get ownership personally in there. Now you'll pay tax on those profits when you get a K-1 from this LLC. That piece will be taxable that you personally own, versus the tax advantage accounts here you've rattled off. So yes, we can combine all those different sources of funds into one multi-member IRA LLC to go out and make specific investments. Now that's the benefit of the multi-member IRA LLC. We can combine multiple accounts and sources of funds into one LLC to go make investments.

Speaker 3:

The downside is ownership is fixed. You cannot change ownership because you own a Roth IRA. You personally are in there, your kids' accounts are in there. When we change ownership, that is, transferring ownership from you to you personally or from your Roth IRA to your spouse's Roth IRA. Those are disqualified persons under the rules. We've got a whole Directed IRA podcast on this. If you're like I'm not sure I understand or following this, this is about self-directed IRAs and prohibited transaction rules. We cannot change ownership in those multi-member IRLCs because it causes a prohibited transaction as we're transferring ownership between what are called disqualified persons. So hopefully that makes sense, jim Arms. So the nice thing is, yes, you can form this LLC. The ownership will be fixed there, so we can't restructure or change percentages later. Now you could put more money in next year, but it's going to need to follow the same ownership percentages as when you formed it in the beginning.

Speaker 2:

Great answer, matt, love it All right. Well, this will be my last question I'll take here today, and this is from Jay Wepka, about an RV. An RV Now. Before I continue, please anyone out there that is all of a sudden thinking of all these questions that someone didn't ask and you're like, oh my heck, I really would like to know about X, y and Z. Please go to MainStreetBusinessPodcastcom and submit a question. We would love to hear from you and we would actually like to do more open forums and help answer these questions around the country. We love this engagement and it's just. This is one of my favorite shows to do. I just love hearing from you. So Jay says great content. Guys new to the channel and just listen to your RVer episode.

Speaker 2:

I am a full-time RVer and decide to start a new business as a mobile RV repair technician. I'll spend part of the year on a family property, but the question is when I travel south for the winter, I plan on working while I travel and I assume mileage and fees to stay at RV campgrounds are able to be written off. Oh, if you can only wish it so, but the question is at what percentage? If there are days I don't provide any service work? Can I park fees still where I'm written off? Also, what about meals and groceries? Thank you Well, jay, good news and bad news. I'm always a glass half full guy, so I'm going to start with the good news. First of all, jay, I love your style here. I'm living in an RV on a ranch that we're starting to build out this summer. Patty and I are doing the RV life campfires every night and working with contractors and dirt movers and excavators. It's a lot of fun and I love the RV lifestyle. So I hope you're having fun.

Speaker 2:

But for those out there, there's a big fork in the road on those that have an RV parked on the side of their house and use it occasionally and they don't realize they're sitting on a little gold mine right outside the door. Maybe I'll go there for a moment. But then we have the full-time RVers that are like I sold the house, blah, blah, blah, bought an RV, new or used, fifth wheel, whatever and we hit the open road. There's pros and cons. So here's let me tell you the good news you don't have a house payment, you are not paying property taxes somewhere, you are living with a lower cost of living overall, I'm sure. And you're out there in the open road going wherever your gypsy heart wants to take you, and I just love it. That's a lot of fun. You're going to make money on the road. You're going to be able to take tax write-offs directly related to your business.

Speaker 2:

But the con your RV is your home, it is your primary residence and you can't write off the food while you're out there. You can't write off the RV itself. It's your home. You are simply moving your personal residence around the country and once you get there, those fees for the hookups and the pad rental and blah, blah, blah those are for your home, where you live. Now I will take mileage to get where you're going. I'm cool with that because you're going to move to a new place for your business. It's not under the moving expense category, it is fairly aggressive. But you have probably an S corporation that you're going to be using for your RV tech and repair. So just live with mileage and that's it. And repair, so just live with mileage and that's it. Now, if you've got a fifth wheel going on, once you get there and you unhook the truck and cruise around, we might be able to ride off more of the truck, but the RV is going to be a hard one. It's your home.

Speaker 2:

So last point if you are a sticks and bricks think of the three little pigs you've got a sticks and bricks home and that RV parked on the side. Oh my gosh, you are sitting on so much opportunity because now that becomes a business vehicle, a work truck, you're going to go park it at the rental properties you're working on. You're going to go park it at conferences you might be going for your business. Frankly, you're not even using it for personally. You're cruising around doing business with it. Think of a contractor that parks an RV at their work sites.

Speaker 2:

That's what I want you doing with your RV and you can put it on Waverly and rent it out when it's not being used by you. You can then use it 14 days out of the year. Personal use is still right of 100% of it. As long as you've got it on Waverly, you could be making cash flow with that RV and using it as 100 hundred percent business vehicle and rental property Amazing. So look into that. For those that have that RV on the side of the house that you're kind of regretting that you bought, let's put it to use for you. Full-time RVers. Enjoy your benefits, but have a little bit of a reality check on how much you can write off while you're out there.

Speaker 3:

I love it, God going A to Z for the RV owners out there. You know, Mark, he's living the dream right now Some RV lifestyle.

Speaker 2:

Matt's nightmare, my dream.

Speaker 3:

Yeah, it's like my worst nightmare is Mark's dream. That's the last place you're going to want to see me. I just will not be happy.

Speaker 2:

I've invited him out and I'm like we've got s'mores, uh, and we got our you know side folding tables and a camp chair, and uh, yeah, I've got a little pond with 50 trout. I had 50 trout delivered this week. Oh, I'm, I'm, I'm in for that 12.

Speaker 3:

Oh my gosh, I'm allergic to trout. I'm allergic to trout. I did one of those blood tests, those food blood tests, and I was like, and literally, trout was on the list of like, and wheat too. That's more complicated.

Speaker 2:

You can still catch them and release them.

Speaker 3:

Yeah, it's all fun.

Speaker 2:

I guess no more trout almondine for Matt. Okay.

Speaker 3:

Can you put something else in there?

Speaker 2:

Well, I could. I guess bass. You know they're predatory, though I don't know. I got it totally dialed in for trout. But you know, last night I just went out there after sunset I sat in my lawn chair. I caught two rainbow. Let them off. I went swimming. Okay, I can do that It'll catch and release Very relaxing.

Speaker 3:

I'll eat your beef.

Speaker 2:

You got cattle up there I got three Wagyu's brewing. They're going to be sweet.

Speaker 3:

All right, I'm in for that Well, always a great hour with Mark J Kohler here. I've learned so much, some great, tangible tips. I'm always learning on this podcast. But thank you everyone for submitting your questions. Make sure you're sharing the show with your friends and family. If you need any tax planning specific advice, some structuring all these tax legal questions we were diving into, our lawyers do this every day for clients across the country at KQS Lawyers. The Main Street Tax Pro Network is an incredible resource to you as well. If you're like I need a new accountant, I need someone that'll help strategize with me and not just spit numbers into a computer and spit out a return at the end of the day. So we're here for you. We've got a lot of resources. Thanks for being with you. We'll see you next time.

Speaker 2:

Thanks everyone.

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Mark J. Kohler

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