Episode 6: LawyerFI Podcast: Traditional v. Roth IRAs (and the Backdoor Roth IRA Explained for High Earners)

Are you getting the most out of your Individual Retirement Account (IRA)? Whether you’re just starting your career or planning your exit strategy for retirement, understanding how IRAs work—and how to use them strategically—can make a huge difference in your long-term wealth.

In this episode of the LawyerFI Podcast, Florida Collaborative Family Law Attorney Adam B. Cordover breaks down everything you need to know about Traditional IRAs, Roth IRAs, and the Backdoor Roth IRA strategy for high earners. You’ll learn how to maximize contributions, avoid common pitfalls, and compare IRAs to 401(k) plans so you can grow your money tax-efficiently and achieve financial independence.

Traditional vs. Roth: Taxes Now or Taxes Later?

The first step in building a smart IRA strategy is understanding the two main types:

• Traditional IRA: Contribute pre-tax dollars and get a tax deduction today, but pay taxes when you withdraw the money in retirement.

• Roth IRA: Contribute after-tax dollars and enjoy tax-free withdrawals in retirement—your future self will thank you.

In the episode, Adam explains how your current income, tax bracket, and long-term goals can help determine which type is best for you.

The Backdoor Roth IRA for High Earners

What if you earn too much to contribute to a Roth IRA directly?Enter the Backdoor Roth IRA, a perfectly legal workaround that allows high-income professionals to convert Traditional IRA contributions into a Roth, even if their income exceeds the IRS limits.

Adam walks you through the steps, key deadlines, and common mistakes to avoid so you can use this powerful strategy without triggering unnecessary taxes or penalties.

Maximize Contributions & Automate Your Savings

Consistent contributions are the key to compounding growth. In this episode, you’ll learn:

• Annual IRA contribution limits and catch-up rules for those 50 and older.

• How to automate transfers so you save without thinking.

• Strategies to use bonuses, tax refunds, or side hustle income to boost your retirement savings.

Even small, automatic contributions can grow significantly over time thanks to compound interest.

IRAs vs. 401(k)s: Which Is Right for You?

Many professionals wonder whether to prioritize their employer’s 401(k) plan or an IRA. Adam breaks down the pros and cons of each, including:

• 401(k): Higher contribution limits and employer matches.

• IRA: More investment flexibility and potential tax advantages.

  
  

The good news? You don’t have to choose one over the other—you can often contribute to both to maximize your retirement savings.

Rules to Avoid Penalties

Retirement accounts come with strict IRS rules. Withdraw too early or skip required minimum distributions (RMDs), and you could face steep penalties. Adam shares essential tips to stay compliant while keeping your money growing.

Start Building Your Wealth Today

Whether you’re fresh out of law school or approaching retirement, it’s never too late—or too early—to put your money to work. By understanding how Traditional IRAs, Roth IRAs, and Backdoor Roth IRAs fit into your financial plan, you can build wealth, lower taxes, and create the freedom to live life on your terms.

Listen to the full episode of the LawyerFI Podcast for actionable strategies and real-world examples to help you get started.

This episode is brought to you by Family Diplomacy: A Collaborative Law Firm, serving professionals across Florida with dignity and privacy in divorce. Learn more at www.familydiplomacy.com or call 813-443-0615 to schedule a confidential virtual planning meeting.

Are you using a Traditional IRA, Roth IRA, or Backdoor Roth to grow your wealth? Share your strategies and questions in the comments below!