My mentor WCI, recently wrote a post “9 Ways to Expend Your Roth Space.” The link will lead you to his website/article.

His advice regarding finances has always been fantastic, but I see a unsolved dilemma facing most people. IE, when you make little (like I do right now in training), you have the BEST tax bracket of your life to be putting away POST-TAX money into your ROTH accounts. This money can grow tax-FREE for the remainder of your life… and when inherited by your offspring, can continue to grow tax-FREE with mandatory distribution based on THEIR (younger) age. This means, with the low taxes you pay NOW, your money gets to grow for 3-4 decades in your life time before you need to take any out (and it’s tax-free withdrawal). Then when your heir inherit this account upon your death, the same money gets to grow tax-FREE for another 3-4 decades of their life… Imagine the power of time value on a long term investment with average market performance of 8-10% annual grow, again tax-FREE!

As you salivate to this amazing deal, you also realize, you have too little income and too much debt to be putting away much in ROTH in your lower income (lower tax bracket) years.

Then, you get to your light at the end of the tunnel, where your income jumps from 50k to 250k. Wow, now you are in the position to build great net worth from your great income. Your goals are to minimize paying high interests (ie. student loans at 7% after consolidation), to maximize retirement savings, and of course to live a little. But your high income comes with a very high tax burden as well. Putting money away in POST-TAX accounts (including mega backdoor ROTH IRA, regular backdoor ROTH IRA) costs you lots more now because your tax bracket is much higher… So frequently at this point, most people choose tax-Deferred accounts instead of post-tax ones. This is because they believe that in retirement, when they actually withdraw this tax-deferred money,  they will be in a lower tax bracket than that of their peak earning years. So they DEFER the taxes until withdrawal in retirement and pay taxes on the original fund and its growth over the last several decades based on their retirement tax bracket.


Would you like to have a LARGE tax-FREE (ROTH) retirement fund 

@ the lowest possible cost to you (ie. taxes paid)?


I’d like to propose 3 ways to combine the best of both worlds. So you can maximize your ROTH fund with paying minimal taxes in your life span. This is based on the assumption that you have little income in training, much income in peak earning years, then somewhere in the middle income during retirement years.

  • Credit cards:

How can you stow away 23.5k of ROTH money while on a 51k income? If I can do this with a family to support, anyone can.

Charge all your living expenses, except those NON-chargeable items (ie. mortgage), on your interest-free credit card. Many cards offer 18 months interest free purchases AND cash back rewards with your spending. So technically, this is borrowing @ NEGATIVE interest.

Credit card companies are INCENTIVIZING your borrowing their money to max your ROTH accounts.

Number wise, you will be making 8-10% average annual tax-free gain (long term) in your ROTH account,  while you also make 1-6% ofnthe money you borrow from credit cards during the first 18 months.

Yes, when 18 months is up, the credit card company hopes and prays that your balance stays with them so they can now make money on you @ 13-20% interest rate. But all you need to do at this point is to balance transfer to another credit card that offers you 3% transaction fee/0% for 18 months; which translates to 2% effective annual interest.

So you bought yourself 36 months of tax-free growth in your ROTH space that you will never have access to again (because when you are making too much compared to now, your tax bracket is much higher than your current tax bracket. then, it often doesn’t make sense to make ROTH contribution, back door or front door, until you max out all your tax-deferred accounts.)

Bottom line: No Brainer Math. 

The effective interest rate of the money you borrow from credit card companies over 3 years would be 1% (lower than 1% if you count the 100’s of dollars you made from cash back rewards), while your ROTH funds grow at an average 8-10%.

  • IRS

Same deal with IRS. While IRS does not incentivize you borrowing money from them, it is interest free until April 15th, tax day. A dentist paid off his student loans during his first year practicing by borrowing from IRS. He simply hold off paying taxes on his income until he had too (legally), while he applies his entire monthly gross income to his high interest student loan. Then made sure to save up a bit before April 15th so he can pay his taxes on time. So uncle Sam lent him interest free money to pay off his high interest student loan as long as he satisfy his duty by the deadline. This is what I plan to do to pay off my first home a few months prior to my adjustable mortgage rate increases. Tho not as much is saved or made when IRS lends us money, it’s still a pretty cool idea.

Alternatively, you can use a balance transfer check to pay uncle Sam on April 15th. Again, this will buy you another 18 months @ effective 2% annual interest rate.

Bottom line: No Brainer Math.

Though this requires a little more work and gets you a little less rewards than credit card companies. It’s still interest free money for up to 16 months. 

  • Other Sources of Low-interest or interest-free money

Share your idea of maxing your ROTH space in your lowest earning/lowest tax bracket years with your loved ones. They often jump on board to lend you so money to do this because they see the math as well.  Being better established than you, they face the same challenge of maximizing their ROTH because they are in higher tax bracket.

One of my very blessed family member has this going for her. She makes 30k a year, but max out her ROTH at 23.5k. How? Because her mother sees that this is the best legacy funds she can leave her daughter with for years and years to come.


  • Are you maxing out all ROTH space available to you?
  • How do you max out your ROTH in your lifetime lowest income years?
  • Which method above will you try? Why and why not?

Comment below!



Best of Both Worlds: How to Truly Maximize Your Roth Funds

13 thoughts on “Best of Both Worlds: How to Truly Maximize Your Roth Funds

  • April 6, 2016 at 5:36 pm

    For a beginner wanting to start the retirement savings starting residency, which accounts should I open and how much should I invest? Any tips on how to start? I heard it is good to open these two accounts, 401K and IRA ROTH.


  • May 4, 2015 at 2:30 am

    I couldn’t agree more with the post. But of course, there are some work involved. A couple of points:

    1. You can save an additional $3,350/year (single) or $6,650/year (family) if you qualify for a Health Savings Account (HSA)
    2. Keep in mind that you have to have an earned income to contribute to a ROTH IRA. So most full time medical students probably won’t qualify. At least when I was in school, not too many people held jobs in addition to full time schooling.

    • May 4, 2015 at 4:45 am

      Great points, thank you.
      Quite a few of my classmates (i’d say 30-40%)including myself had job(s) in med school because we had families to feed, lol.
      I guess additional financial responsibilities could be a blessing in disguise.
      I had some income throughout med school, which helped with minimizing debt.
      It would have been nice if I were aware of ROTH then and actually took advantage of the low tax bracket then to expand my ROTH space.
      oh well, that’s why i’m trying to reach those who still have the opportunity to do so NOW.

  • May 3, 2015 at 10:59 pm

    Ah very nice. And then once you hit attending status just pay off the credit card debt.

    Where did the $23.5k Roth money number come from? Is this assuming a 4 year residency and contributing to the limit?

    • May 3, 2015 at 11:29 pm

      Actually that’s a annual limit!
      it’s 23.5k a year 🙂
      it comes from 2 ROTH accounts: 18k in ROTH 403b and 5.5k in ROTH IRA.
      in other words if you do it successful during residency, you will get 141,000 in ROTH for a 6 year post-grad training program.
      assuming that you are not buying race cars and living lavishly and you do a bit of moonlighting, you will not need to use credit cards to fund ALL of the 141k.
      and you are right, even if you did fund all 141k on credit cards during residency, you can easily pay it off during first year of attendinghood 🙂
      but i certainly don’t plan to have a 141k credit card balance racked up in residency.

      • May 3, 2015 at 11:48 pm

        Oh right! Very interesting. I’m in a similar situation where I can potentially contribute 23.5k a year to Roth type accounts as well.

        • May 4, 2015 at 1:58 am

          omg, that’d be amazing! you are in med school, right? you will have so much ROTH @ the best tax rate than most of us 🙂 congrats!

    • May 3, 2015 at 11:00 pm

      Yes, someone that inspires, guides, encourages, cautions, and shares his/her wisdom and life lessons 🙂
      And you are one of my best mentors!
      I am very grateful for everything you have taught me and I continue to learn from you!

    • May 3, 2015 at 11:01 pm

      And it is such a great honor that you visited my blog 🙂

    • May 3, 2015 at 11:44 pm

      Dr. WCI! Just wanted to let you know you’re the best. If it wasn’t for your website I think I would’ve blown my first few paychecks on a “Lieutenant Mobile” after I started med school.

    • May 3, 2015 at 4:09 pm

      I wish I was thinking like this in my earlier years. because as a med student, i worked work study job at the library (and study). i could have at least max out ROTH IRA 5.5k annually during med school.
      in fact, i had been working since 16… imagine how much ROTH IRA I would have had if I actually max out JUST ROTH IRA since 16.
      but that’s what i will do for my daughter joy though. i think all parents who have the means should give thoughts to maxing out ROTH for their children.


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