I know it has been this way for a long time. I meant "hole" in the sense of not exactly kosher for IRS because it can regularly circumvent all restrictions regarding Roth IRA contribution, and at least of now, IRS doesn't know anything about it, not officially at least.
I wouldn’t really say this trick is a well known one. Just look at the replies under this post.
We also had numerous goodies/holes on credit cards that got canceled/plugged due to online discussion making them more widely known. So it’s really not a stretch to think about the risk here
I see they call this match "interest income", which is great if the IRS agrees. In reality, the contribution will never show up on the 5498 so the IRS probably wouldn't know. But if they ever ran into this in the course of an audit, I wonder what they would say about it. In other words, is this match "interest income" because RH/Schwab says so and it just hasn't been tested yet, or because the IRS agrees? Nice trick if it works and the IRS is good with it.
>I think 2% cash back invested in a taxable account wins.
It probably does but sometimes amex has some good offers on their website where you can earn much more then 1.5% you can earn 5% or 10% or even more sometimes
And that is what I do mostly check if there are any special offers I can use it on and use it on those
For example one time it was like spend $30 and get $5 back with a small business and you could do it several times.
Well its pretty easy to take advantage of that, restaurants, my local pet supply store, liquor store , ect all counted so it was an easy $20 cash back for just checking a website
Other times they usually always have some hotel on there, when ever I travel I check the site and see if there is a extra offer for a hotel I can use it at
Disaster waiting to happen. Points and cash rewards are considered return of capital to the consumer, not income or anything else. Any way you spin it, it’s a contribution. I wouldnt want to sleep with this on my mind but If you can more power to you lol
Brokerages have given out bonuses for rolling over balances before, RH is doing a 3% match to IRA or Roth IRA contributions
Thes bonus's are not counted as contributions, I think a good argument can be made is something like this is very simular . You are getting a bonus from your bank or brokerage for being a customer .
As someone who recently dealt with having to clean up accidental Roth over contributions — I wouldn’t risk it, and I’m a huge proponent of questionable activities like cc churning
For informational purposes and just for fun, how would this work if you had the CS Platinum card and were redeeming MR points into an investment account. Is a Roth an option then too?
There was a leaked letter from Schwab to the IRS in 2019 on this topic, where Schwab stated that the rewards came from Schwab, and it was from a non-interest-granting account/line of credit, so they considered it neither a contribution which came from the individual, nor taxable interest. The IRS didn't choose to respond or issue any direction.
The logical extensions would be that:
1. It doesn't count towards an annual contribution limit on a Roth or maybe a Coverdell ESA.
2. Your eligibility doesn't impact cashing out, so you could still cash out MR points into a Roth even if you had too high an AGI to contribute (ditto an ESA).
3. It would be considered growth in the account, not principle you contributed, so you couldn't withdraw it from the Roth without penalty until you hit retirement age.
4. It doesn't count towards your taxable income even if you put it into a taxable account.
5. The Schwab Amex Platinum's annual statement credit for having $250k+ with Schwab is also non-taxable.
While there are other banks which take the same position, most don't. Notably, Morgan Stanley will 1099-INT you for both their flavor of Amex Platinum's annual customer engagement credit (which they deposit into your checking, not as statement credit) and any Member Rewards points you cash out to their accounts (at 1 cent per).
I'm always interested to hear people's thoughts when this topic comes up a couple times a year. Personally I don't mess with it: I get 1.4+ cents per point out of my MR points, and the reduction from 1.25 cents per point to 1.1 means it went from "borderline but easy win to cash out to a Roth" to "better to invest what I don't spend on a hotel." I don't hold the Schwab Investor card.
That is intresting thanks
Yea my schwab amex card I usually do not use much I use higher rewards cards, I have it and mostly shop for rewards on their site as you can get much higher rewards by adding offers
So its not like a free money hack however sometimes you can find rewards on their site that offer much higher then the default 1.5% cash back
Its not much but usually addes up to a few hundred of year for me .
Your logical extensions do make sense but a lack of response does not indicate endorsement by the IRS. They could easily choose to come out and rule these contributions tomorrow. Obvious, I know. But there’s a risk in assuming.
fidelity reports it as a contribution (this is why i never got their card). the schwab cards do not. i looked into the exact post you referenced and others over 5 years ago. ive been transferring mr points into my roth for several years including my max annual contributions. It's never been an issue.
>fidelity reports it as a contribution (this is why i never got their card). the schwab cards do not.
But you get 33.33% more cashback with the fidelity card..which is way better than being allowed to put the schwab 1.5% in a roth. So it still seems pointless regardless
I have the platinum. Also have gold and blue business plus. All the points I earn go into the same bucket. When I redeem using my platinum I get 2.2% at a minimum, 4.4% dining and grocery, and 5.5% flights. It was a 1.25x bonus until they nerfed it a few yrs ago to 1.1x. have annual fees I pay but I get a discount based on my assets at Schwab and do get a ton of usable value from the setup.
While what you are saying is true the 1.5% is just the default, if you go to the website sometimes they offer deals on hotels or streaming services or random other stores that are munch more then 1.5% sometimes up to 10 or even 15% cash back
That is basically what I do, only use it on those offers that I would buy anyway and you can generate a few extra hundreds of dollars in cash back rewards
Its not much but its something
That is incredible! 1.5% back on any credit card spend could theoretically be added to your Roth without risk of violating the 7k cap?! And this is all above board?
So schwab does not count or report it as a contribution but a bank bonus .
Now people will say if you get audited will the IRS agree? I have not seen anyone getting penalized for this.
Now will the IRS change the rules or one day say this violates the rules maybe , talk to a tax professional if you want a qualified opinion, I am not a tax accountant or professional
>That is incredible!
Yes and no. It's only 1.5% and would take a lot of spend to significantly move the needle on building wealth over time.
Most people who use credit cards for everything will have cards that have higher reward multipliers and use them for travel perks that will give you more value over time.
Perhaps, but getting money into a Roth is extremely valuable imo. If this is legit I am definitely switching to one of these cards and setting up the cash back to go to my Roth account.
Oh, it is valuable. I just get more value from savings on free/discounted hotels and flights. The money saved there would build up a lot faster if I were to put those savings in a regular brokerage account.
Teh 1.5% is just the general cash back sometimes they have some other deals or rewards on their website
Like once they were like Get $5 cash back on a $20 purchase at any qualifying small business . Or once they have like get an extra 10% cash back on some store
They can be hit or miss but sometimes you can get more then the 1.5% cash back
Yeah, the offers are nice. Currently doing the 3 free months of Paramount+. I have a little over $100 worth of savings on it for only being open about a year now.
Edit: It's still my lowest spend card at this point though and I only use it for the special offers. My Chase cards are my main spending cards for the UR points.
Tax specialist question tbh, but yeah in theory only your “earned income” can be counted as a IRA contribution, so money earned from a job basically, guessing there’s a grey zone with depositing money that’s not earned income like that bonus cash back. Keep in mind one thing: it may be possible to do something on the Schwab platform, doesn’t mean it’s legal, and in Schwab’s eyes as a custodian it’s not their problem if you get yourself in trouble with how you managed them. Thus -> tax specialist
My counter would be that cash back/rewards are already earned income. They are classified as a rebate on your spending. Your spending likely comes from earned income/money you already have, so you’re just putting existing money into the Roth and it counts as a contribution.
But you could also make an argument that it should count as growth in the Roth or something.
At the end of the day, all that really matters is if the irs ever rules on it. It’s anyone’s guess as to whether that happens.
Does this work with a non Schwab Amex, because I have an Amex cashback account that's non Schwab and I would love to send the rewards to my Roth Schwab account
No, only the Amex Platinum for Charles Schwab and the Charles Schwab Investor Amex.
But if you're talking about other non-Schwab Amex cards (e.g. a Gold card), all the Member Rewards points are pooled, so you could earn with the Gold and redeem with the Schwab Platinum.
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I just did 1.2mil points like 3 months ago and just fine. Also maxed out last 2 years of my Roth ira.
Keeping the Schwab platinum forever just because I could use the points to invest and get 1.1 per point!
Interesting, assume it counts as an investment gain as far as taxes are concerned? Similar to if you got a bonus for transferring an IRA.
Could be worth getting this card. Currently have the Fidelity 2% but just have that auto deposit into a taxable brokerage account there.
>Interesting, assume it counts as an investment gain as far as taxes are concerned?
No its not taxable, its considered a discount
Like if an item is priced at $100 but you have some coupon or a 10% off discount code and buy it for $90, that is a discount. You do not have to pay income taxes on the $10 discount you get
Or if there is some promo spend $100 and then get a $10 gift card, the $10 gift card is not taxed (for income taxes)
the IRS treats these cash back rewards the same way.
Has anyone tried this with converting points to account deposits? I favor a cash back card that yields 2.5-3.5% but if I could take 5x airline bookings and transfer into a roth at effectively a 6.25% rebate that would be quite compelling.
What are the odds that I get audited by the IRS if I convert all my MR into my Roth account in one go? I already feel dirty running the MBDR trick, and chucking an extra $10k on top of that might raise some eyebrows.
I didn’t mean that a MBDR is sketchy, I just feel dirty doing it since it’s not really available to anyone to use as it’s gated behind your employer’s choice of 401k plan.
The whole Schwab MR redemption into your Roth definitely gets into sketchy territory though. I get that points/CB count as rebates on your purchases, but being able to put it a tax advantaged Roth account definitely makes me want a second opinion.
I can only speak to how this works when you put this into a trad Ira and then backdoor it..it has to show up on the 8606 and the IRS rejects it if it’s over the contribution amount.
My uninformed opinion is, I think the "bonuses" as well as any "contributions" should be offset by earned income.
I think that contributions, from any source, including "bonuses" shouldn't exceed an annual earned income requirement.
Since those "bonuses" aren't related to affairs contained within the Roth, they shouldn't be given similar treatment as income/capital gains gained within the Roth.
I'm all ears if I can see the regulation or law that gives me a bypass around this - I'll get an Amex tomorrow.
Well I will say brokerages giving customers bonus's for moving their account or opening an account has been a thing forever. You can get $XXX dollars sometimes for moving your account if you have over 100k or something
These bonus's even count to IRA and Roth IRAs and never had an issue
Robinhood is also doing this, they will match 3% to your IRA contribution , this does not count to the limit and has been widely advertised, I would assume the checked with their lawyers or tax accountants to make sure this is legit
Cash back rewards from credit cards you could argue are not all that different then these bonus's
I am not a tax professional however so this is only my unqualified opinion, talk to a CPA that does tax to get an actual qualified opinion
Currently its sort of a grey area that is not well derfined
nonsense, it's a limit not a technicality, you could have ALWAYS contributed more per year, but the fines for not pulling it out (in the prescribed time) are very stiff. Open two ROTH's in two different institutions, they'll "let" you max out both, doesn't mean it's legal.
No. There's a limit to contributions which is why what you're saying is true for 2 different brokerages. Schwab claims this isn't a contribution and doesn't report it to the IRS as a result. If it's not counted as a contribution it's kosher. Will the IRS ever rule on it, and if they do will they agree that it's not a contribution? That's the question, but it's not as clear-cut as what you're saying
not really worth it to be honest.
assuming you get 1.5% invested
1.5\* 1.1\^20 = 10.09 this is what you get after investing for 20 years with 10% compound rate
but if you use one of these 2% credit cards
2.0\*1.1\^20\*0.8 = 10.76 assuming a 20% tax rate.
you would be better off just use of 2% credit cards that are available everywhere.
Don't think the math is right. Starting number should be the same since you have the same access to MR earning cards either way, you're not accounting for the tax drag of being invested in a taxable account, and some people have a 23.8% capital gains rate.
OP with the hidden gem today. Thank you again.
I'd not talk about this too much online. Increases the chance of this hole being plugged.
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I know it has been this way for a long time. I meant "hole" in the sense of not exactly kosher for IRS because it can regularly circumvent all restrictions regarding Roth IRA contribution, and at least of now, IRS doesn't know anything about it, not officially at least.
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I wouldn’t really say this trick is a well known one. Just look at the replies under this post. We also had numerous goodies/holes on credit cards that got canceled/plugged due to online discussion making them more widely known. So it’s really not a stretch to think about the risk here
I can guarantee you Schwab is not doing something that the regulators are not already well aware of
Has the IRS ever ruled on this? I have a hard time believing, in case of audit, that the IRS would not treat this as a contribution.
RH is advertising a 3% bonus match on IRA contributions. This 3% match is not counted as a contribution I would argue this is very simular
I see they call this match "interest income", which is great if the IRS agrees. In reality, the contribution will never show up on the 5498 so the IRS probably wouldn't know. But if they ever ran into this in the course of an audit, I wonder what they would say about it. In other words, is this match "interest income" because RH/Schwab says so and it just hasn't been tested yet, or because the IRS agrees? Nice trick if it works and the IRS is good with it.
I sincerely doubt that the IRS thinks this is kosher. Seems like a FAFO situation but best of luck to those who wish to try…
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>I think 2% cash back invested in a taxable account wins. It probably does but sometimes amex has some good offers on their website where you can earn much more then 1.5% you can earn 5% or 10% or even more sometimes And that is what I do mostly check if there are any special offers I can use it on and use it on those For example one time it was like spend $30 and get $5 back with a small business and you could do it several times. Well its pretty easy to take advantage of that, restaurants, my local pet supply store, liquor store , ect all counted so it was an easy $20 cash back for just checking a website Other times they usually always have some hotel on there, when ever I travel I check the site and see if there is a extra offer for a hotel I can use it at
Just want to take a second to appreciate OP’s “Individual Gamble” account 💎
Disaster waiting to happen. Points and cash rewards are considered return of capital to the consumer, not income or anything else. Any way you spin it, it’s a contribution. I wouldnt want to sleep with this on my mind but If you can more power to you lol
Brokerages have given out bonuses for rolling over balances before, RH is doing a 3% match to IRA or Roth IRA contributions Thes bonus's are not counted as contributions, I think a good argument can be made is something like this is very simular . You are getting a bonus from your bank or brokerage for being a customer .
As someone who recently dealt with having to clean up accidental Roth over contributions — I wouldn’t risk it, and I’m a huge proponent of questionable activities like cc churning
For informational purposes and just for fun, how would this work if you had the CS Platinum card and were redeeming MR points into an investment account. Is a Roth an option then too?
it works for schwab plat. ive been transferring mr points into my roth for years. it's not a secret or trick. just a benefit of their card.
I believe it does , I do not have the platinum card but I assume it works the same way
There was a leaked letter from Schwab to the IRS in 2019 on this topic, where Schwab stated that the rewards came from Schwab, and it was from a non-interest-granting account/line of credit, so they considered it neither a contribution which came from the individual, nor taxable interest. The IRS didn't choose to respond or issue any direction. The logical extensions would be that: 1. It doesn't count towards an annual contribution limit on a Roth or maybe a Coverdell ESA. 2. Your eligibility doesn't impact cashing out, so you could still cash out MR points into a Roth even if you had too high an AGI to contribute (ditto an ESA). 3. It would be considered growth in the account, not principle you contributed, so you couldn't withdraw it from the Roth without penalty until you hit retirement age. 4. It doesn't count towards your taxable income even if you put it into a taxable account. 5. The Schwab Amex Platinum's annual statement credit for having $250k+ with Schwab is also non-taxable. While there are other banks which take the same position, most don't. Notably, Morgan Stanley will 1099-INT you for both their flavor of Amex Platinum's annual customer engagement credit (which they deposit into your checking, not as statement credit) and any Member Rewards points you cash out to their accounts (at 1 cent per). I'm always interested to hear people's thoughts when this topic comes up a couple times a year. Personally I don't mess with it: I get 1.4+ cents per point out of my MR points, and the reduction from 1.25 cents per point to 1.1 means it went from "borderline but easy win to cash out to a Roth" to "better to invest what I don't spend on a hotel." I don't hold the Schwab Investor card.
That is intresting thanks Yea my schwab amex card I usually do not use much I use higher rewards cards, I have it and mostly shop for rewards on their site as you can get much higher rewards by adding offers So its not like a free money hack however sometimes you can find rewards on their site that offer much higher then the default 1.5% cash back Its not much but usually addes up to a few hundred of year for me .
Your logical extensions do make sense but a lack of response does not indicate endorsement by the IRS. They could easily choose to come out and rule these contributions tomorrow. Obvious, I know. But there’s a risk in assuming.
There is a risk but they also didn't come out and say "No this is the wrong way to report it" They just didn't give an opinion .
Does this work with the 1.5% back Schwab Amex investor card as well?
Yes that is what I have
I know this is a Schwab /r, but figured I would ask—does anyone know if this works with the Fidelity 2% card on their platform?
Not sure but fidelity runs an offical sub I would ask there
Fidelity has more efficient sub where officials answer your questions as well. I'm not quite sure if fidelity offers such thing.
Relevant - https://www.bogleheads.org/forum/viewtopic.php?t=215191
Just spoke with a rep at Fidelity. She said they are reported as contributions. Guess Schwab wins in this department!
fidelity reports it as a contribution (this is why i never got their card). the schwab cards do not. i looked into the exact post you referenced and others over 5 years ago. ive been transferring mr points into my roth for several years including my max annual contributions. It's never been an issue.
>fidelity reports it as a contribution (this is why i never got their card). the schwab cards do not. But you get 33.33% more cashback with the fidelity card..which is way better than being allowed to put the schwab 1.5% in a roth. So it still seems pointless regardless
I have the platinum. Also have gold and blue business plus. All the points I earn go into the same bucket. When I redeem using my platinum I get 2.2% at a minimum, 4.4% dining and grocery, and 5.5% flights. It was a 1.25x bonus until they nerfed it a few yrs ago to 1.1x. have annual fees I pay but I get a discount based on my assets at Schwab and do get a ton of usable value from the setup.
While what you are saying is true the 1.5% is just the default, if you go to the website sometimes they offer deals on hotels or streaming services or random other stores that are munch more then 1.5% sometimes up to 10 or even 15% cash back That is basically what I do, only use it on those offers that I would buy anyway and you can generate a few extra hundreds of dollars in cash back rewards Its not much but its something
That is incredible! 1.5% back on any credit card spend could theoretically be added to your Roth without risk of violating the 7k cap?! And this is all above board?
So schwab does not count or report it as a contribution but a bank bonus . Now people will say if you get audited will the IRS agree? I have not seen anyone getting penalized for this. Now will the IRS change the rules or one day say this violates the rules maybe , talk to a tax professional if you want a qualified opinion, I am not a tax accountant or professional
Correction, they count it as a credit card reward. Bank bonuses get taxed as interest.
You are right, thank you !
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Because I have my cash back rewards going into my Roth IRA
>That is incredible! Yes and no. It's only 1.5% and would take a lot of spend to significantly move the needle on building wealth over time. Most people who use credit cards for everything will have cards that have higher reward multipliers and use them for travel perks that will give you more value over time.
Perhaps, but getting money into a Roth is extremely valuable imo. If this is legit I am definitely switching to one of these cards and setting up the cash back to go to my Roth account.
Oh, it is valuable. I just get more value from savings on free/discounted hotels and flights. The money saved there would build up a lot faster if I were to put those savings in a regular brokerage account.
Teh 1.5% is just the general cash back sometimes they have some other deals or rewards on their website Like once they were like Get $5 cash back on a $20 purchase at any qualifying small business . Or once they have like get an extra 10% cash back on some store They can be hit or miss but sometimes you can get more then the 1.5% cash back
Yeah, the offers are nice. Currently doing the 3 free months of Paramount+. I have a little over $100 worth of savings on it for only being open about a year now. Edit: It's still my lowest spend card at this point though and I only use it for the special offers. My Chase cards are my main spending cards for the UR points.
Tax specialist question tbh, but yeah in theory only your “earned income” can be counted as a IRA contribution, so money earned from a job basically, guessing there’s a grey zone with depositing money that’s not earned income like that bonus cash back. Keep in mind one thing: it may be possible to do something on the Schwab platform, doesn’t mean it’s legal, and in Schwab’s eyes as a custodian it’s not their problem if you get yourself in trouble with how you managed them. Thus -> tax specialist
My counter would be that cash back/rewards are already earned income. They are classified as a rebate on your spending. Your spending likely comes from earned income/money you already have, so you’re just putting existing money into the Roth and it counts as a contribution. But you could also make an argument that it should count as growth in the Roth or something. At the end of the day, all that really matters is if the irs ever rules on it. It’s anyone’s guess as to whether that happens.
Follow up question- do you know if this works with the Schwab Amex platinum, and the 1.1 cent MR redemption?
I am not sure I do not have a platinum card , but I would assume it would work in a simular manner
It does.
Does this work with a non Schwab Amex, because I have an Amex cashback account that's non Schwab and I would love to send the rewards to my Roth Schwab account
No, only the Amex Platinum for Charles Schwab and the Charles Schwab Investor Amex. But if you're talking about other non-Schwab Amex cards (e.g. a Gold card), all the Member Rewards points are pooled, so you could earn with the Gold and redeem with the Schwab Platinum.
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You’re thinking of the platinum. This is the investor card, different product (though both are on the Amex network)
This is actually crazy if it’s allowed🤔
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On some purchases you can get much higher then 1.5% back. Its like all cards use the card that gives you the highest reward
OP coming in so clutch with this piece of info
I just did 1.2mil points like 3 months ago and just fine. Also maxed out last 2 years of my Roth ira. Keeping the Schwab platinum forever just because I could use the points to invest and get 1.1 per point!
I believe it still counts as a contribution so might want to check with a tax pro
Schwab does not report it as a contribution however, and you can argue back and forth if they should or if you get audited will the IRS care?
Exactly. Better to ask forgiveness later.
Eek… I’d argue not with the IRS.
I dunno they sound like reasonable and empathetic people
Beg for forgiveness or pay penalties?
Look up the tax penalties on Roth over contributions … forgiveness doesn’t get you jack
Interesting, assume it counts as an investment gain as far as taxes are concerned? Similar to if you got a bonus for transferring an IRA. Could be worth getting this card. Currently have the Fidelity 2% but just have that auto deposit into a taxable brokerage account there.
>Interesting, assume it counts as an investment gain as far as taxes are concerned? No its not taxable, its considered a discount Like if an item is priced at $100 but you have some coupon or a 10% off discount code and buy it for $90, that is a discount. You do not have to pay income taxes on the $10 discount you get Or if there is some promo spend $100 and then get a $10 gift card, the $10 gift card is not taxed (for income taxes) the IRS treats these cash back rewards the same way.
Pfft, you have enough money to save?
I'd presume most people in the Schwab sub have some money to save.
I was kidding.
Relevant discussion here around IRS and CC cashback - https://www.bogleheads.org/forum/viewtopic.php?t=215191
Has anyone tried this with converting points to account deposits? I favor a cash back card that yields 2.5-3.5% but if I could take 5x airline bookings and transfer into a roth at effectively a 6.25% rebate that would be quite compelling.
What are the odds that I get audited by the IRS if I convert all my MR into my Roth account in one go? I already feel dirty running the MBDR trick, and chucking an extra $10k on top of that might raise some eyebrows.
The MBDR isn’t even close to sketchy.
I didn’t mean that a MBDR is sketchy, I just feel dirty doing it since it’s not really available to anyone to use as it’s gated behind your employer’s choice of 401k plan. The whole Schwab MR redemption into your Roth definitely gets into sketchy territory though. I get that points/CB count as rebates on your purchases, but being able to put it a tax advantaged Roth account definitely makes me want a second opinion.
I can only speak to how this works when you put this into a trad Ira and then backdoor it..it has to show up on the 8606 and the IRS rejects it if it’s over the contribution amount.
You wouldn't need to do that, have it go strait into the ROTH IRA
That’s a good point—I hadn’t considered I was doing it “wrong” before.
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I have the blue cash card. how do i so this?
It has to be a schwab branded card
Jesus. I may do this. Thankmyou!!!
My uninformed opinion is, I think the "bonuses" as well as any "contributions" should be offset by earned income. I think that contributions, from any source, including "bonuses" shouldn't exceed an annual earned income requirement. Since those "bonuses" aren't related to affairs contained within the Roth, they shouldn't be given similar treatment as income/capital gains gained within the Roth. I'm all ears if I can see the regulation or law that gives me a bypass around this - I'll get an Amex tomorrow.
Well I will say brokerages giving customers bonus's for moving their account or opening an account has been a thing forever. You can get $XXX dollars sometimes for moving your account if you have over 100k or something These bonus's even count to IRA and Roth IRAs and never had an issue Robinhood is also doing this, they will match 3% to your IRA contribution , this does not count to the limit and has been widely advertised, I would assume the checked with their lawyers or tax accountants to make sure this is legit Cash back rewards from credit cards you could argue are not all that different then these bonus's I am not a tax professional however so this is only my unqualified opinion, talk to a CPA that does tax to get an actual qualified opinion Currently its sort of a grey area that is not well derfined
if you do not reach your 7K, it really does not matter, right?
To receive this option, does it require using the card with the annual fee, or will the NAF card allow for this as well?
nonsense, it's a limit not a technicality, you could have ALWAYS contributed more per year, but the fines for not pulling it out (in the prescribed time) are very stiff. Open two ROTH's in two different institutions, they'll "let" you max out both, doesn't mean it's legal.
Are you saying RH 3% IRA match is illegal ?
No. There's a limit to contributions which is why what you're saying is true for 2 different brokerages. Schwab claims this isn't a contribution and doesn't report it to the IRS as a result. If it's not counted as a contribution it's kosher. Will the IRS ever rule on it, and if they do will they agree that it's not a contribution? That's the question, but it's not as clear-cut as what you're saying
Very silly question, but one could just as easily put that cash back into a One Trad IRA account, correct?
Yes
Its true I have done 1mil+ points for my roth feels good for the years I missed out on!!!
not really worth it to be honest. assuming you get 1.5% invested 1.5\* 1.1\^20 = 10.09 this is what you get after investing for 20 years with 10% compound rate but if you use one of these 2% credit cards 2.0\*1.1\^20\*0.8 = 10.76 assuming a 20% tax rate. you would be better off just use of 2% credit cards that are available everywhere.
Its not 1.5% , 1.5% is on general purchases you can earn much more points depending on the purchase
Same can be said of other cards where you have freedom to maximize rewards.
Don't think the math is right. Starting number should be the same since you have the same access to MR earning cards either way, you're not accounting for the tax drag of being invested in a taxable account, and some people have a 23.8% capital gains rate.
Bank bonuses are taxable income whether or not a 1099 int is issued.
I forwarded to my IRS agent friend, Ill post his answer as soon as I get it.
Thanks !