Rich Habits Podcast
Q&A: Paying Off $300K in Student Loans, Roth IRA vs. Roth 401(k), & Kiddie Taxes
Date: March 5, 2026
Hosts: Austin Hankwitz & Robert Croak

Episode Overview

The March 5, 2026 Q&A edition of the Rich Habits Podcast delivers practical, habit-based financial advice, with a focus on nuanced reader questions about large-scale student debt, real estate inheritance, retirement catch-up strategies, Roth investment options, backdoor Roth IRAs, and smart ways to save for children. Austin and Robert combine their unique perspectives—entrepreneurial ambition (Austin) and seasoned wealth-building (Robert)—to offer actionable, personalized blueprints to listeners navigating complex financial scenarios.

Key Discussion Points & Insights

1. Market Updates & Listener Wins (02:12–05:25)

• The hosts reflect on their 2026 market predictions, celebrating portfolio wins in Potash (IPI), Copper (COPX), and Generac stocks.
• Austin: “Generac is up 31% since our January episode. Shout out to anyone that actually jumped on that.”
• Importance of diversification and staying ahead of the secular shifts in the market with a long-term view.
• Promotion of active participation in the Rich Habits Network for those who want deeper dives into hosts’ portfolios and strategies.

2. Q1: Paying Off $300K in Student Loans—What’s the Right Move? (06:10–11:27)

Listener: Kyle B, physician in residency, holding $300k in student loans at 6% (in forbearance), $212k invested already.

Robert’s Response: (07:16)

• Prioritize investing over aggressively paying off student loans, especially while loans are in forbearance at a manageable rate.
• “I would leave them in forbearance as long as they can be. … I would always put the investing first, especially if the student loan debt is in what we consider high interest debt.”
• Possible future for student loan policy changes—potential for lower rates or partial forgiveness.

Austin’s Take: (08:39)

• Reinforces investment first: “You should have the equivalent amount or more invested somehow, some way … before you start tackling massive student loan debt.”
• Once earning physician money, rapidly increase investments while paying off loans, never sacrificing retirement contributions to pay debt.
• “Our goal … is for people to not go into retirement with student loans. … You should get rid of the student loans, but you should also make sure you’ve got several hundred thousand dollars invested in the markets before you do so.”

Memorable Quote:

• Robert: “I would keep doing exactly what you’re doing, keep building the wealth, and then get back to the student loans later on.” (07:59)

3. Q2: Buying Real Estate for Kids & Passing Down Wealth (11:29–18:43)

Listener: Brent, 55, $1mm in 401k, $1.25mm in brokerage, no debt, $300k income, considering buying a house for child, concerns about estate taxes.

Robert’s Response: (12:49)

• Considerations: Will you deplete retirement or use a mortgage? Fairness among multiple children? Upkeep, repairs, and formal agreements are vital—treat it as a business deal.
• Recommends setting up an LLC and a revocable living trust to shield the asset from probate and clarify inheritance procedures.
• “Even though it’s your son, I would make sure you have an operating agreement … everything spelled out. … Don't just sign the deed over. That is a disaster.”

Austin’s Legal & Tax Angle: (15:10)

• IRS “fair market rent” rules: Renting below market means less tax advantage—losing out on landlord deductions.
• Brent is well below the federal estate tax exemption ($14M in 2025), so no need to worry about a 50% “government take.”
• Step-up in cost basis explained: Kids inherit assets at current value, not original purchase price.
• Strongly advises consulting an estate attorney for optimal, tailored planning.

Supportive Note:

• Robert: “Never, ever, ever [sign the house directly over]. Get the revocable living trust set up.”

4. Q3: Are We Behind for Retirement? Millionaire With Debt Anxiety (18:43–28:58)

Listener: Martin, 53, $725k in retirement accounts, $70k brokerage, four kids, $215k income, $62k in various debts (including $30k credit card).

Robert’s Response: (20:21)

• Martin is ahead of the national average—shouldn’t feel “behind.”
• But: “Why are you carrying all this credit card debt? That doesn’t make any sense whatsoever. … You need to help yourself.”
• Strongly recommends prioritizing paying off high interest debt; transferring to 0% card is okay, but only if truly paid off within promo period.
• Suggests reviewing and analyzing household budget (see their Honest Budget tool).

Austin’s Deep Dive: (21:45)

• Martin is a millionaire, but “you can't out-invest high interest debt.”
• Recommendation: Sell part of the taxable brokerage to obliterate credit card debt. Stop using cards; don’t rely on zero percent transfers as a discipline crutch.
• Detailed budget strategy: Track every dollar, fixed and variable expenses, forecast future costs, and create sinking/emergency funds.
• Quote: “You’re trying to out earn your stupidity. Not to call you stupid—but everyone tries it.”

Memorable Moment:

• Robert: “Wealthy people forecast. Broke people react. And Martin is definitely not broke, but they're definitely not forecasting.”

5. Q4: Roth IRA vs. Roth 401(k)—Where Should My $7,000 Go? (28:58–32:24)

Listener: Tom H, eligible for both Roth IRA and Roth 401(k), wants to invest $7,000/yr and prefers simplicity.

Austin’s Response:

• Roth 401(k): “A really cool perk … is a match. … You get that 3% match, 4% match, whatever it is at your company … a hundred percent instant return on your investment in year one.”
• Downside: Often limited (sometimes “bad”) investment options, higher fees, less control.
• Roth IRA: No match, but full investment autonomy and flexibility.
• Playbook: “Match beats Roth, Roth beats taxable.” Contribute up to the match in the 401(k), everything above to the Roth IRA.

Practical Quote:

• “If I were in your shoes … up to the match, get the free money, and then everything above goes into your personal Roth IRA, then you invest it in low-cost index funds and you close your eyes for 20 years.”

6. Q5: Backdoor Roth IRA—Is It Worth It for High-Income Earners? (33:18–38:18)

Listener: Chad M, pilot, wife is NP, $290k income, income too high for Roth IRA, unsure if backdoor Roth should come before maxing out 401(k)s.

Austin’s Framework:

• “Match beats Roth, beats taxable”—always max out employer match first.
• Use backdoor Roth only after taking full advantage of workplace retirement account options (both match and max).
• Invest aggressively due to youth and earning potential; ensure risk alignment.

Robert’s Bridge Account Explanation: (36:56)

• Bridge (taxable) account is vital to create early-retirement flexibility—not everything should be tied up until age 59½.
• “If you guys want to retire early and have a blast, … you can do that because you thought ahead and built up the bridge account right along with everything else.”

Austin on Long-Term Tax Efficiency: (38:18)

• “If you are married, filing jointly, in 2025 you can experience all in $96,700 of income, portfolio income … at a 0% long term capital gain rate.”

7. Q6: Best Account for Kids’ Savings & Navigating the Kiddie Tax (38:18–42:12)

Listener: AD, 43, single mom, 10-year-old with $23k in a CD, $300/month savings, not keen on 529 plans.

Austin’s Answer:

• CD too conservative for an 8-year time horizon. Suggests shifting the funds into a broad market index fund via UTMA for greater growth.
• Considers UTMA vs. 529 disagreement, advocating for 529 plans for their long-term benefits: college/trade school flexibility, possibility to roll into Roth IRA.

Robert’s Tax Breakdown: (41:26)

• Explains the “kiddie tax”:
  • First $1,350 unearned income (dividends, gains): tax-free.
  • Next $1,350: taxed at child's 10% rate.
  • Income over $2,700: taxed at parent’s rate.
• “If you're saving this much money … you have to understand the tax implications.”

Notable Quotes & Memorable Moments

• On Carrying Debt Despite High Net Worth:
  Robert (21:09): "You should never, at your salary, over $200,000 in income per year, be carrying credit card debt. It makes no sense."

• On Inheriting Assets:
  Austin (16:36): "When you pass and your heirs inherit those ETFs ... it's going to be at a step up basis. ... Not at the $100 where you bought it."

• On Forecasting vs. Reacting:
  Robert (27:18): "Wealthy people forecast. Broke people react. ... They're definitely not forecasting."

Timestamps for Major Segments

• [02:12] – Market review, 2026 stock picks discussion
• [06:10] – Student loan strategy for medical professionals
• [11:29] – Real estate for children & estate planning
• [18:43] – High earner, debt, and retirement confidence
• [28:58] – Roth IRA vs. Roth 401(k) for young professionals
• [33:18] – Backdoor Roth IRA and bridge accounts for high earners
• [38:18] – Best savings vehicle for kids & kiddie tax explained

Tone & Language

• Friendly, direct, sometimes passionate: “You’re trying to out earn your stupidity. Not to call you stupid—but everyone tries it.” (Austin)
• Practical, conservative counsel mixed with innovative, actionable strategies.
• Transparent about mistakes and challenges—reinforces the “we’re in your shoes” vibe.
• Encouraging and non-judgmental, always emphasizing long-term habits and clarity.

For listeners: Whether you’re facing mountain-sized student loans, worrying about leaving a legacy (or the IRS), or just deciding where your next investment dollar should go, this episode packs decades of financial wisdom into real, relatable answers. These “rich habits” are all about clarity, planning, and letting your money (not your debts) work for you.