The Formynder Field Manual

May 2026

From the Field

Welcome to May! This is a particularly eventful month - I'm celebrating the one-year anniversary of Formynder Wealth Management! 🥳🎉

This past year has been nothing short of amazing, and honestly one of the most rewarding journeys I've ever been on. The reason I get to do this work is simple: you believed in me. You trusted me to give you the best advice I possibly could. Truly, thank you.

The BLUF

I know you'll want to read the entire newsletter, but here's a preview of what's included in this month's edition.

✅ Feel Good Moments. It's a two-for-one special!

✅ Roth IRAs. Is there anything they can't do? (Yes, but they're still pretty awesome)

✅ Passive Rentals. Not quite.

✅ In plain site. Some of the other places you'll find my musings.

Feel Good Moments

This past month brought my semi-annual guys weekend out to Shenandoah National Forest, a tradition we have kept going since fall 2023. All Marine veterans. All business owners. All Christians. It is one of the mainstays of our military retirement routines and always a chance to reset, reflect, and fellowship while taking full advantage of God's creation without distraction. Our weekend has never disappointed, and I recommend it 10/10 for anyone and everyone to add something similar to their annual calendar!

On the business side, Formynder Wealth Management continues to gain momentum, and April was one of the busiest months since I opened my doors last May. And it had nothing to do with tax season! Honestly, I am not entirely sure what sparked the sudden jump in inquiries, but meeting new people has been an absolute dream, whether they become clients or not. Quite frankly, it's exactly what I set out to do: meet new people and help where I can.

Both of these moments simply bring a smile to my face when I think about them.

Is the Roth IRA a Swiss Army Knife of Savings?

Whenever someone asks, Roth or Traditional, I can't help but think that it's not always about the taxes. I mean, it's mostly about the taxes, but there are so many other benefits to having a Roth IRA outside of never having to pay taxes on distributions, contributions or earnings, ever again.

Before we dive into the rules around Roth IRAs, let's be clear about something. The Roth IRA is designed for retirement. The tax-free growth you get over 20 or 30 years is one of the most powerful wealth-building tools available, and tapping it early usually means giving up more than you realize. That said, life in the military does not always follow a neat timeline, and there are some situations where accessing Roth funds early makes genuine sense.

Here are a few examples.

Andrea just got her PCS orders and wants to buy a house.

She has been contributing to her Roth IRA since she was a young E-4 and has built up a solid balance. She and her husband have found the perfect house near the new duty station, but they are a little short on the down payment. Megan can pull every dollar she has ever contributed to her Roth IRA, tax-free and penalty-free, no questions asked. Contributions always come out first and are always available. She does not touch the earnings, so the long-term growth stays intact.

David is a disabled veteran who needs to access his IRA early.

A service-connected disability forced David out before he planned to retire. The IRS recognizes permanent disability as a qualifying exception, meaning David can access even the earnings in his Roth IRA without the 10% early withdrawal penalty, though the 5-year rule on earnings still applies for taxation purposes.

These are legitimate situations. But they all require knowing exactly which layer of your Roth you are pulling from and when. That is where the 5-year clock comes in.

Clock No. 1: Starting the Clock on Earnings

The most familiar version of the rule says that your Roth account needs to have been funded for five years before you can withdraw any earnings tax-free, even after you have reached age 59 and a half.

The good news is that the clock starts earlier than most people realize. The five-year period backdates to January 1 of the year of your first contribution, not the actual date the money landed in the account. So if you contributed in April 2026 for tax year 2025, your clock started January 1, 2025.

The practical takeaway: start the clock as soon as possible, even if you can only put in a small amount. You can never get that time back.

The Distribution Order: How the IRS Assumes You Withdraw

This is where a lot of people are pleasantly surprised. The IRS assumes you are taking out

1. contributions first
2. converted balances oldest first
3. earnings last

What that means in plain English:

Contributions come out first, and they are always tax-free and penalty-free. You already paid taxes on that money, so the IRS has no claim on it.

Conversions come out next, oldest first. You will not owe income tax on conversion amounts since you already paid that at the time of conversion. Whether you owe the 10% early withdrawal penalty depends on Clock No. 2.

Earnings come out last and have the strictest rules of all three layers.

Clock No. 2: The Conversion Clock

Every conversion has its own individual five-year timer. If you convert money in 2023, 2024, and 2025, you have three separate clocks running, each one governing whether you will face a 10% penalty on that particular converted amount if you withdraw before age 59 and a half.

Here is the key distinction: conversion amounts will never be subject to income tax again since you already paid it when you converted. The five-year rule for conversions only determines whether you owe the 10% early withdrawal penalty.

Once you reach age 59 and a half, the conversion clocks no longer matter. The only clock still running after that age is Clock No. 1 for earnings.

Earnings: The Final Layer

Earnings have the strictest treatment of all. To withdraw earnings both tax-free and penalty-free, you need two things:

1. at least five tax years to have passed since your first Roth contribution
2. a qualifying event such as reaching age 59 and a half, disability, death, or a first-time home purchase up to $10,000 lifetime.

If you withdraw earnings before meeting both conditions, you may owe income tax, the 10% penalty, or both.

The Bottom Line

The Roth IRA rewards patience and planning. Start the clock early, understand what layer you are pulling from when you take a withdrawal, and keep good records especially if you have done conversions.

The Pass.....active Rental Property You Thought You Wanted

If you have spent any time in military circles, you have probably heard some version of this story. Someone buys a house near a duty station, gets PCS orders, decides to rent it out instead of selling, and suddenly they are a real estate investor. Sometimes it works out beautifully. Sometimes it becomes a second job. The difference almost always comes down to one thing: expectations meeting reality.

It's a Business, Not a Hobby

Rental real estate is not passive income. It is a business. Tenants call, things break, management companies underperform, and vacancies happen. The investors who thrive are the ones who treat it like a business from day one, with proper expectations, proper numbers, and a plan for when things go sideways. The ones who struggle are usually the ones who bought into the narrative without doing the math.

The Numbers That Actually Matter

Most people look at a rental property and ask one question: does it cash flow? In other words, after paying the mortgage, insurance, taxes, and management fees, is there money left over each month? If the answer is yes, it feels like a win.

But imagine you have $200,000 in equity sitting in a rental property and it is putting $300 a month in your pocket. That is $3,600 a year on $200,000, which is less than a 2% return. Your money might be working a lot harder for you somewhere else.

That is what Return on Equity is asking. Not just "am I making money?" but "am I making good money relative to what I have tied up in this property?"

Then there is Internal Rate of Return, or IRR. Think of it as the property's full report card over time. It adds up everything: the monthly cash flow, the value the home gained over the years, any tax benefits along the way, and what you actually walk away with when you sell. It lets you compare a rental property to stocks or any other investment using the same grading scale.

A property with so-so monthly cash flow might actually get an A on that report card once you factor everything in, while a property with great monthly cash flow might get a C once you see the full picture. Cash flow is one chapter of the story, not the whole book.

The Accidental Landlord Problem

This one hits close to home for military families. You buy a house, love it, build equity, and then orders come. Selling feels wrong, especially if the market is soft or you are not quite where you hoped to be on equity. Renting feels like the safer choice, and sometimes it is.

But renting is not always the conservative option it feels like. A bad tenant, a poorly vetted management company, or a major repair can extend the financial damage well beyond what a sale at a loss would have cost. The accidental landlord often ends up managing a property from 1,500 miles away, hoping nothing goes wrong.

The better approach is to make the rent versus sell decision like an investor, not like someone trying to avoid a hard choice. Run the numbers, stress test the cash flow against a vacancy or an unexpected repair, and be honest about whether the math actually works.

Finding a Good Management Company

If you decide to rent, especially from a distance, a property management company is not optional. It is essential. And finding a good one is harder than most people expect.

Vet them like any important business relationship. Ask about their tenant screening process, their maintenance network, how they handle vacancies, and how they communicate with owners. Get references. A poorly chosen management company can mean bad tenants, deferred maintenance, and a growing list of problems you are trying to solve from two or more states away.

Your Key Takeaway

Real estate can absolutely build wealth when approached with realistic numbers, proper management, and a clear exit strategy. Approached casually and based on optimism alone, it tends to create stress and tie up equity in ways that are hard to unwind.

The best time to think through all of this is before the lease is signed.

For a deeper dive on all of these topics, check out Episode 30 of the Fiscal Foxhole featuring Daniel Huffman, ChFC, MQFP, Army Reservist, and fellow planner and business owner, with a distinct focus on rentals.

In Plain 'Site'

Check out my latest articles:

• ​TRICARE for Life and Medicare at 65: What Every Military Retiree Needs to Know​
• ​FEDVIP for Military Families: Dental and Vision Coverage Worth Understanding​
• ​Beneficiary Designations for Military Families: TSP, SGLI, IRAs, and More!​
• ​Estate Planning Documents for Military Families: What They Are and Why They Matter​

Check out the Fiscal Foxhole podcast with myself and Rob Moore - we're out every Wednesday morning!

• ​Spotify​
• ​Apple​

​​​​

Join or follow for more tips throughout the month!

Disclaimer: This newsletter is provided for educational, general information, and illustration purposes only. Nothing contained in this material constitutes tax advice, a recommendation for purchase or sale of any security, or investment advisory services. I encourage you to consult a financial planner, accountant, and/or legal counsel for advice specific to your situation.