Backdoor Roth IRA Strategy
For Higher Income Earners Who Can’t Contribute
Directly To A Roth IRA.
Step 1: Make a NonDeductible Contribution
Make a non deductable contribution to your Traditional IRA, up to $7000 [$8000 over 50]
Traditional IRA
annually
Step 2: Establish your Roth IRA
Roth IRA
Step 3: Convert NonDeductible Funds
Convert
Backdoor Roth IRA
Strategy Overview
Roth IRAs can be established and funded for high-income earners by using what is known as the “back door” Roth IRA contribution method. Many high-income earners believe that they can’t contribute to a Roth IRA because they make too much money and/or because they participate in a company 401(k) plan. Fortunately, this isn’t true
While direct contributions to a Roth IRA are limited to taxpayers with income in excess of $161,000 ($240,000 for married taxpayers), those whose income exceeds these amounts may make annual contributions to a non-deductible Traditional IRA and then convert those amounts over to a Roth IRA. Directed IRA can help those who want a self-directed “back door” Roth IRA, but the strategy can be done with almost anyone who wants a Roth IRA.
The strategy used by high-income earners to make Roth IRA contributions involves the deposit of non-deductible contributions to a Traditional IRA and then converting those funds in the non-deductible Traditional IRA to a Roth IRA. This is oftentimes referred to as a “back door” Roth IRA. In the end, you don’t get a tax deduction on the amounts contributed, but the funds are held in a Roth IRA and are tax-free upon retirement (just like a Roth IRA). Roth ‘n’ Roll.
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Backdoor Roth IRA Strategy
Discover how high-income earners can leverage the Backdoor Roth IRA strategy to enjoy tax-free retirement income. Learn the step-by-step process, benefits, and how to get started with this powerful tax loophole today.
The Backdoor Roth Strategy
Uncover the secret strategy high-income earners are using for tax-free retirement savings. Say goodbye to Roth IRA contribution limits. Explore the potential of the “Backdoor” Roth IRA approach and how it can revolutionize your financial future.
Ep.117 – Everything You Need to Know About the Backdoor Roth IRA in 2024
Mat and Mark delve into the strategic approach of establishing and funding Roth IRAs for high-income earners through the innovative ‘back door’ Roth IRA contribution method. Often, high-income individuals assume they are ineligible for Roth IRA contributions due to their earnings or participation in a company 401k plan. Discover how the ‘back door’ method offers a viable solution to unlock the benefits of Roth IRAs for individuals in this financial bracket.
Ep.116 – Your Questions: Roth Conversions and Backdoor Roth IRA
Mat and our Executive Director Nate discuss the intricacies of Roth conversions and contributions, addressing questions related to traditional IRA to Roth IRA conversions, the nuances of the five-year rule, considerations for investment opportunities, and rules governing multi-member IRA LLCs.
Ep.108 – Top 10 IRA Questions and Answers 2023
In this episode, Mat goes solo to tackle the most pressing Roth IRA questions of 2023. Whether you’re considering a Roth IRA or exploring self-directing options, Mat provides thorough answers and valuable insights to help you make informed decisions. Don’t miss out on the essential knowledge and tools you need to secure your financial future
Ep.80 Backdoor Roth IRA for 2023 and Beyond
Roth IRAs can be established and funded for high-income earners by using what is known as the “back door” Roth IRA contribution method. Many high-income earners believe that they can’t contribute to a Roth IRA because they make too much money and/or because they participate in a company 401k plan. Fortunately, this thinking is wrong. While direct contributions to a Roth IRA are limited to taxpayers with income in excess of $140,000 ($218,000 for married taxpayers, 2023), those whose income exceeds these amounts may make annual contributions to a non-deductible traditional IRA and then convert those amounts over to a Roth IRA.
EP71: Open Forum – Your Questions Answered on Real Estate in a Roth IRA, Short Term Rentals, UBIT Tax
You asked and bestselling authors, Mat Sorensen & Mark J. Kohler answered your self-directing IRA questions! Can you self-direct in multi-family syndication with a self-directed Roth IRA? Is UBIT or UDFI due with a debt structure? Can you own an Airbnb Rental property outside the U.S. in an IRA? These were a handful of the many questions tax attorneys and bestselling authors, Mat Sorensen & Mark J. Kohler answered on self-directing with an IRA. In this Directed IRA Podcast episode they provided insight on:
- Real Estate in a Roth IRA
- Short Term Rentals
- Solo 401k Qualification
- UBIT
- Mega Backdoor Roth
- And more!
EP 69: Student Loan Debt Crisis and The Solution – Coverdell ESAs, 529 and Roth IRAs
This episode is a must-listen for any parent!
- Total Student Loan Debt is $1.75 trillion.
- The average amount per borrower is $29,000.
- There are 2.4 million retirees who struggle to pay student loan debt aged 62 and older.
What is the best strategy for parents to pay for their kid’s college debt free?
Mat Sorensen and Mark J. Kohler talk about account types you can use and how to save in a tax-favored way. They explain the benefits of Coverdell ESAs, 529, and Roth IRAs and, which accounts to use first.
Mat and Mark also shared how they helped their kids graduate with zero debt and their own personal journey of what they did to pay for their own college education. They also explained what NOT to do with a retirement account.
EP 68: Roth IRA vs. Health Savings Account (HSA): Which Is Better?
If you only had $5,000, would you put it in a Roth IRA or a Health Savings Account (HSA) account?
Watch The Great Debate between tax attorneys and bestselling authors, Mat Sorensen & Mark J. Kohler on how to best grow your money tax-free.