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 $6K [$7K if 50+]

Traditional IRA

This strategy can be repeated
annually

Step 2: Establish your Roth IRA

This account will receive your Roth conversion and is the account you will make your investments.

Roth IRA

Caution: If you have existing Traditional IRA funds those must be converted first

Step 3: Convert NonDeductible Funds

Convert non-deductible funds from your Traditional IRA to your Roth IRA. There is no tax for this conversion.

Convert

Consult with your tax professional to ensure that you properly report this conversion on form 8606 of your personal return

Backdoor Roth IRA Application

Backdoor Roth IRA Fee Schedule

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 $120,000 ($189,000 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).

Articles On Backdoor
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Roth IRAs Are for High-Income
Earners, Too

Roth IRAs can be established and funded for high-income earners by using what is known as the “backdoor” Roth IRA contribution method….