I know, I know. They both have the word Roth in them. They must be the same thing. The Backdoor Roth IRA even includes a conversion step, so I suppose it shouldn't be surprising that people get confused. But there is a key difference. When you do the conversion in the Backdoor Ro...
You put money into a Roth IRA through the backdoor when you aren’t eligible to contribute to it directly. That’s why it’s called a Backdoor Roth. You pay tax on a small amount of earnings between contribution and conversion. That’s negligible relative to the benefit of having tax-f...
First, the instructions above are very clear and the guidance provided in the comments section helpful as well. I didn’t learn about “backdoor” IRAs until this calendar year (2022) but for the tax year 2021. Through Vanguard I was able to easily and successfully convert $6,000 from tr...
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If you did a Backdoor Roth, which involves making a non-deductible contribution to a Traditional IRA and then converting from the Traditional IRA to a Roth IRA, you need to report both the contribution and the conversion in the tax software. For more information on Backdoor Roth, please rea...
Having said that, I started after-tax contributions to my company’s 403(b) in 2021. They (Vanguard) perform an in-fund “roll-over” to my Roth account for me as soon as the deposit hits the account so I don’t have to worry about any earnings which has been great. ...