A backdoor Roth IRA lets you convert a traditional IRA into a Roth IRA, which could save on taxes. Backdoor Roths are an option if your income is too high for a Roth IRA.
Can I Convert a Roth to a Traditional IRA? Not anymore. While the backdoor Roth IRA allows investors to convert from a Traditional IRA to a Roth, investors have historically used another method to convert a Roth IRA back into a Traditional IRA. This method, known as Recharacterization, was...
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...
You can do the Mega Backdoor Roth in two ways — convert within the plan or withdraw to a Roth IRA. Converting within the plan is much easier, and many plans automate this process. Transferring to a Roth IRA also works. See the previous postMega Backdoor Roth: Convert Within Plan or O...
Backdoor Rothis a type of IRA for individuals with high incomes who are priced out of making normal Roth contributions. Essentially, a backdoor Roth is when someone puts money into a traditional IRA, then converts that account to a Roth IRA, and pays the tax bill -- sidestepping the inco...
What is a backdoor Roth IRA? The colloquial use of the “backdoor” adjective connotes the two-step procedure that allows someone whoseincome is too high to contribute directly to a Roth accountto fund one indirectly. First, they contribute to a traditional IRA, for which there is no incom...
Step 2: Convert that Traditional IRA into a Roth. Depending on your custodian, this can be as simple as buying and selling between accounts or involve filling out paperwork. Step 3: Profit. It really is this easy. Of course, there are some things you need to know prior to doing this....
starting at $230,000.13For married filing jointly filers in 2025, the MAGI limit is $246,000, with a phase-out starting at $236,000.9If you earn too much to contribute to a Roth directly, you might be able to make contributions indirectly via a strategy known as abackdoor Roth IRA.14...
Ifyour income is too highto either deduct contributions to a Traditional IRA or contribute directly to a Roth IRA, you may still be able to take advantage of that IRA space by executing what’s called aBackdoor Roth IRA. Here’s a basic overview of how it works: ...
For example, there’s a trick to contribute over $50,000 to your Roth IRA every year (seeMega Backdoor Roth) andthere’s a waythere used to be a wayto make your Roth IRA conversion ladder even more tax-efficient (seethis postfor how the 2017 tax reform legislation impacted some popula...