Backdoor Roth IRA 2021: A Step by Step Guide with Vanguard

In 2021, I made my ninth pair of “backdoor Roth” IRA contributions with Vanguard. It’s a great way for high-income professionals to contribute to a Roth IRA when earning “too much” to contribute directly to a Roth

I’ll give you a brief overview, precise step-by-step instructions on how to do it yourself.

I like to get ours done early in the year to start the tax-free earnings as soon as possible, but you have until Tax Day in mid-April, 2022 to complete a 2021 Backdoor Roth contribution.

Step 1: Make a Non-Deductible IRA Contribution

After logging in, I point to My Accounts -> Balance & holdings. Find your Traditional IRA brokerage account, and click the arrow to the right of “Buy and Sell,” and select “Buy Vanguard funds.”

Step 2: Convert to Roth IRA

On Monday, 1/4/2021, I logged in to see if I could convert my non-deductible IRA contribution to my Roth IRA. No dice. Yes, it still says I have unavailable shares, but when I click “Convert to Roth IRA,” magically, I am able to do so.

Step 3: Invest in the Roth IRA

Immediately after completing my Roth conversion, I go back to Accounts & Balances, and I see that my $6,000 Roth conversion money is now available to trade, along with $1.01 in spare change that’s been sitting there for a while.

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