The Backdoor Roth FAQ

Many a high-income professional who earns too much to make a direct Roth IRA contribution will need to use the backdoor to make a Roth IRA contribution of $6,000 or $7,000 (if age 50 or over).

With pending legislation that may eliminate this option, it’s more important than ever to get this done before the end of 2021.

As someone who fields multiple questions a day on the topic at the end of one year and beginning of the next, I felt it would be great to push this list of frequently asked questions about the backdoor Roth to the general public.

The Backdoor Roth FAQ

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Do nothing until you understand the steps and know what accounts you have and your projected income for the year. Repeat, STOP and pay attention. 

The 2021 Backdoor Roth FAQ

– So, what’s the point of all this? You make too much money, fancy pants high earner, to get a tax deduction from a traditional IRA contribution. However, you can still make a non-deductible contribution. 

General Backdoor Roth Overview

However, once it comes time to remove that money, the gains are taxed as income. So you got no deduction on the way in, you did get tax free growth over the years, but the gains are taxed on the way out. Not the most efficient choice. too much money to directly contribute to a Roth IRA.

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