Backdoor Roth IRA 2023: A Step by Step Guide with Fidelity

In 2023, I made my eleventh pair of “backdoor Roth” IRA contributions.

I like to get our backdoor Roth contributions and conversions done early in the year to start the tax-free earnings as soon as possible, but you have until Tax Day in mid-April, 2023 to complete a 2022 Backdoor Roth contribution (and until April, 2024 to make your 2023 contribution).

This post will give you a brief overview of the backdoor Roth, precise step-by-step instructions on how to do this yourself at Fidelity, and a link to a backdoor Roth FAQ that should answer any lingering questions you have. 

Backdoor Roth IRA: An Overview

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Money contributed to Roth accounts does not result in a tax deduction, unlike contributions to tax-deferred accounts. Both Roth and tax-deferred accounts benefit from tax-free growth, unlike a taxable account that is subject to tax drag (which can be minimized).

The Roth dollars, unlike tax-deferred dollars, will not be taxed when withdrawn. One of the first world problems of earning a solid income is the inability to contribute directly to a Roth IRA or a tax-deductible IRA.

A modified adjusted gross income (MAGI) of $228,000 for a couple filing jointly, or $153,000 for an individual makes you ineligible to contribute to a Roth IRA in 2023. Phaseout ranges where you can make a smaller Roth contribution (less than $6,500) start at $218,000 and $138,000 for couples who are married filing jointly and single filers, respectively.

Many physicians are thus excluded from making either deductible IRA contributions or direct Roth IRA contributions. If there’s even a tiny chance your income might put you into or above those phaseout ranges, you’re better off using the backdoor, just in case.

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