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 IRA.
Before Attempting a Backdoor Roth
While income limits are a non-issue for the backdoor, there exists one important prerequisite to be able to properly execute the backdoor Roth.
You cannot have tax-deferred money in a traditional IRA, SEP IRA, or SIMPLE IRA in your name.
The list includes traditional IRA, SEP IRA, and SIMPLE IRA, but does not include 401(k), 403(b) or similar accounts.
Completing the backdoor Roth with Vanguard:
If you haven’t done so already, you’ll need to open a Traditional IRA.
Step 1: Make a Non-Deductible IRA Contribution
Brokerage Account Backdoor Roth Step 2: Convert to Roth IRA
Brokerage Account Backdoor Roth Step 3: Invest in the Roth IRA
See all Steps By Swiping Up!