Backdoor Roth IRA 2022: A Step by Step Guide with Vanguard

In 2022, I made my 10th 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.

It’s important to note that if legislation proposed in September, 2021 becomes law, the backdoor Roth could soon cease to be an option for high-income households.

My best guess is that any changes will be more likely delayed until 2023 or not enforced until the bill were to become law

Backdoor Roth IRA: An Overview

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While income limits are a non-issue for the backdoor, there exists one important prerequisite to be able to properly execute the backdoor Roth.

Before Attempting a Backdoor Roth

If you do hold tax-deferred IRA dollars on 12/31 of the calendar year in which you made the Roth conversion, you’ll be subject to taxes when making your conversion per the pro-rata rule.

You cannot have tax-deferred money in a traditional IRA, SEP IRA, or SIMPLE IRA in your name.

If you haven’t done so already, you’ll need to open a Traditional IRA. I won’t walk through all the steps, but it should be straightforward. You’ll start by selecting “Open an account” from the top of the page.

Completing the backdoor Roth with Vanguard:

If you’re married, your spouse can also do the backdoor Roth, even if he or she has no earned income.

Spousal Roth IRA

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