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

We transitioned to a “brokerage IRA account” as requested by Vanguard a few years back, while my wife’s account remains a “mutual fund IRA account.”

The latter makes things quicker and easier, although now, there only seems to be a one-day difference between the two different processes for the different account types.

Vanguard is the company I use, and it’s one that tends to be favored among many index fund investors, so that’s what you’ll see here.

Backdoor Roth IRA Your Step by Step Guide with Vanguard

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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 have these types of accounts, you’re not hosed, but you need to have a strategy to move that money elsewhere or you can forget about the backdoor Roth.

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.

Completing the backdoor Roth with Vanguard:

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