The sooner you start making backdoor Roth contributions, the more benefit you’ll see. The longer you can make Backdoor Roth contributions, the more valuable they’ll be to you. You must have earned income to contribute to an IRA via the front or back door.
If the tax code persists in its current form for a while, and you’ll be earning a solid income throughout, it’s certainly somewhere between the $300 that the Rothschild family saved, and the $1.6 Million saved by the Rothmans.
Again, it comes down to the following factors: – How early you start your Roth IRA – How many years you contribute – How long you delay withdrawals – Your tax drag in a comparable taxable account
If you’ve got no barriers to doing this, and you earn too much to contribute directly, you should go ahead and do the Backdoor Roth. It is also true that a Roth IRA offers better asset protection than a taxable account.
Conversely, consider the advantages of a taxable account: – 100% liquid and available without penalty at any age – The foreign tax credit is realized only in a taxable account – Tax Loss Harvesting alone is worth $1,000 or more per year for most high-income professionals. You can’t do that in a Roth account.
Since we’ve established that it’s value is in the range of dozens to hundreds of dollars per year, anything that costs you many hundreds of dollars or thousands of dollars per year is more harmful to your bottom line.