HOW TO DO A BACKDOOR ROTH IN FIDELITY (4 EASY STEPS) | In this video, I’m going to share the 4 steps to do a backdoor Roth IRA in Fidelity. I’m also going to teach you how to avoid 2 major mistakes that people do often do, to make sure you don’t get in trouble with the IRS. Master the process and take control of your retirement savings!
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Skip Ahead Here!
0:00 – How To Do A Backdoor Roth In Fidelity (4 EASY STEPS)
0:35 – Step 1: Contribute to a Traditional IRA
2:44 – Step 2: Invest your contribution
4:23 – Step 3: Move your pre-tax IRAs to your current employer plan
6:01 – Step 4: Convert your Traditional IRA to a Roth IRA
***RECOMMENDED READING LIST***
The One-Page Financial Plan by Carl Richards (easy read, holistic + fun graphics!)
Simple, Smart Investing by Ian Kennedy (can help you construct your investment portfolio)
A Random Walk Down Wall Street by Burton G. Malkiel (classic book that sold me on index funds)
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Alvin Carlos is a CFP® professional and CFA® charterholder. His team helps professionals in their 30s and 40s to be smarter with their money. They help them optimize their investments, lower taxes, pay off debt, and have peace of mind.
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If you’re looking to maximize your retirement savings and take advantage of a backdoor Roth IRA, Fidelity makes the process easy and straightforward. A backdoor Roth IRA is a strategy that allows high-income earners to contribute to a Roth IRA by first making a non-deductible contribution to a traditional IRA and then converting it to a Roth IRA. This can be a powerful way to grow your retirement savings and take advantage of tax-free growth.
Here are four easy steps to do a backdoor Roth IRA in Fidelity:
Step 1: Open a Traditional IRA
The first step is to open a Traditional IRA with Fidelity. You can easily do this online through the Fidelity website or by calling their customer service. Make sure to designate that your contribution is non-deductible to ensure that it is not taxed upon conversion to a Roth IRA.
Step 2: Make a Non-Deductible Contribution
Next, make a non-deductible contribution to your Traditional IRA. As of 2021, the contribution limit for IRAs is $6,000 for those under age 50 and $7,000 for those 50 and older. Be sure to keep records of your contribution for tax purposes.
Step 3: Convert to a Roth IRA
After making your non-deductible contribution, you can convert the funds to a Roth IRA. This can be done online through the Fidelity website or by calling their customer service. Fidelity makes this process simple and typically takes just a few clicks.
Step 4: File IRS Form 8606
Lastly, you will need to file IRS Form 8606 with your tax return to report the non-deductible contribution and conversion to a Roth IRA. This form helps ensure that you do not pay taxes on the converted funds. Be sure to keep a copy for your records.
By following these four easy steps, you can take advantage of a backdoor Roth IRA in Fidelity and grow your retirement savings tax-free. It’s important to consult with a financial advisor or tax professional to ensure that this strategy is right for your individual financial situation. Fidelity also offers resources and guidance to help you make the most of your retirement savings.
Skip Ahead Here!
0:00 – How To Do A Backdoor Roth In Fidelity (4 EASY STEPS)
0:35 – Step 1: Contribute to a Traditional IRA
2:44 – Step 2: Invest your contribution
4:23 – Step 3: Move your pre-tax IRAs to your current employer plan
6:01 – Step 4: Convert your Traditional IRA to a Roth IRA
Great video, thanks! Quick question. If after investing your money in the traditional IRA for a few months your balance is more than the $7K limit for the year, you can still rollover the entire balance or you are limited to the $7K?
Very helpful! Most other videos I’ve seen on this, are to fund your traditional IRA, then transfer cash to Roth IRA, and then to invest money once it’s settled in Roth IRA? So you are saying to invest the money in Traditional IRA and then convert to Roth and few months later?
Are you planning to use the backdoor Roth IRA strategy this year?