Logan Allec CPA explains why you may need a Backdoor Roth IRA and how to set one up at Vanguard! Jump to 6:49 to get right into the step-by-step (everything before that is background on the Backdoor Roth IRA loophole).
FOLLOW ALONG WITH THE ARTICLE:
SET UP YOUR ACCOUNT AT VANGUARD:
…(read more)
LEARN MORE ABOUT: IRA Accounts
INVESTING IN A GOLD IRA: Gold IRA Account
INVESTING IN A SILVER IRA: Silver IRA Account
REVEALED: Best Gold Backed IRA
Two questions. I have a rollover IRA. Does that work the same as traditional IRA when rolling over to a Roth?
I can contribute now 6000 to traditional then immediately roll it over to Roth protecting it from income tax?
If your traditional IRA contributions are already post-tax (not eligible to deduct them), why do you have to pay taxes on any basis left over? I'd like to save up and grow 6k in my traditional IRA, before moving it over to the Roth, instead of say keeping it in a "high" yield savings account until I have the $6k saved up to move into the traditional IRA -> Roth IRA.
Great video! Sorry for the noob question. I don't have a ROTH IRA, but I 'd like to start one. For this tax year, I will make over the income limit to contribute to a ROTH IRA, so I'd like to do the back door conversion. I'd like to open a traditional IRA, place the max allowable contribution of $5500 into the traditional IRA and then convert it as soon as possible into a ROTH IRA. This contribution will be seen as a taxable event right? I think I should be ok as long as the $5500 I converted doesn't place me into the next tax bracket for taxable income that year. Is my logic correct or is there something else I should watch out for?
Hi Logan, I just saw your video. It's awesome as I wanted to convert mine too. The problem is that I put in 5,500 in a regular IRA for 2017 and the same amount for 2018. I did not deduct them for tax year 2017 and 2018 as I made too much. However I forgot to convert it. Is it too late to convert it now?
So you pay taxes on the amount you profit (interests) out of the ROTH IRA?
you make over 72k a year dont use Traditional IRA. OOF i couldnt claim the tax deduction.
Great Video! Thank you. 2 questions:
1) I already have a Roth IRA (maxed out $5,550/year for a few years while I was making a much lower income). I have since opened a traditional IRA and placed ~$4,000 in there. I understand the steps of conversion. Can I convert to a pre-exisitng Roth?
2) If the $ that went into traditional IRA was higher than money coming out (by a few hundred) to Roth conversion (meaning it lost a few hundred $ from initial investment), do I still pay taxes on that? There were also minor dividends that got reinvested. But overall amount was less. Also what to write on IRS form?
Thank you!
Can you do this for 2018 until April 2019? If so, are the steps the same? If I wanted to do it for 2018 and 2019 now, would I essentially do the same thing twice back to back?
So by converting the money from the traditional IRA to the Roth IRA, your shares are therefore held within the Roth IRA?
Great Video with step-by-step instructions!!
Can the account be set up jointly with a husband and wife on the same Traditional IRA and Roth IRA account or do you need to open 1 traditional and 1 Roth for husband and 1 traditional and 1 Roth for wife?
Don't you lose out on a lot of tax savings by investing in real estate in an IRA or 401k?
Can I I create a backdoor Roth if you already contribute to a 401 through my employer?
Thanks for laying this out with the screen cast showing step-by-steps specifically using Vanguard! Also the inclusion about doing it without investing on the front end @9:40 for a clean conversion of $5500 was helpful (placing the funds initially in a Money Market account vs. investments inside the Traditional account prior to conversion).
My question is this —
Are you actually converting the ACCOUNT or the MONEY IN THE ACCOUNT?
Ergo – When you want to contribute the following year, has your old IRA been converted to a Roth, and you now need to open a NEW traditional IRA, fund it, and then convert it? Or is the Traditional IRA still there, just now it has been emptied and can be refilled and converted again in the new year?
Great video, thanks!
Is this just as simple with a Schwab account or so you prefer vanguard?
Great walkthrough, very helpful. Won't you be penalized by the IRS for converting more than 5,500? Curious why you did not convert exactly 5,500.
6500 max? And can't touch it until 59.5? No guarantee on my money? Sounds like a winner!