The video takes you step-by-step through the details of making a backdoor Roth IRA contribution using Vanguard. Follow me as I make every click, and explain what I am doing!
A backdoor Roth IRA is when you contribute non-deductible contributions to a traditional IRA, then convert it to a Roth IRA. This allows you to effectively bypass the income limit which would otherwise restrict you from making an annual IRA contribution.
07:08 Special Bonus at the end of the video: I explain how you will fill out tax form 8606 to reflect your backdoor roth contribution, which consists of a non-deductible traditional IRA contribution, plus a conversion from traditional to Roth.
I also have another video explaining the difference between the Backdoor Roth strategy, and another strategy called the mega backdoor Roth:
Want to know how to do a backdoor Roth IRA contribution for LAST YEAR? Check it out: …(read more)
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Thank you. This was a great tutorial.
Don’t they make you pay tax on the amount being converted from traditional to roth?
7:11
that’s great explanation
Thank you very much, especially for 8606 walk-through!
Is there a limit to how much I can convert from a traditional IRA to a Roth IRA?
This is, hands down, the best end-to-end backdoor Roth IRA and Tax Form video on YouTube! Thank you for being careful, iterative, and thorough!
That was crystal clear! Thanks!
So glad I stumbled upon this. Quick question (hopefully!)
I funded my tIRA in 2021 and the funds are still in the settlement fund. I plan on doing the ROTH conversion now in January 2022 for those 2021 funds. How does this impact completing form 8606? Thank you!
Pulled up this video today to walk me through this yet again for 2022. Thanks!!
I wish I could like this video every year! Thank you man, happy new year
Thanks for this video man!
Awesome Video!
Thank you for sharing.
Lol earning some ad revenue while you’re figuring out how to save for retirement. Nice.
I watch this every year to go through this process lol
Can I do this every year..meaning rinse and repeat every year by contribution to traditional IRA and immediately transferring to ROTH?
The best explainer of things!
When do we fill out the form? At the end of the year when we do our taxes or at the time of when we do the conversion?
Thanks for the detailed tutorial. My question is: I contributed $6000 for 2020 in 2021 and converted to roth ira, should I fill the line 4 with 6000 and line 5 with 0 ? Thank you.
Solid info and content…you've got a new subscriber! Just followed step by step and maxed it out for 2021. Thanks again!
Is it ok to hold after tax money as a 1 share of VTI in IRA to keep it open? Does Vanguard or other broker close your account if it is unfunded?
Thank you for the step by step process. When you convert to roth, the funds end up in a settlement account. Remember to setup auto invest or set a reminder to come back in a few days to buy funds.
Really the best tutorial on 8606 on youtube
So does this basically negate the 1099-R that says you took a taxable distribution when you actually converted it?
Can you use the same traditional IRA for another year or you’ll need to open a new one every year?
can you show us how to fill if its our first time filling it or if we contributed 12k on the same year for both years.
I come back to this every year.
This was very helpful, subscribed! I did a backdoor Roth last year for the first time and mistakenly invested the money after contributing it to the Traditional but before converting it to the Roth. In that time it gained $2. I was worried that I had made a huge mistake, but after watching your video I don't think it'll be that big of a deal.
will they charge you a fee for just having the Traditional IRA open with 0 balance? even though you only use it for rollover each each?
Thank you thank you! Extremely helpful
Hi Will, I am having an issue on line 14 of form 8606. I accidentally put my $6,000 traditional IRA money into an index fund (instead of a settlement fund) while I was waiting to convert it over to a Roth IRA. In those few days, I lost -$69.02, making the amount I converted over to the Roth IRA: $5,930.98.
If Line 3 is $6,000 and line 13 is $5,930.98, and line 14 is saying subtract line 13 from line 3, that would be -$69.02.
Does that mean I put -$69.02 on line 14 or should I just put 0? Any help you can give is appreciated. Thanks!
every year i watch this
your videos are way too good
back at it again this year!
Hello, I have a question. When I tried to make a backdoor ROTH IRA and put money into my Traditional (which I already paid taxes for), the person at Ally Invest said I would again need to pay taxes on the $6K that I am transferring to the ROTH IRA account. Wondering if this is correct?
if I made a contribution and conversion in January 2021 for my backdoor Roth IRA, do I file the 8606 form for 2020 or 2021?
Does this mean every time I transfer money from my traditional IRA to Roth IRA, I have to fill out this form? thanks!