Join IRA Financial Founder Adam Bergman as he discusses Roth IRA Conversions & The Backdoor Roth IRA. Learn how you can save more for retirement by using a Backdoor Roth IRA today!

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About IRA Financial:

IRA Financial was founded by Adam Bergman, a former tax and ERISA attorney who worked at some of the largest law firms. During his years of practice, he noticed that many of his clients were not even aware that they can use an IRA or 401(k) plan to make alternative asset investments, such as real estate. He created IRA Financial to help educate retirement account holders about the benefits of self-directed retirement plan solutions.

IRA Financial is a retirement account facilitator, document filing, and do-it yourself document service, not a law firm. IRA Financial does not provide legal services. No attorney-client relationship exists between the Client and IRA Financial Group, its management, salespersons, or IRA Financial’s in-house legal counsel. IRA Financial provides IRA retirement facilitation service and CANNOT provide Client with legal, investment, or financial advice. Prior to making any investment decisions, please consult with the appropriate legal, tax, and investment professionals for advice.

IRA Financial is not engaged in rendering legal, accounting or other professional services. If legal advice or other professional assistance is required, the services of a competent professional person should be sought. (From a Declaration of Principles jointly adopted by a Committee of the American Bar Association & a Committee of Publishers and Associations.). The scope of Professional Services does not include the costs of any custodian related services.

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When it comes to retirement savings, many people turn to Individual Retirement Accounts (IRAs) as a way to build a nest egg for their golden years. Traditional IRAs allow investors to contribute money on a pre-tax basis, allowing their investments to grow tax-deferred until retirement.

However, there is another option that may be beneficial for some individuals – the Roth IRA. Unlike traditional IRAs, contributions to Roth IRAs are made with after-tax dollars. This means that while you won’t get a tax deduction for your contributions upfront, your withdrawals in retirement are tax-free.

One way to take advantage of the benefits of a Roth IRA is through a Roth IRA conversion. This involves converting funds from a traditional IRA to a Roth IRA. While you will have to pay taxes on the amount converted, the potential tax-free growth and withdrawals may make it a smart move, especially if you expect to be in a higher tax bracket in retirement.

However, there are income limits on who can contribute directly to a Roth IRA. For 2021, if you are single and your modified adjusted gross income is above $140,000, or if you are married filing jointly and your income is over $208,000, you are not eligible to contribute directly to a Roth IRA. This is where the Backdoor Roth IRA comes into play.

The Backdoor Roth IRA is a strategy that allows high-income earners to get around the income limits for direct Roth IRA contributions. It involves making a nondeductible contribution to a traditional IRA and then immediately converting the funds to a Roth IRA. Since there are no income limits on Roth IRA conversions, this strategy allows individuals to take advantage of the benefits of a Roth IRA even if they exceed the income thresholds.

However, it’s important to note that the IRS has specific rules and guidelines for Roth IRA conversions, so it’s best to consult with a financial advisor or tax professional before making any moves. Additionally, you should consider your own financial situation and goals to determine if a Roth IRA conversion or Backdoor Roth IRA is the right choice for you.

In conclusion, Roth IRA conversions and the Backdoor Roth IRA can be valuable tools for retirement savings, especially for high-income earners looking to take advantage of tax-free growth and withdrawals. By understanding the rules and guidelines surrounding these strategies, you can make informed decisions about your retirement savings and financial future.