Many times we encounter clients who simply earn too much to be eligible for the Roth IRA, yet they still want the tax advantages that the Roth IRA provides. One way around the income limits is to do what is called a back door transaction. This allows one with higher income to still build a Roth IRA without “contributing” to it.
We are a wealth management firm that specializes in improving on the traditional buy and hold approach. To use a simple analogy, we do this by treating ones retirement investments as if they were real estate.
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does it make sense to put after tax money like 50k into a traditional IRA then do the conversion to a Roth IRA ?
Starting from 6:30 minutes to 7:00 minutes was so valuable to me!!!!
This guy is the man!!!!
Awesome awesome awesome video got me stuttering how good this information was. Thank you my friend. Just got a new subscriber.
If W2 employed under 50 in 2021, why not contribute directly to a Roth IRA? – and skip the traditional IRA. In this scenario, there is no advantage to putting the money in a traditional IRA first. If self-employed under 50 in 2021 and you max-in your traditional IRA with tax-deferred funds, you have maxed out your total IRA contributions for both an IRA and a Roth IRA that year. How can this self-employed person take advantage of a back door Roth IRA?
Is the limit – gross or AGI?
Great video. I have couple of questions related to ira to roth conversion(backdoor)
-> while converting from ira to roth at the end of the year does my contributions need to be cash or it could be in stocks too?
-> for traditional ira we will be contributing from our bank account which is generally post tax. But you mentioned traditional ira is pretax. How can we accomplish that.
Great video. I have couple of questions related to ira to roth conversion(backdoor)
-> while converting from ira to roth at the end of the year does my contributions need to be cash or it could be in stocks too?
-> for traditional ira we will be contributing from our bank account which is generally post tax. But you mentioned traditional ira is pretax. How can we accomplish that.
Wouldn’t you also want to wait until the market drops so you reap the benefits of tax free growth?
what if i have an existing IRA account. Its like 3 year old now I make too much now. can i roll over the stocks or do i sellout pay taxes and then roll over cash?
its messy sorry
Watching this in June 2020. Thanks for the detailed explanation Dustin!
this was a great explanation!!!!
Greetings, I am from the future. It is now 2020 and we now have flying cars, killer drones and and are all living in the matrix…
… all jokes aside great vids man. Keep em coming
i created a traditional IRA this year 2019. I had never had any IRAs before. I didn't know which one to set up. I am not even certain my initial intention was to creat a traditional. But it looks like I didn't know that all earning and all contibutions will be taxed when withdrawn from a traditional IRA. The Roth provides more tax efficiency by being tax free for all compounded earnings within a Roth IRA. I have earned a few hundred or or so..including reinvested dividends and share price increases captial gains. Can i fix this mistake before the tax year ends? or am i stuck? I did create a roth today and transfered or converted all the funds from the traditional IRA to the Roth IRA. I am not sure if i made my problem worse or better. I contacted the financial institution and let them know that i made an error and it should have been a Roth IRA that i set up and not a traditional. But it is so close to the end of the year i am not sure if i will be able to reach anyone to get this sorted.
You should also mention the fact that Roth’s aren’t considered in the Minimum Required Distribution calculation.
wonderful explanation! subscribed! brilliant. it's a complex thing to explain and you did it perfectly
Thumbs up from the Future. ;
)
Did you say execute order 66?…
This is so dumb the irs should just eliminate the income Roth threshold.
Great vid
Ughhhh pro-rata rule!
So some basic questions and detailed one. Can you contribute to 401k AND also have Traditional IRA? So for 2018, what if you paid in $18500 to 401k and also $5500 to Traditional IRA? Or if you have 401k, are you not allowed to put money into Traditional IRA at all? What if you made the $5500 non-tax deferred (when filing taxes you'd basically say it's post tax money). Then can you backdoor the $5500 into Roth? And does it matter that you roll over the 2018 Traditional IRA contribution into Roth IRA in 2019?