Roth IRAs are one of the best tools for creating tax-free wealth. You don’t have to worry what future tax brackets will be because as money grows in Roth IRAs you know that it will never be taxed again.
Unfortunately, once your income exceeds certain thresholds you are no longer able to contribute to Roth IRAs. You have to invest in other accounts where you either pay taxes on your growth or taxes on your future withdrawals.
But there is a way around this. If you do it correctly, you may still be able to get money into a Roth IRA via a backdoor Roth IRA contribution.
Check out these tips to help you determine if contributing to a Roth IRA via a backdoor Roth IRA contribution is best for your financial strategy.
Timestamps:
00:00 – Intro
00:32 – Roth IRA Benefits
1:00 – Roth IRA Eligibility
2:16 – How A Backdoor Roth Conversion Works
4:09 – What is a Non-Deductible IRA Contribution?
4:52 – Backdoor Roth IRA example
5:59- Taxable v. Tax-Free Conversions
8:22 – How To Get Funds Into Your Roth IRA
8:50 – 3 Important Considerations
11:14 – What Forms Do I Need To File?
12:03 – Like and Subscribe
12:29 – Our Services
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Is there a way to fund a backdoor Roth if neither my wife nor I earn a salary? We are both over 50. We both retired last year and our current income is solely from a pension, rental real estate and stock dividends. I have almost fully converted my IRA to a Roth but my spouse still has a large pre-tax IRA. Our plan is to convert hers over the next four years. We also live in California and expect state income taxes to rise along with the federal so we are being aggressive in our conversions but would like to continue with contributions. By the way, your videos are incredibly beneficial and I've already recommended them to others. Thank you.
You’re awesome man and I’m quickly gaining respect for your channel. Coincidentally our financial advisor talked about this for my wife and not for me but we had to leave before I could learn why; you concisely explained why (my prior 401k rollovers) and further stated how to ameliorate this (roll over into company 401k).
I don’t think I’ve commented before but just want to let you know people are watching, your material stands out, and while I love my current advisor you better believe were something g terrible to happen I’d remember you.
Keep it coming man; based on the last two videos I’ve seen I now point young investors to yours and The Money Guys channel to learn how to succeed. Theirs is more introductory to get people psyched up, but I never fully appreciated the Roth IRA until hearing and verifying your explanations and you offer more advanced insights.
Hi excellent podcast. Can I ask you about this scenario? I have a traditional IRA that I opened eons ago with less than a thousand dollars that I forgot. I did a back door Roth IRA contribution earlier of $7000 this year. And then I watched this episode and thought of this 1k IRA. (This is the one and onl IRA account that I have ). Questions : should I just do a Roth conversion of this $1000 traditional IRA, or should I move this to my 401k (note: In your video you said move it to traditional 401k- can I move it to my Roth 401k?)
Well, okay. I will stop watching as I do not even come close to the amounts posted for Single MAGI Phaseout. Now, where do I start?