➤ ➤ ➤ ➤ ➤ ➤ DOWNLOAD THE FULL BACKDOOR ROTH IRA GUIDE (which I reference in the video), here:
Want to do a Roth IRA but make too much money? This video is for you. You’ll learn about the Backdoor Roth IRA. A “Backdoor” Roth IRA is a technique to get around the income limits for a Roth IRA, so it’s effectively as if the ROth IRA income limits are removed. Wondering if it’s legal? Yes–in 2018 Congress “blessed” this Backdoor Roth IRA approach.
This video is going to walk you through the steps for how exactly to do the Backdoor Roth IRA. I use Vanguard and share my screen recordings so you can follow along. I’ll also talk about a big warning you need to know before you attempt the Backdoor Roth IRA, and answer some questions you might have.
Just quickly, the benefits of a Roth IRA are that your money grows tax free and will not be taxed when withdrawn. This is because the money you put into a Roth IRA doesn’t result in a tax deduction.
To contribute the maximum to a traditional Roth IRA, you cannot have a modified adjusted gross income of:
$206,000 or above for a couple filing jointly
$139,000 or above for individuals
So, if your modified adjusted gross income is above that, then KEEP WATCHING because the “Backdoor” Roth IRA could be perfect for you!
For 2020, the contribution limit to all of your traditional and Roth IRAs is $6,000 (or $7,000 if you’re 50 or older).
This is important to know before you try to do a “Backdoor” Roth IRA.
You cannot have money that is tax-deferred in an IRA. That means, you cannot have money in a traditional IRA, Simple IRA and SEP IRA. This is because if you do have money that is tax-deferred in an IRA, you will be subject to a “pro-rata” calculation that can essentially counteract the benefits of the “Backdoor” Roth IRA. So, if you want to do the “Backdoor” Roth IRA, you’ll first need to make sure that you do not have any money that is tax-deferred in an IRA.
One thing that’s great to note is that you can do a backdoor Roth IRA for your spouse too!
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About ME:
Hello! My name is Erika Kullberg. I’m a lawyer by profession, but my passion is personal finance. After I graduated, I had over $200,000 of student debt, so I made it my mission to dive into everything personal finance-related, so I could equip myself with the tools to pay off the student loans as quickly as possible. I ended up paying them off in under 2 years, and now it’s my passion project to share with you all of the strategies I’ve used to pay off my student loans, increase my net worth, credit card hack (travel on points), invest, house hack (invest in real estate), build passive income streams, and more. I hope you’ll join me—I’ll have a new video with filled with valuable personal finance tips every Tuesday!
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NOTE: This description contains some affiliate links, meaning that I may earn a minimal commission if you click through and use these links (at no additional cost to you).
Disclaimer: I am not a financial advisor. Although I am lawyer by profession, I am not your lawyer and no attorney-client relationship is established with you in any way. This video, and the ideas presented in it, are for entertainment purposes only and should not be construed as financial or legal advice.
#investing #rothIRA #backdoorrothira…(read more)
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Earn 2 free stocks on Webull (the second one valued up to $1400) when you deposit $100 into an account through my link: https://act.webull.com/k/s9QY5o7HmqDn/main
Want to download the free "Backdoor Roth IRA Guide" PDF mentioned in the video? Link is in the description above. Please NOTE: When you repeat the Backdoor Roth IRA next year, you can skip steps 1 and 3, since your Traditional IRA and Roth IRA accounts will already be opened. Thank you!
Love your videos !!!
If I have tax deferred IRA from a 401k rollover, can my wife still contribute to Roth IRA without tax ramifications (filing married jointly)?
Thank… great video!
So what if you start a ROTH IRA below the wage limit, but in a few years you are promoted or something and now your income surpasses the limit. Can you not contribute to your ROTH account anymore? How does that work?
PDF did not get delivered via email after waiting 15 minutes, doing it a second time and checking Spam both times. Almost seems like a trick just to get my email address 🙁
Now make a video explaining the Roth 401K. That’s all I use from my workplace. My entire contribution for my wife and I is placed in a Roth 401k (14% of our Gross income) and it’s contributions limits are MUCH higher.
Clear and concise. Excellent.
The one question is have is this….Do I have to deposit the whole $6000 or can I do this a couple of times before April 15th?
How do you open a "Back door Roth IRA" account if you already have an existing "Roth IRA" account? I have one with vanguard. I was eligible to contribute to Roth IRA until last year (FY2021), but will not be eligible anymore starting 2022 since my spouse is starting a job soon. Any advice?
SO helpful without fluff! Thank you very much!
Wow.. I'm just stunned by how simple and clear the explanation was. So many other YouTubers make this seem so unnecessarily complicated. Thank you Erika for being honest and actually giving people the information they need to be successful. You just got a subscribe from me! Keep the content coming!
Why do you need to repeat it annually?
When you say "repeat every year" does this mean create a new Roth IRA every year or deposit $6k (or amount of choice) every year?
Great vid. QQ – why do you have to repeat every year? Would we end up with multiple Roth IRA accounts?
what is the minimum earing for single person, in order to be qualified to put money into Roth ?
so at the end of this video , won’t you end up with two Roth IRAs ?
PDF ?
Thanks for the valuable insight, Erika!
Me: only makes $25,346 a year "oh thats interesting"
Erika what about people who need to pay the federal tax withholding percentage, how do you pay it without touching the money IRA? make payment out of pocket so the full $6000 is contributed.
yea ,I did not know this and now well i made to much for the year and have a roth ira I put money into….now what???
One q: do I need to create a new Traditional IRA account every year? Or, can I just contribute to the same one that I created, and then convert that money to my existing Roth IRA account? Great video, Erika. Thank you!
If you think you are going to be over the income limit does it make sense to do the back door option just in case?
Will it hurt me in any way if I do a back door option, but I am actually under the income limit come end of year?
New subscriber Chanel is great. I contribute to a 401k and a Roth they offer through my employer. Can I still create this for my wife and I? Since it is not a traditional Roth IRA.
Hi Erika. I am currently on LT disability. I receive W-2 from my employer at year-end for my disability benefits. I have not had an IRA account and wondering if I am eligible to open a Roth IRA now. Would you please advise? Thanks.
You’re amazing. Thank you for what you do!
Thank you for the explanation, very informative!
Erika…Very well done! If i contribute to a Roth IRA via my company sponsored 401k, can i still do a separate “back door IRA” ?
Roths are a good idea if you are currently at a lower wage than you anticipate at 60 yrs old or if your wage will be exactly the same (assuming constant tax rates). Bad idea if the opposite.
Is there any way to contribute more then 6k in roth ira per year. I already maxed out my work ira.
Congrats on 200k! How amazing! I love your content!
If I already contribute $6000 in my Roth IRA, can I still convert another $6000 from my traditional IRA to my Roth IRA? I guess not coz it will put my total over the $6000 limit, right? Can you clarify that for me? Thanks
When you do this for the following year, can you combine the new Roth IRA into you current Roth IRA? I would assume you can because I really do not want a bunch of Roth IRAs to manage.
Thank you so much, Erika
I've seen so many articles on this topic but this is by far the clearest explanation!