Backdoor Roth IRA
What is the “backdoor” Roth IRA and who should consider using it?
What is the “backdoor” Roth IRA and who should consider using it?
The backdoor Roth IRA is a method where you first contribute to a nondeductible Traditional IRA (placing the money in a money market fund would be a wise option for this move) and then the next day, converting it to a Roth IRA and into the investment that fits your situation (a total stock index fund for example).
The “backdoor” Roth IRA should be a consideration for any high income people who make too much from their job to contribute to a Roth IRA normally. Too much? It starts at $118,000 for singles and $186,000 for married folks filing jointly in 2017. If your income runs over those amounts, the backdoor Roth IRA may be the best option for YOU. More can be learned on this subject by reading What Color is the Sky.