The Backdoor Roth IRA is a Secret Loophole That Will Increase Your Wealth
#BackdoorRothIRA #Investing #Taxes
The Backdoor Roth IRA is a perfectly legal, IRS-sanctioned method for high income earners to convert their traditional IRA or tradtional 401k to a Roth IRA. I briefly touch on the biggest advantages and drawbacks when comparing a Roth IRA with a traditional IRA before delving into the reasons why someone would need to use a Backdoor Roth IRA. The IRS sets income limits on taxpayers that prevent higher income earners from contributing to a Roth IRA. The Backdoor Roth IRA get around the income limits by converting an existing traditional IRA to a Backdoor Roth IRA. I go over the steps to complete a conversion to a Backdoor Roth IRA including setting aside money to pay the taxes on contributions to your traditional IRA or 401k when converting to a backdoor Roth. I finish off by going over some of the rules and potential drawbacks of converting to a Backdoor Roth.
I hope you enjoy the video and find it informative. Please remember I’m not a financial advisor and this isn’t financial advice. Make sure you do your own research and consult a tax professional if you need further clarification.
00:38 Why Choose a Roth IRA over a Traditional IRA?
03:11 Backdoor Roth IRA Explained
03:48 Why is a Backdoor Roth Necessary?
06:05 Steps to Complete Backdoor Roth Conversion
08:18 Additional Rules and Warnings