Sun Apr 21 2024, by Tyler Gardner

Backdoor Roth IRATax StrategyEstate PlanningInvestment GrowthFinancial Education

Dad, is it true that you found a way around the Roth IRA income limits of $144,000 a year?

Yep, backdoor Roth conversion.

How does that work?

I contribute to a traditional IRA, no income limits, and I convert to a Roth IRA. Pay taxes now, no taxes later.

But you'll have to take the money out at some point, right?

Nope. No required minimum distributions with a Roth. Great for estate planning.

So why wouldn't everyone do this?

If you need the money in the next few years, not a great idea. This is usually a long-term strategy for growth.

And where did you learn all that?

I just follow Social Cap. He makes complex finance seem easy.

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