"Backdoor" Roths and how they work
If your income is high enough, it gets to the point that you can neither deduct a traditional IRA contribution or even make a Roth IRA contribution. But there is a way for higher income people to have Roth IRAs through what is known as a "backdoor" Roth. This video explains what a "backdoor" Roth is, how it works, and how to report in on your tax return.
0:00 Introduction
0:54 IRA Contribution Limitations
2:58 How "Backdoor" Roths Work
5:33: Reporting a "Backdoor" Roth on a tax return
6:57: Conclusion
To learn more about Traditional v. Roth accounts, click here: • Traditional or Roth?
For more information on Traditional IRA distributions, click here: • IRA 101: Traditional IRA Distributions
ADDITIONAL RESOURCES AND INFORMATION:
IRS Form 8606: "Non-deductible IRAs" https://www.irs.gov/pub/irs-pdf/f8606...
IRS Publication 590-A: "Contributions to Individual Retirement Arrangements (IRAs)": https://www.irs.gov/pub/irs-pdf/p590a...
(Although the "backdoor" IRA strategy is perfectly legal, the IRS does not encourage anyone to use it, and it is not mentioned in the publication. However, there is important information on IRA contributions and Roth conversions in general.)
Investopedia: "Backdoor Roth IRA: Advantages and Tax Implications explained": https://www.investopedia.com/terms/b/...
Nerdwallet: "Backdoor Roth IRA: What It Is and How to Set One Up": https://www.nerdwallet.com/article/in...
The Tax Geek on the Site Formerly Known as Twitter: www.x.com@taxgeekusa
The Tax Geek on Reddit: www.reddit.com/r/askataxgeek
Image and footage credits:
Storyblocks.com
The image of "Artie" was generated by thispersondoesnotexist (Stability.ai). Any resemblance between the person pictured in this image and any person, living or dead, is incidental and not intended.
NO OTHER ARTIFICIAL INTELLIGENCE WAS USED TO WRITE, EDIT, ANIMATE, VOICE, OR EDIT THIS VIDEO
Intro Music: "Bluesy Vibes" - Doug Maxwell - YouTube Creator Music
Outro Music: "Modern Attempt" - Track Tribe under license from YouTube Creator Music
DISCLAIMER: This video is for educational and informational purposes only. It is not intended to render tax advice or financial advice for individual situations. If you have questions regarding your particular situation, please consult with a qualified tax or financial professional.