Tax Planning
Tips & Tricks for Today & Tomorrow 8 – Roth Contributions for High Earners
High earners are often phased out of contributing directly to a Roth IRA. This Presilium video explains workarounds, including the backdoor Roth IRA and mega backdoor Roth through a 401(k), that let high-income savers still build tax-free retirement assets, along with the tax rules to watch when using them.
High earners are often phased out of contributing directly to a Roth IRA. This Presilium video explains workarounds, including the backdoor Roth IRA and mega backdoor Roth through a 401(k), that let high-income savers still build tax-free retirement assets, along with the tax rules to watch when using them.
Key takeaways
- Income limits can block high earners from contributing directly to a Roth IRA.
- A backdoor Roth converts after-tax traditional IRA contributions into a Roth IRA to bypass income limits.
- A mega backdoor Roth uses after-tax 401(k) contributions to add far more to Roth accounts when the plan allows it.
- The pro-rata rule and plan specifics make professional tax guidance important before executing these strategies.
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