#43: The Finance Flash Go Podcast | Important Topics About Money | The Backdoor Roth IRA

Even hotter topic alert! Today on the Finance Flash Go! podcast, we’ll be discussing the Backdoor Roth IRA! There IS a way for high income earners to contribute to a Roth IRA. It is colloquially called a Backdoor Roth IRA. I won’t get into the nitty gritty of exactly how to do this here, but will describe the general idea. Let’s say your income as a married couple is above $206,000. You already maxed out your 401(k) and 457(b) options. You want to maximize your tax advantaged investing before going into a taxable account. What you can do is contribute $6000 to a Traditional IRA. Because you are above the income limit, your contributions will then be taxed. Leave it in the Traditional IRA and your money will be taxed again upon withdrawal. BUT…the government will now allow you to roll your (now after-tax) Traditional IRA contributions into a Roth IRA once a year. Once this rollover is done, the money will grow tax free and not be taxed upon withdrawal. You are contributing to a Roth IRA through the backdoor…hence the nickname. Please enjoy the Finance Flash Go podcast! We plan to release a new episode every weekday answering important finance questions. If you ever want to submit a question to our podcast, send an e-mail to [email protected], and please be sure to check out Jordan Frey’s blog prudentplasticsurgeon.com where he gives great financial advice. A brief disclaimer While we are providing knowledge and awareness around financial topics in this show, we are not held responsible for any financial decisions you choose to make in response to the podcast. We hope to provide accurate information in regards to money and different methods of wealth creation, but it is always the learner’s responsibility to due their due diligence before making important financial decisions. We hope you enjoy the show and thanks for tuning in, and if you like the podcast please subscribe, share, and leave us a review on the podcasting platform of your choice!