How to Fund a Backdoor ROTH IRA | Mark J Kohler - YouTube

I just came in through the back door just like the back door Roth IRA and if you know what the Roth IRA is all

about you know how cool it is compared to the traditional IRA but you want to be in the party and

Your accountant may tell you that you make too much money to be at the Roth party well

That's what we're going to talk about today is the backdoor Roth IRA and how you can get in and play in the game

All right now why you've heard of this problem is because of income limits if you make too much money you cannot contribute

to a Roth IRA it starts around 130 grand if you're single and

If you're married it starts kicking in at about a hundred and ninety grand and so you know it's awesome

tax-free growth tax-free withdrawals

That's why we want to be in the Roth party well if you try to come in through the front door

We can't get there because if you want to get into the Roth but we're blocked this front door is

Closed so I want to talk about two ways to come in the back door and get into the Roth party okay option one is

a conversion strategy pretty straightforward pretty easy you probably have heard about it the second method is more of a

two-step process

So let's go through this step one option first here's the beauty of this you can take any old IRA

Traditional IRA or any old SEP IRA in fact inside your 401k at work your solo 401k in your small

Business you can convert

traditional 401k

Contributions to Roth

Amounts in as much as you want anytime you want before December 31st for that particular year now if it is a 401k

conversion to Roth you have to make sure that the

401k plan allows for that call your employer or if your solo 401k owner you might need to modify it but the conversion is pretty

Cool, because there is no conversion

Income lineage you can convert as much as you want any given year

Now the strategy is looking at what bracket you're in and making sure you don't convert too

much to get into a higher bracket

You want to kind of chunk at it that's the term we use a lot is that you might say well I want to convert

some money into Roth so we're gonna do it in

Pieces and parts and get as much to the Roth party as we can over

time by chunking at it now the two-step process is really where this backdoor Roth IRA evolved and that is where you make a non

deductible contribution that step one you make a

non-deductible

Contribution to an IRA now you may say

Well can I do that yeah you can to any income level see if you make more than 130 grand single 190 mer

You start to phase out and you can't make a contribution to a regular IRA and get a write-off but you can still contribute

but why would you do that because on step two

you convert it to rot so you're it's kind of a cool way to get into the Roth because you make a non

deductible contribution which you can do even if you make too much money and then on day two you

convert and you convert that contribution over to a Roth

This year it's six thousand dollars and if you're over age 50 you can do another 1,000 dollars so you your spouse if you're married

make your non-deductible contributions to your IRA and then on day two

Convert it to rock well my friends that's how you get into the party the Roth party is rocking they're having tax free growth tax

free drinks and food and then they get tax-free treatment on the way out the front door

That's why you want to be in the Roth party study up on it keep building your Roth accounts and keep living that American dream

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