It’s all about the Backdoor (Backdoor Roth that is)

OK, so I’m learning that it’s all about the backdoor. 😉 Well, that is if you make too much money and want to contribute to a Roth IRA – – now a Roth IRA is a retirement savings vehicle with a big tax advantage – – money contributed grows completely tax-free, as are the withdrawals – – although Roth contributions are with after tax money (meaning the government is still getting their cut up front), they don’t permit higher earners to take advantage of this tax shelter.  But, butt (pun intended), this is where the backdoor becomes your friend, and thanks to this FIscovery over at Physician on FIRE, they provide a step-by-step guide on how you can convert a traditional IRA (where there is no income limit on contributions) to a Roth IRA (where there is). They further provide considerations that you need to be aware of before doing such, and a number of additional resources to ensure you get it right (conversion benefits, tutorials, how to avoid conversion mistakes).

Just because folks are making a decent living doesn’t mean they already have a secured retirement – – IMO, financial instruments like a Roth IRA encourages folks to save for retirement and should be available despite your income level (just because you make a lot doesn’t mean you save a lot) – – thanks to the folks over at Physician on FIRE the Roth IRA playing field has been leveled. 🙂

Read this article on Physician on FIRE