How high earners can funnel money to a Roth IRA, the 'gold standard' of retirement accounts

Published On Sep 5, 2024, 12:53 PM

High earners face challenges in contributing to tax-advantaged retirement accounts like Roth IRAs due to income limits. However, they can utilize a strategy known as the 'backdoor Roth IRA.' This involves making a nondeductible contribution to a traditional IRA, which can then be converted into a Roth IRA. Roth IRAs are favored for their tax-free growth and withdrawals in retirement. The article explains the process step by step and highlights the proper documentation needed for this strategy, emphasizing its benefits over other saving methods, particularly for higher income individuals who want to maximize their retirement savings options.