How To Easily Do A Backdoor Roth IRA

Roth IRA is better than a taxable account since the you don’t pay taxes on interest, dividends and capital gains. If your income is too high, $116,000 for single and $183,000 for married filing jointly, you aren’t allowed to contribute to a Roth IRA. However, there’s a way to do a backdoor Roth IRA that suits high-income individuals. The maximum contribution is $5,500 for individual and $6,500 for those 50 or over. Here’s how to easily do a backdoor Roth IRA to minimize taxes in retirement:

1. Rollover pre-tax IRA account into employer if possible
2. Make a non-deductible contribution to traditional IRA
3. Convert traditional IRA to Roth IRA
4. Report on the tax return