Roth IRA is a great, tax-efficient way to save for your retirement. Your contributions can grow tax-free and you can generally make withdrawals tax-free and penalty-free after you reach age 59½. If your income is too high, you can still do a planned backdoor Roth IRA. In certain situation when you contribute to Roth IRA but later find out that your income is too high. Harry Sit at The Finance Buff has a guide on what to do if you did an unplanned backdoor Roth. First, you have to recharacterize your ineligible contribution and gain to traditional IRA and then convert it. Next, you split your tax reporting since you contribute for one year and convert in a different year. Harry Sit recommends: “If there is any chance that your income may be too high again, resolve that you will become proactive and do a planned backdoor Roth from this year forward. When in doubt, do the planned backdoor. Don’t wait after the year-end.”
What To Do If You Did An Unplanned Backdoor Roth
