Suze Orman's Women & Money (And Everyone Smart Enough To Listen)
UPDATED: Suze School: Clearing Up Your Backdoor Roth Confusion
Feb 18, 2024
Suze Orman explains the consequences of doing multiple backdoor Roth IRAs, gives tips on avoiding pitfalls, and emphasizes the importance of financial literacy and understanding tax implications when converting to a Roth IRA.
21:37
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Quick takeaways
- Understanding income limits for Roth IRA contributions is crucial for maximizing retirement savings.
- Consider the prorata rule when converting to a backdoor Roth IRA to prevent unexpected tax liabilities.
Deep dives
Understanding Roth IRAs and Income Qualifications
A Roth IRA is a retirement account that you open individually with money you've already paid taxes on. There are no income limitations for a Roth retirement account at your workplace, such as a Roth 401(k) or Roth 403(b). You can also have an individual Roth IRA, which has income qualifications. For single filers, the maximum contribution is allowed if their modified adjusted gross income is under $146,000, decreasing as income increases. Married filers have a limit of $230,000, decreasing to zero at $240,000.
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