Money Girl How to Use a Mega Backdoor Roth Conversion
Jun 12, 2024
Discover the mega backdoor Roth conversion, a game-changer for high earners looking to bypass income limits and supercharge their retirement savings. Learn about the benefits of Roth IRAs, their tax advantages, and how to maximize contributions. Get step-by-step insights on making after-tax contributions and converting them into a Roth account, along with eligibility criteria and limits. Uncover alternative strategies if you lack a workplace plan to ensure your retirement is robust and growth-focused.
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Roth IRA Benefits
- Consider a Roth IRA for tax-free retirement income.
- Withdraw original contributions penalty-free, but earnings are taxed before 59 1/2.
Roth IRA Flexibility
- Roth IRAs offer flexibility; no required minimum distributions.
- High earners face income limitations for direct contributions.
Mega Backdoor Roth
- Utilize the Mega Backdoor Roth to exceed contribution limits.
- This involves after-tax contributions to a workplace plan, then converting them to a Roth.
