Everything you need to know about backdoor Roth IRAs

investmentnews.com:

If you earn too much to contribute directly to a Roth IRA, then backdoor Roth IRAs may be a good bet for you.  

A backdoor Roth IRA is a strategy of converting non-deductible contributions in a traditional IRA to a Roth IRA. While Roth IRAs come with certain advantages, there are some things you need to know.  

In this article, we will talk about backdoor Roth IRAs, who is eligible, what the benefits are, and what the disadvantages are.  

Here is everything you need to know about backdoor Roth IRAs. 

Backdoor Roth IRAs are a strategy that allows high-income clients to move funds to Roth IRAs. Unlike traditional IRA contributions, Roth IRA contributions have income limits. Backdoor Roth IRAs, however, allow funds to be moved to Roth IRAs even if income exceeds the Roth IRA limits. 

In 2023, individuals could not make a Roth IRA contribution if their income exceeded $228,000 (married, filing jointly) or $153,000 (single). 

Backdoor Roth IRAs are a work-around that lets people move funds to a Roth IRA even if they fail to qualify for a Roth contribution due to income limits. They can make a non-deductible contribution to a traditional IRA and then convert that contribution to a Roth IRA. (Remember: that is if they qualify. They must have earned income.) 

Roth IRAs have their benefits, but there are still some good reasons to keep funds in a traditional IRA. 

Yes. Backdoor Roth IRAs are still allowed in 2024. However, there has been talk of eliminating the backdoor Roth in recent years. And the future is, of course, difficult to predict.  

Currently, backdoor Roth IRAs are still a legal way to get around the income limits in place, in terms of being able to contribute directly to a Roth IRA. Backdoor Roth IRAs are not