The Costly Backdoor Roth Mistake High Earners Make Every Year

The Costly Backdoor Roth Mistake High Earners Make Every Year

The post The Costly Backdoor Roth Mistake High Earners Make Every Year appeared first on 24/7 Wall St.. High earners who execute the backdoor Roth IRA correctly can still generate an unnecessary tax bill through one specific timing error. The strategy itself is sound. The execution is where the money leaks. High Earners Above the Roth Income Limit Have a Workaround — With a Catch The backdoor Roth IRA exists because Congress set income limits on…

Why Most Backdoor Roths Go Wrong

Backdoor Roth IRAs are popular with high earners who make too much to contribute directly to a Roth. The idea sounds simple: put money into a traditional IRA, convert it to a Roth, pay no tax, and enjoy tax-free growth. That can be true—but only if you avoid a hidden trap that catches many people. I’m Taylor Sohns, CEO of LifeGoal Wealth Advisors, a CIMA and CFP, and I want to explain how this works so you don’t end up with a surprise tax bill. …