US EditionUnderstanding the backdoor Roth IRA—How it works and why you should consider it
- In 2025, high-income individuals in the United States can use the Backdoor Roth IRA strategy to contribute to a Roth IRA despite exceeding the usual income thresholds that limit direct contributions.
- This method arose because direct Roth IRA contributions phase out at incomes between $150,000-$165,000 for singles and $236,000-$246,000 for married filers in 2025.
- Contributors first make nondeductible, after-tax contributions to a traditional IRA and then convert the amount to a Roth IRA to access tax-free growth and withdrawals.
- For 2025, individuals can contribute up to $7,000 annually to their IRAs, with those 50 and above eligible to add an extra $1,000 as a catch-up contribution. Additionally, Roth IRAs do not require minimum distributions, giving account holders control over when and how much they withdraw.
- While the Backdoor Roth IRA offers significant long-term, tax-free growth benefits, users face tax complexities, so consulting a tax professional is advisable to optimize this strategy.
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The Billings Gazette+34 Reposted by 34other sources
Understanding the backdoor Roth IRA—How it works and why you should consider it
Range explores how a backdoor Roth IRA works, why it’s valuable for high-net-worth households, and the specific steps and tax implications involved.
·Billings, United States
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Total News Sources36
Leaning Left2Leaning Right1Center31Last UpdatedBias Distribution91% Center
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- 91% of the sources are Center
91% Center
C 91%
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