Whiteboard Series: Episode 5 – The Backdoor Roth IRA

Roth IRAs are fantastic savings and investment vehicles.  Assets in a Roth IRA grow tax-free, contributions can be withdrawn without taxes or penalty at any age and the investments in these accounts are never REQUIRED to be accessed during the account owner’s lifetime.  Roth IRAs tend to be popular accounts for young professionals early in their careers but lose momentum over time as people get into their 30s and 40s and find themselves above the IRS income thresholds for contributing to them.  Current tax law does allow higher income earners to get money into Roth IRAs, provided they take a few extra steps to do so.  This strategy, known as the Backdoor Roth IRA, is a unique and powerful opportunity for individuals looking to expand the scope – and tax efficiency! – of their overall savings and investment strategy. 

 
 

The Whiteboard Series is a continuous exploration and discussion across a wide range of personal finance topics. Through a series of drawings, interviews and explanations, we hope to educate and simplify important financial planning principles.