You may have heard about a back door Roth IRA, especially if you make too much money to contribute directly into one right now. While a back door Roth and a regular Roth IRA utilize the same account, performing the contribution to get around the income limits has very specific steps that you need to get right in order to avoid unnecessary taxation and issues with the IRS.
This podcast episode goes over what a makes a back door Roth different than a regular IRA contribution, along with the exact steps you need to take to successfully perform the strategy. You'll also understand what account aggregation is and how those rules could cause unanticipated tax consequences, along with potential solutions to avoid taxes when doing a back door Roth contribution.
Resources mentioned in this episode include:
Episode 8 The 1 Account With 4 Surprisingly Flexible Savings Options
Form 8606 - include this with your tax return for the year you make your non-deductible traditional IRA contribution
Form 5498 - what you'll need to save to prove that your contribution was made originally to your traditional IRA; it will be supplied by your IRA provider
Form 1040 - you'll show the nuts and bolts of your conversion to your Roth IRA on the line for IRA distributions
Disclaimer: This podcast is for informational purposes only; every individual's situation varies and could impact the outcome so this should not be exclusively relied upon for tax, legal or investing advice.
Please confirm the use of this information with your own paid professionals as Kelley C Long and Kelley C Long Consulting LLC expressly disclaims any and all liability that may arise from listeners' use of this information for their own tax and financial planning.
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