Unlock opportunities to tax-advantaged retirement savings
Backdoor Roth IRAs can be complex. Unsure of the steps to success? Most common questions are answered below. For expert guidance and confident retirement saving, schedule a call with a Facet expert to make informed financial decisions.
Unlock Your Retirement Savings Potential with a Backdoor Roth IRA
Who Qualifies?
Anyone can contribute to a traditional IRA and then convert to a Roth IRA, regardless of income level. This makes the Backdoor Roth IRA an excellent option for high earners who are otherwise ineligible to contribute directly to a Roth IRA.¹
Navigate the Complexities with Peace of Mind
The Backdoor Roth IRA is a completely legal strategy, endorsed through IRS rules and tax laws. However, navigating the nuances requires expertise to ensure compliance and optimize benefits.²
Steps to a Successful Backdoor Roth IRA:
- Contribute to a Traditional IRA: Start by making a contribution to a traditional IRA. There’s no income limit for contributing, making this the first step accessible for everyone.
- Convert to a Roth IRA: Next, convert the balance of your traditional IRA to a Roth IRA. This process involves a few key decisions, particularly concerning taxes, which is where Facet comes in.³
- Report to the IRS: Finally, report the conversion to the IRS using Form 8606 to ensure your taxes are handled correctly.⁴
Benefits for Your Future:
- Tax-Free Growth: Enjoy tax-free growth on your investments, allowing your retirement savings to increase without being diminished by taxes.
- No Required Minimum Distributions (RMDs): Roth IRAs do not require withdrawals at a certain age, giving you more control over your wealth.
- Tax Planning Flexibility: Converting to a Roth IRA can provide more flexibility in managing your tax liabilities in retirement.⁵
Tax Implications for High Earners
High earners face unique challenges and opportunities with Backdoor Roth IRAs. The conversion from a traditional IRA to a Roth IRA is a taxable event. However, strategic planning can minimize the tax impact.⁶
Why Facet?
Facet offers a personalized, flat-fee membership tailored to your unique financial situation. Our experts are here to guide you through the Backdoor Roth IRA process, from initial contribution to conversion and beyond, ensuring you make the most of your retirement savings.
Ready to Start?
Investing in your future with a Backdoor Roth IRA doesn’t have to be complicated. Contact Facet today to see how we can personalize a wealth management strategy that’s right for you. Together, we’ll ensure you’re on the path to a secure and prosperous retirement.
What you need to know: Taking action now will maximize impact. Every month you wait means less opportunity to leverage tax-advantaged retirement savings.
Sources:
- https://www.irs.gov/retirement-plans/traditional-and-roth-iras
- https://www.irs.gov/retirement-plans/traditional-and-roth-iras
- https://www.irs.gov/retirement-plans/roth-iras
- https://www.irs.gov/forms-pubs/about-form-8606
- https://www.irs.gov/retirement-plans/roth-iras
- https://www.irs.gov/retirement-plans/traditional-and-roth-iras
Schedule a call with a Facet expert
Get help with catch up contributions and every important financial decision with an affordable flat fee membership.
** Nerdwallet review conducted in October of 2023 based on the time frame of August – October 2023. Nerdwallet’s independent assessment includes data collection, interviews and testing which results in star ratings from poor (one star) to excellent (five stars). Nerdwallet was not paid for this review however does receive compensation based on referrals.
How we’re different.
What Facet members are saying.
Testimonials were provided by current members of Facet ("Facet Wealth, Inc."). Members have not been paid for their testimonial and there are no material conflicts of interest that would affect the given testimonials. These testimonials may not be representative of the experiences of other members, and do not provide a guarantee of future performance success or similar services.