Backdoor Roth IRA
This cluster focuses on the backdoor Roth IRA strategy for high-income individuals to bypass contribution income limits by converting traditional IRA funds, including discussions on tax advantages, eligibility rules, contribution limits, and comparisons to traditional IRAs and 401(k)s.
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Consider the Roth IRA backdoor whereby people who have too much income to directly start a roth can start one by converting a traditional IRA. This is directly in conflict with the intent of the law but is now a standard bit of financial advice.
Good advice. Worth noting that IRAs have income caps for contributions.https://www.rothira.com/roth-ira-limits
There are no taxes incurred on the gains or losses realized inside a traditional or Roth IRA when trades are executed. With a Roth IRA, the dollars come out tax free within certain constraints (age or account lifetime, roughly speaking), with contributions sourced from after tax earned income. With a traditional IRA, taxes are due when withdrawn. They can only be funded with dollars, not shares or assets. You can direct your investments with a self directed IRA for esoteric asset classes, but th
Roth IRAs have contribution limits.
It's called Backdoor Roth Contribution [1]. It only really works if you don't have any normal IRA accounts.1 - https://www.investopedia.com/terms/b/backdoor-roth-ira.asp
A ROTH IRA is designed so you pay taxes up front and _never again_. This is the whole point. It is easily available in the USA, I even have one. Peter Thiel used a self directed ROTH IRA to make a ton of money. He will never have to pay taxes on that, because it’s in a ROTH IRA. This is not a tax loophole.He _may_ have engaged in insider trading or something, in order to make so much money in the Roth. That should be protected, but is really not related to the fact that he used a Roth.
Roth 401(k)s (and traditional IRAs) do exist, you know...
You can invest inside a traditional or Roth IRA, which mitigates everything. But your retirement accounts should probably be heavily biased towards stock market index funds anyhow, so that doesn't really help that much.
Depending on how much you've earned during the year, a Roth IRA may not be an option (exact threshold I've forgotten but it's around $120,000)
There are limited ways of acquiring money that can be contributed to a Roth IRA, this way is not one of them