Roth for High Income earners
We have an advisor that is telling his clients that some physicians that earn $500K can still contribute to a Roth IRA. I am not talking about a Roth 401-K but a regular Roth.
I think earning limitations preclude someone from doing this. The only way I know to do this to contribute to a non-deductible IRA and then do a Roth conversion. I assume that since it was after tax contributions the Roth conversion would not be taxable.
Any thoughts?
Thank you
BH
Permalink Submitted by Alan - IRA critic on Mon, 2014-07-28 20:22
You are right, the only way to do this is the so called “back door Roth” from making non deductible TIRA contributions and then converting them. And even for that strategy the conversions will be mostly taxable if there is any other pre tax non Roth IRA balance. Of course, high income people can always convert other retirement assets to a Roth IRA if they have pre tax retirement assets to convert, but in most cases those conversions will be taxable.