Back Door Roth
Hello,
I read an article today related to the backdoor Roth strategy. Please see the excerpt below. I believe this is incorrect. Can you confirm? I don’t think separate Roth accounts are required for each backdoor Roth conversion?
The tax-free accumulation is the obvious attraction. But it comes with a relatively high administrative burden: Each year’s contribution has to be created as a separate Roth IRA account, meaning that if you make contributions for the next 20 years, you’ll be juggling 20 separate Roth IRA accounts. There’s also a thicket of IRS conversion regulations that have to be followed carefully to avoid triggering additional tax liabilities.
Thank you.
Permalink Submitted by Alan - IRA critic on Thu, 2024-01-18 20:27
The article is dead wrong about multiple accounts and it is surprising that Kiplingers published it. Only one Roth IRA is needed and for that matter only one TIRA account is needed as well. Another myth is that you should wait some period of time prior to converting because of “step transaction” concerns. Congress has clarified that step transaction theory is not appllcable to the back door Roth strategy.