The theme this week is the backdoor Roth IRA strategy. If you make too much money to qualify to make a Roth contribution in 2019, don’t fret. There is a little-known strategy called the backdoor Roth, that will still allow you to make Roth contributions. 

Here’s how it works: You make a non-deductible or after-tax IRA contribution to your Traditional IRA. There aren’t income limits on conversions from a Traditional IRA to a Roth IRA, so you can then turn around and convert that contribution to a Roth. Bam. Done. Take that Uncle Sam!

Today, I’m sharing with you why I chose to do this topic in October - it’s because if you’re going to utilize the Backdoor Roth, the clock is ticking. You only have until the end of the calendar year to make your Backdoor Roth conversion, so if you haven’t yet talked to your tax advisor to see if this strategy makes sense for you, what are you waiting for? 

You should consider the Backdoor Roth Strategy if: 

• You don’t have access to a Roth through your 401k plan
• You make too much money to qualify for a Roth IRA contribution in 2019
• Your pre-tax IRA account balances are low. This is important because you could owe taxes on the amount you convert to a Roth if you already have a lot of money socked away in an IRA account.

So do your homework, talk with your tax advisor, see if this strategy makes sense for you. But do it now, and don’t procrastinate, because if you wait until the end of the year, you could miss the opportunity to do a backdoor Roth contribution for 2019, and will have to wait until next year. 

Your retirement is perhaps the most important financial decision you’ll ever make. You want to get it right. Well, so do I. For the last 12 years, I’ve been helping clients just like you make the transition into retirement. If you want to talk one-on-one with me about whether or not you can retire, head on over to truenorthra.com, where you can book a 15 minute call with me, at a time that’s convenient for you. The call is confidential, free, and I promise to help guide you on whatever is weighing most on your mind right now regarding your retirement. So head on over to truenorthra.com and book a call today. 

That’s it for today. Thanks for listening. My name is Ashley Micciche and this is the One Minute Retirement Tip. 

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