Backdoor Roth IRA

All right.

So the backdoor IRA or Roth IRA is something that I get asked about quite a bit.

It's a very simple sort of tool, but also a very effective one.

Yet there's little wrinkles to the rules that people are not aware of.

when they're just typing in, what should I do with my finances into AI, or they're just speaking to a random investment manager.

And so want to make sure that we are addressing those concerns as well.

So first of all, let's talk about why the backdoor Roth tactic exists.

It's really important for those who have reached a point where they cannot invest in a Roth directly.

So basically, the ability to invest in a Roth directly phases out at $153,000, and then it's gone by $168,000.

And if you're single and then for married filing jointly, it's $242,000, and then it's gone by $252,000.

And so...

When you're locked out of contributing to the Roth, that means you are locked out of the ability to put money in there.

You know, it's after tax.

So you've paid it and paid taxes on it.

And then it can grow tax free.

And when you use it in retirement, it's tax free.

So it's a very powerful tool.

In that dynamic, what you what happens is you can still use the Roth when you're over those income limits.

You just have to go through a circuitous route.

And that's where the backdoor Roth happens.

comes into play because there's no income limit on this.

And so it can be really a useful tool to build after tax wealth.

And when we're building wealth, we want different layers, we want taxable, we want pre tax, we want post tax.

And so Roth is a big component of that.

So how does this work? So you can contribute up to $7,500 in an IRA in 2026 and $8,600 if you're above 60.