Many of our clients’ earned income exceeds the limits to contribute to a Roth IRA (See the 2022 limits here) and they think they cannot contribute to a Roth IRA. Does that include you?
There may be a way! Actually TWO ways!
One, is to check to see if you have a Roth option in your 401k plan. If you do, part or all of your 401k contributions can be done as a Roth (after tax) 401k contribution. Roth 401k’s do not have income limits.
The second way is fund a nondeductible traditional IRA and then do a Roth IRA conversion. As of today, there are no income limits on a Roth IRA conversion. Another name for this second idea you may have heard of is the “Backdoor Roth IRA.”
Want to learn more? If the idea makes sense for you, we can help you set up the Backdoor Roth IRA and/or the Roth option in your 401k plan. Reach out for your free initial consultation!
Here is this week’s market update.