Quote:
Originally Posted by XKxRome0ox
hmmm
how?
is it because if you are past a certain income level, you can't get tax deduction for the traditional IRA contribution anyway? so you're already taxed on the money so it avoid being taxed on the back end?
i'd check to make sure 100% how it works
because you don't want to put away all this money thinking you're going to take your money out of a "Roth" and then end up owing taxes
(i'm genuinely asking because i've kinda heard about this "backdoor Roth IRA" thing and want to do it as well)
|
because its a roth. roth is money that you've already paid taxes on. the growth is tax free.
i have $12k that is in my bank account that i already paid income taxes on. $6k is for me, and $6k is for my wife. we can each have a roth ira. we had to do a "backdoor" because of the income limitations. i know for a fact there is no taxes to be paid because my wife didn't have a roth before. we opened the account and maxed it out ($6k) and no taxes were taken.
you can't open a roth ira if your modified adjusted gross income is over $190k or something like that. you can, however, open an ira. there are no rules prohibiting rolling an ira into a roth ira, but you have to abide by the contribution limits of the roth ira, which is $6k. makes sense? its a legal loophole.
its a beneficial supplement to retirement. i invest approximately 18% of my income (not including rental property, or my wife's income). my wife has a small 401k from work we contribute to just to get the small match. we're 33 so we have some ways to go, but we're off to a great start. the roth's are going to be a good tool to maybe keep us under a certain tax bracket at retirement.