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Provides a three-step implementation process (nondeductible traditional IRA contribution, Roth conversion, and IRS Form 8606) and guidance on when to use or avoid it based on AGI, the 5-year rule, pro-rata rule, and legislative risk.",{"@graph":14,"@context":72},[15,34,55],{"@type":16,"itemListElement":17},"BreadcrumbList",[18,23,27,31],{"item":19,"name":20,"@type":21,"position":22},"https://docshare.wps.com","Home","ListItem",1,{"item":24,"name":25,"@type":21,"position":26},"https://docshare.wps.com/template/","Template",2,{"item":28,"name":29,"@type":21,"position":30},"https://docshare.wps.com/template/letters/","Letters",3,{"item":32,"name":10,"@type":21,"position":33},"https://docshare.wps.com/template/should-we-consider-a-backdoor-roth-strategy-this-year-info-sheet-82024/301665/",4,{"url":32,"name":10,"@type":35,"image":36,"author":41,"headline":10,"publisher":44,"fileFormat":47,"inLanguage":8,"description":12,"dateModified":48,"datePublished":49,"encodingFormat":47,"isAccessibleForFree":50,"interactionStatistic":51},"DigitalDocument",{"url":37,"@type":38,"width":39,"height":40},"https://docshare.wps.com/thumbnails/should-we-consider-a-backdoor-roth-strategy-this-year-info-sheet-82024/301665.png","ImageObject",442,249,{"name":42,"@type":43},"Felix Montgomery","Person",{"url":19,"name":45,"@type":46},"DocShare","Organization","application/pdf","2026-09-25","2026-09-19",true,{"@type":52,"interactionType":53,"userInteractionCount":22},"InteractionCounter",{"@type":54},"ViewAction",{"@type":56,"mainEntity":57},"FAQPage",[58,64,68],{"name":59,"@type":60,"acceptedAnswer":61},"What is a “Backdoor” Roth IRA strategy?","Question",{"text":62,"@type":63},"A “Backdoor” Roth IRA is a strategy for people and families above the Roth IRA income limits who can’t directly contribute to a Roth. It involves contributing to a nondeductible Traditional IRA and then converting it to a Roth IRA.","Answer",{"name":65,"@type":60,"acceptedAnswer":66},"How do you use the strategy step by step?",{"text":67,"@type":63},"Contribute up to the annual maximum (listed as $7k for 2024) to a nondeductible Traditional IRA, convert that Traditional IRA to a Roth IRA, and complete IRS tax form 8606 for the tax year of the conversion.",{"name":69,"@type":60,"acceptedAnswer":70},"Why might someone avoid the strategy?",{"text":71,"@type":63},"Avoid it if the 5-year rule could affect distributions you need soon, if the pro-rata rule creates taxable portions due to existing Traditional IRA holdings, or if legislative changes remove or alter the “Backdoor” Roth approach. The sheet also notes conversion from a traditional IRA to a Roth is a taxable event.","https://schema.org",{"og:url":32,"og:type":74,"og:title":10,"og:site_name":45,"og:description":12},"article",{"robots":76,"canonical":32},"index,follow",{"doc_id":78,"site_id":7},301665,1790325524,{"code":4,"msg":81,"data":82},"success",[83,88,93,98,103,108,113,117,122],{"id":84,"doc_module":22,"doc_module_name":25,"category_name":85,"show_sort_weight":86,"slug":87},11,"Presentations",90,"presentations",{"id":89,"doc_module":22,"doc_module_name":25,"category_name":90,"show_sort_weight":91,"slug":92},12,"Resumes",80,"resumes",{"id":94,"doc_module":22,"doc_module_name":25,"category_name":95,"show_sort_weight":96,"slug":97},14,"Invoices",70,"invoices",{"id":99,"doc_module":22,"doc_module_name":25,"category_name":100,"show_sort_weight":101,"slug":102},15,"Posters",60,"posters",{"id":104,"doc_module":22,"doc_module_name":25,"category_name":105,"show_sort_weight":106,"slug":107},16,"Social Media",50,"social-media",{"id":109,"doc_module":22,"doc_module_name":25,"category_name":110,"show_sort_weight":111,"slug":112},17,"Forms",40,"forms",{"id":114,"doc_module":22,"doc_module_name":25,"category_name":29,"show_sort_weight":115,"slug":116},18,30,"letters",{"id":118,"doc_module":22,"doc_module_name":25,"category_name":119,"show_sort_weight":120,"slug":121},21,"Paper Templates",5,"papers-templates",{"id":123,"doc_module":22,"doc_module_name":25,"category_name":124,"show_sort_weight":4,"slug":125},158,"General","general-158",{"code":4,"msg":81,"data":127},{"doc_id":78,"user_id":128,"nickname":42,"user_avatar":129,"doc_module":22,"category_id":114,"category_name":29,"doc_title":10,"doc_description":12,"doc_content":130,"file_id":131,"file_url":132,"file_type":133,"file_size":134,"view_count":26,"is_deleted":4,"is_public":22,"is_downloadable":22,"audit_status":22,"page_count":22,"language":135,"language_code":8,"site_id":7,"html_lang":8,"table_of_contents":136,"faqs":137,"seo_title":138,"seo_description":12,"update_tm":139,"read_time":4},549768064778,"https://ap-avatar.wpscdn.com/davatar_6f874abed73319feea01a86fa6f0fab8","Wade A. McFee, ChFC®, CLU® Principal and CEO  \nMcFee Financial Group  \nOffice 763.425.5777 Toll Free 800.470.9608 Fax 763.425.6788  \n4640 Oak Grove Parkway N. Minneapolis, Minnesota 55443  \nA Registered Investment Advisory Firm  \nShould We Consider a “Backdoor” Roth Strategy this Year?  \nINFO SHEET – 8/2024  \nWhat is a‘Backdoor’Roth?  \nA ‘Backdoor’Roth IRA is a strategy used for people and families who make over the $230k Joint, $146k Single income limit to contribute to a Roth IRA.  \nWhy Use This:  \n􀁸 Tax-Free DistribuƟons and Tax-Deferred Growth: Roth IRA’s grow tax-deferred, and are distributed tax-free. The only taxable porƟon is the contribuƟon is made with aŌer-tax dollars. TradiƟonal IRAs are Tax-DeducƟble upfront, grow Tax-Deferred, but upon distribuƟon, are taxable at ordinary income tax rates. To diversify the tax distribuƟons at reƟrement, some families prefer to have different opƟons.  \n􀁸 Estate Planning: While TradiƟonal IRAs are subject to the 10-year rule (heirs must distribute the IRA within 10 years, or be penalized), Roth IRA’s have no restricƟons on withdrawals for beneficiaries, for the most part.  \nHow to use:  \nThe strategy is simply:  \n1. Contribute up to the annual maximum of $7k (2024) to a Non-DeducƟble TradiƟonal IRA  \n2. Convert the Non-DeducƟble TradiƟonal IRA to a Roth IRA  \n3. Fill out tax form 8606 for the Tax Filing Year to report the Conversion  \nWhen to use:  \n􀁸 When AGI is above $230k JT or $146k Single  \n􀁸 You’ve maximized your Pre-Tax ContribuƟon ReƟrement Savings Goals  \nWhen not to use:  \n􀁸 The 5-year Rule: If you are nearing ReƟrement DistribuƟon Phase, the 5-year rule on Roth IRAs could leave you ina lurch. This Roth IRA distribuƟons rule sƟpulates the earnings of a Roth IRA may not be distributed in the first 5-years of your first Roth IRA contribuƟon (one may take principal whenever one pleases for whatever reason) .  \n􀁸 Pro-Rata Rule: If you have a TradiƟonal IRA, each dollar withdrawn or converted from an IRA or 401(k) will contain a percentage of tax-free and taxable funds relaƟve to the proporƟon those funds make up the account.  \n􀁸 LegislaƟon Risk: There has been talk each of the past few years about removing the ‘Backdoor’Roth IRA Strategy.  \nCitaƟons: (1) Roth Iras. Internal Revenue Service. (2024, August 8) . hƩ[ps://www.irs.gov/re](ps://www.irs.gov/re)Ɵrement-plans/roth-iras  \nAdvisor offering securities and advisory services through Cetera Advisor Networks LLC  \n(Doing insurance business in CA as CFGAN Insurance Agency LLC), Member FINRA/SIPC, a broker-dealer and registered investment adviser.  \nCetera is under separate ownership from any other named entity. CA Insurance License \\# 0F70768  \nMcFee Financial Group, Inc. is a registered investment adviser firm offering financial planning service.  \nMcFee Financial Group is not a subsidiary of no controlled by Cetera Advisor Networks LLC.  \nPersonal Insurance Licensed in Minnesota \\#47761, IA and FL  \nConverting from a traditional IRA to a Roth IRA is a taxable event. For a comprehensive review of your personal situation, always consult with a tax or legal advisor. Neither Cetera Advisor Networks LLC nor any of its representatives may give legal or tax advice.","cbCaieejzOvOYYL2","https://ap.wps.com/l/cbCaieejzOvOYYL2","pdf",198650,"English","# What is a “Backdoor” Roth?\n# Why Use This Strategy?\n# How to Use It\n# When to Use It\n# When Not to Use It\n# Citations and Disclosures","[{\"question\":\"What is a “Backdoor” Roth IRA strategy?\",\"answer\":\"A “Backdoor” Roth IRA is a strategy for people and families above the Roth IRA income limits who can’t directly contribute to a Roth. It involves contributing to a nondeductible Traditional IRA and then converting it to a Roth IRA.\"},{\"question\":\"How do you use the strategy step by step?\",\"answer\":\"Contribute up to the annual maximum (listed as $7k for 2024) to a nondeductible Traditional IRA, convert that Traditional IRA to a Roth IRA, and complete IRS tax form 8606 for the tax year of the conversion.\"},{\"question\":\"Why might someone avoid the strategy?\",\"answer\":\"Avoid it if the 5-year rule could affect distributions you need soon, if the pro-rata rule creates taxable portions due to existing Traditional IRA holdings, or if legislative changes remove or alter the “Backdoor” Roth approach. The sheet also notes conversion from a traditional IRA to a Roth is a taxable event.\"}]","Should We Consider a “Backdoor” Roth Strategy this Year? - Info Sheet - 8/2024 | PDF",1789784446]