Should You Convert a Traditional IRA to a Backdoor Roth IRA?
You may have dismissed Roth IRAs years ago if you didn’t meet the income eligibility. But did you know that you can convert traditional IRA funds into a Roth IRA by doing what’s called a “backdoor conversion”? You can convert funds to a Roth no matter what your income level is, and unlike traditional IRAs, your investment earnings are not taxed upon withdrawal. The downside is that, because traditional IRAs are funded with pre-tax dollars, if you choose to convert to a Roth IRA, you’ll pay taxes on those tax-deferred dollars the year you make the conversion. Is a Backdoor Roth IRA worth considering? In this post we’ll discuss how Roth IRAs can fit into a retirement strategy and overall wealth management. And, while there is no one-size-fits-all when it comes to any retirement planning — Roth IRAs being no exception — it may be helpful to build your strategy based on where you are in your retirement planning.