How to do a backdoor Roth IRA?

[mdom77 (Mel D)]

Hey Jeremy and others,

Early this week I was advised to seek a “backdoor Roth IRA” because my wife and I exceeded the max combined salary allowance for . We’re both maxing out employer matched 401Ks and are aggressively seeking how else to plan for our retirement. We’re might be a little delayed to the part at age 31 and 32, but we’re starting nonetheless.

I’m trying to educate myself on a Backdoor Roth IRA with various explanations out there. I know wanted to hear from those who’ve done and might want to share the experience on doing it successfully and any other best practices. Take care!

[Jeremy (Jeremy Schneider)]

Hey @mdom77!

When you say you’re both maxing out your 401ks, is it just the match or the full $19,500 each? If it’s the full $19,500 each, for a total of $39,000/year going into a tax-deferred investment account, that’s excellent!

A backdoor Roth IRA could get you $6,000/each into a Roth IRA. I think this post discusses the same question!

Backdoor Roth with traditional IRA

Hi, first love the idea of this site. I browsed around several topics and just great overall information. So my question is in regards to Roth IRA. I’m married and both me and my wife work. We’re over the limit for Roth. We also both have 401ks and Traditional IRAs and we have Roth IRAs from when we weren’t married and making less money. We’re both 30. My question is to contribute to Roth IRA, we’ll need to do backdoor Roth’s? I’ve read that Well both need to roll our traditional ira int…

[mdom77 (Mel D)]

Good catch. We are just doing the match and I guess we can certainly see if we can do more. We refinanced our home to lower our interest and are saving close to $1,000 from Sept and onward. We’re discussing how we can wisely continue using that money that we would’ve been paying in our previous mortgage.

Perhaps truly “maxing” out our employer retirement accounts is the better move than opening more retirement accounts?

[Jeremy (Jeremy Schneider)]

Yeah, if it’s me, I’m definitely going to fill up those 401k before I try to monkey around with backdoor Roth IRAs. Just less headache, paperwork, complexity etc.

[mdom77 (Mel D)]

Update. I’m back and heeded Jeremy’s advice. I am now maxing out my work 401k’s $19,500 limit and getting my company’s 5% match. It took some lifestyle tweaks to do this maxing out on top of refinancing our home. The money saved with the refinance went directly into investing, absolutely nothing else. I took the PFC’s courses suggestions and also picked which index funds my money goes into. I think I want to double check I did that right though… I should hit the $100k by the end of the year.

Next is filling my HSA, and creating a backdoor Roth IRA. Before I set up a backdoor Roth IRA, I wanted to double check if it’s worth the extra headache, or is adding more money to my 401k a simpler and just as effective route? I can add more than the $19,500 though it will be taxed…

Thoughts?