Explain steps of back door Roth to me like I'm 5, please

[Anonymous]

Anonymous wrote:Can you convert all the time whenever you want?Or is it like a once a year or one time thing

This is OP. You can convert as many times as you want, as long as you don't end up contributing more than $6500 or $7000 into the Roth.

[Anonymous]

Anonymous wrote:Google search? https://www.physicianonfire.com/backdoor/

wow. That creates a novel out of an short story

[Anonymous]

It’s a political term for a Roth IRA conversion.

You contribute to a traditional IRA, keep it in cash for a few weeks, then convert it to Roth. If you don’t qualify for or take the income tax deduction or have any other money in an IRA, it’s perfectly legal. It’s paying taxes now instead of later. That’s all.

[Anonymous]

Anonymous wrote:It’s a political term for a Roth IRA conversion.

You contribute to a traditional IRA, keep it in cash for a few weeks, then convert it to Roth. If you don’t qualify for or take the income tax deduction or have any other money in an IRA, it’s perfectly legal. It’s paying taxes now instead of later. That’s all.

But it skirts the income limits of a roth right

[Anonymous]

Anonymous wrote:

Anonymous wrote:It’s a political term for a Roth IRA conversion.

You contribute to a traditional IRA, keep it in cash for a few weeks, then convert it to Roth. If you don’t qualify for or take the income tax deduction or have any other money in an IRA, it’s perfectly legal. It’s paying taxes now instead of later. That’s all.

But it skirts the income limits of a roth right

Roth conversions are not income limited. Roth contributions are. Don’t believe me? Go to IRS dot gov.

[Anonymous]

Anonymous wrote:

Anonymous wrote:It’s a political term for a Roth IRA conversion.

You contribute to a traditional IRA, keep it in cash for a few weeks, then convert it to Roth. If you don’t qualify for or take the income tax deduction or have any other money in an IRA, it’s perfectly legal. It’s paying taxes now instead of later. That’s all.

But it skirts the income limits of a roth right

And the post-conversion gains are completely untaxed. So it's not paying taxes "now instead of later".

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It’s a political term for a Roth IRA conversion.

You contribute to a traditional IRA, keep it in cash for a few weeks, then convert it to Roth. If you don’t qualify for or take the income tax deduction or have any other money in an IRA, it’s perfectly legal. It’s paying taxes now instead of later. That’s all.

But it skirts the income limits of a roth right

And the post-conversion gains are completely untaxed. So it's not paying taxes "now instead of later".

No. Apparently you are bad at math and failed US Government in high school.

You pay income taxes in the year that you earn the money. That’s a real tax for those of us that pay income tax. Maybe not you, but the rest of us do.

Then you don’t deduct them from your taxes. IRA contributions are tax deductible for people under certain income limits.

Then you convert to Roth.