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Back Door Roth IRAs Allowed

Last update on: Mar 14 2020

Upper income taxpayers aren’t allowed to make contributions to Roth IRAs. But they can do conversions to Roth IRAs. For years, tax advisors have said upper income taxpayers should consider the back door Roth IRA. Make a nondeductible contribution to a traditional IRA, and then convert that to a Roth IRA. Some argued that the IRS would disallow these transactions as shams. But in tax reform Congress said back door Roth IRAs are allowed.

 

 

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