3 Ways to Benefit from a Roth IRA Under New Tax Law, Including a 'Mega Backdoor Roth'
The Roth IRA is popular once again. The new lower income tax rates make conversions to a Roth more favorable than they used to be. In addition, the low tax rates are set to expire in 2025, and there is an expectation that higher rates could be on the horizon. This also favors the Roth IRA, whose qualified distributions are income-tax free, unlike with a traditional IRA.
Income restrictions can stand in the way of some people from pumping money directly into a Roth IRA, as people are phased out when their incomes exceed the $199,000 threshold (2018 marrying filing jointly limit, or $135,000 if single). However, there are indirect ways to fund a Roth IRA. Here are three examples:
Strategy #1: Mega Backdoor Roth IRA
First, make the to a 401(k) plan, which may
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