Mastering the Backdoor Roth: How High-Income Earners Can Contribute to an IRA and Navigate the Pro-Rata Rule
The Backdoor Roth is a legal tax strategy for high-income earners to contribute to a Roth IRA despite income limits. However, the complex “Pro-Rata Rule” can lead to unexpected taxes if not managed carefully, especially with existing pre-tax Traditional IRA balances. This article provides a comprehensive guide to the Backdoor Roth process, a detailed explanation of the Pro-Rata Rule, calculation examples, and strategies for avoidance. It offers practical advice for high-income individuals seeking the tax-free growth and withdrawals of a Roth IRA, covering common pitfalls and FAQs.
