A Backdoor Roth IRA lets high earners bypass income limits for Roth IRA contributions. If you earn too much to contribute directly (2025 limits: $161,000 single, $240,000 married filing jointly), this strategy is for you.
How it works:
- Contribute to a traditional IRA (non-deductible, up to $7,000 in 2025, or $8,000 if 50+).
- Convert that contribution to a Roth IRA. Since its after-tax money, you’ll owe little to no tax on conversion.
Why it’s great:
- Roth IRAs grow tax-free, and qualified withdrawals are tax-free.
- No required minimum distributions (RMDs) in retirement.
Watch out:
- Pro-rata rule: If you have pre-tax IRA funds, taxes may apply on conversion.
- Consult a tax pro to avoid surprises.
Maximize your retirement savings with this smart workaround. Questions? reach out to the financial advisors at Kerr Wealth Advisors in Blue Bell, PA.
H. Brad Kerr IV, Vice President/ Wealth Management, Financial Advisor
215.619.3926/ bkerr4@janney.com
1767 Sentry Parkway West Suite 110 Blue Bell, PA 19422
The concepts illustrated here have legal, accounting and tax implications. Neither Janney Montgomery Scott LLC nor its Financial Advisors give tax, legal, or accounting advice. Please consult with the appropriate professional for advice concerning your particular circumstances. For more information about Janney, please see Janney's Relationship Summary (Form CRS) on www.janney.com/crs which details all material facts about the scope and terms of our relationship with you and any potential conflicts of interest.
