J A M E S O N V A N H O U T E N R E V I E W S T H E B E N E F I T S T H A T T H E B A C K D O O R R O T H I R A

H A S T O O F F E R F O R I N D I V I D U A L S

Jameson Van Houten Shares the Advantages & Disadvantages of a

Backdoor Roth IRA

Backdoor Roth IRA

Backdoor Roth Individual Retirement Arrangements are available for individuals who make above $129,000 a year as an individual.

In 2010, a law was passed to allow the benefits of a Backdoor Roth IRA to be used for high-income earners.

This process is done by putting money in a traditional IRA and then transferring it into a Backdoor Roth IRA account.

Advantages

Some of the advantages of a Backdoor Roth IRA include:

1 If you have not been already transferring into an IRA account, you will pay little when converting to a Roth IRA.

2 If you wait to withdraw until you are 59 ½ or if you have had the account for 5 years, you will receive no penalty.

3 You are able to combine your individual retirement funds from that of your job.

Disadvantages

Some disadvantages of this include:

1 You cannot contribute to a traditional IRA if you are under a certain age.

2 If you already have money in a traditional IRA and transfer it, all your interest will be taxed.

3 You will have to pay an extra cost if you withdraw from the account before the terms are met.