Deep Dives

How to Make a "Backdoor" Roth Contribution

A backdoor Roth contribution is a great way for higher-income individuals to take advantage of additional tax sheltered savings for retirement.

July 11, 2022

This article will walk you through how to make a backdoor Roth Contribution. To find out what that is, start here. A backdoor Roth contribution is a great way for higher-income individuals to take advantage of additional tax sheltered savings for retirement. When you’re ready to move forward with implementing this strategy, we’ve detailed the steps below. 

Although it may look like a complicated process, this strategy is relatively simple; however, it’s important to do this in the correct order. 

  1. Open a Traditional IRA and a Roth IRA account.
  2. You can open these accounts at Charles Schwab, Fidelity, or Vanguard for example. For simplicity, we recommend you keep your Traditional IRA and Roth IRA at the same institution. 
  3. Make a contribution to your Traditional IRA account up to the current year's limit.
  4. The current contribution limits set by the IRS are listed here
  5. Contact the custodian of the Traditional IRA and ask them to send you any paperwork required to move the money from your Traditional IRA to the new Roth IRA.
  6. To ensure you are properly documenting the move you should make sure to select the same trustee transfer to ensure the funds move directly from your Traditional IRA to your new Roth IRA.
  7. Notify your tax preparer that this is a non-deductible IRA contribution.

It’s important to note that you may want to do this annually and each time you would repeat steps 2-4 above. The deadline for making your annual contribution is the tax filing deadline for that year (i.e. for 2020 the contribution must be made by April 15th, 2021). 

Learn what Origin can do for you

Helping 150+ top U.S. companies establish financial wellness

Get started!