Using a “Back Door Roth” IRA? Be mindful of the IRA aggregation rule

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As many of you know, the concept of a “Back Door Roth” IRA is relatively simple. It allows taxpayers with higher incomes $132,000 or more if you’re single, and $194,000 or more for married couples filing jointly in 2016, to fund their Roth accounts through contributions to traditional IRA accounts and subsequently convert them to a Roth. When the IRS removed income limits on conversions in 2010, anyone with funds in a traditional IRA account became eligible for a Roth conversion.

Planning to use the Back Door Roth IRA technique? Be mindful of the IRA aggregation rule. In a situation when …read more

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