The backdoor option was designed for high-income earners to make a regular Roth contribution using tax-deferred earnings.
An individual retirement account (IRA) is a savings and investment account with tax advantages. A traditional IRA uses pre-taxed dollars, while a Roth IRA uses after-tax dollars. They both have tax savings, either now or later.
1) It can rapidly increase overall retirement savings rates. 2) The Mega Backdoor Roth IRA allows for significant tax-deferred growth when done correctly.
1) It’s not easy to contribute beyond the tax-deferred contributions. 2) Not all employers offer Rollover Roth IRA options. 3) Regulations may change.
The Mega Backdoor Roth IRA is a mega-savings option for high-income earners. It opens the doors to high savings rates and significant tax savings over time.