Roth IRA
What one can do if he does not qualify for Roth IRA?
In Roth IRA, if person’s income is so high in order to make the contribution in a Roth IRA, one will still be qualified for the traditional deductible IRA but this will happen in one situation that a person or person’s spouse should not be covered in a retirement plan at work.
So, even if a Roth IRA does not work for you, there is still another option of going for a traditional IRA. However, for those who are truly impressed and deeply desire to opt for Roth IRA due to its post tax contribution structure, there is still another option. It is also called the back door option.
First, the individual must qualify for a traditional IRA. Since, there are no maximum income limits, traditional IRA would not be that much of a hassle. Thereafter, one can convert it to a Roth IRA. There are initial federal and state taxes applicable and a conversion fee charged by the bank; however, the path to Roth IRA becomes easier.
This is because of a rule implemented from January 1st, 2010 where all tax payers despite the income limit can qualify for Roth IRA for a time. So, make the best of use while the opportunity is still available.
There are certain cases where this may not be possible. It is strongly recommended to consult your expert financial consultant who can do Math for your investment needs and finally suggest solution according to the type of retirement plan that you need.
The financial expert considers future contingencies that an average person may not even have thought of which gives a whole new perspective to one’s investment needs. Who knows it can be something better than what you initially set out for?
So, even if a Roth IRA does not work for you, there is still another option of going for a traditional IRA. However, for those who are truly impressed and deeply desire to opt for Roth IRA due to its post tax contribution structure, there is still another option. It is also called the back door option.
First, the individual must qualify for a traditional IRA. Since, there are no maximum income limits, traditional IRA would not be that much of a hassle. Thereafter, one can convert it to a Roth IRA. There are initial federal and state taxes applicable and a conversion fee charged by the bank; however, the path to Roth IRA becomes easier.
This is because of a rule implemented from January 1st, 2010 where all tax payers despite the income limit can qualify for Roth IRA for a time. So, make the best of use while the opportunity is still available.
There are certain cases where this may not be possible. It is strongly recommended to consult your expert financial consultant who can do Math for your investment needs and finally suggest solution according to the type of retirement plan that you need.
The financial expert considers future contingencies that an average person may not even have thought of which gives a whole new perspective to one’s investment needs. Who knows it can be something better than what you initially set out for?
