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Some high-income earners are subject to a contribution phase-out schedule that can keep them from contributing directly to their Roth IRAs. But the removal of the modified adjusted gross income limit for Roth conversions has created a back door strategy many can use.

First, open a traditional IRA and make a fully nondeductible contribution. Then convert it into a Roth IRA. If your MAGI exceeds the Roth limit and you or your spouse participates in an employer-sponsored qualified plan, you’re ineligible to deduct your contribution. If you and your spouse do not use a qualified plan at work, do not report your traditional IRA contributions as a deduction on your 1040.

The MAGI threshold for contributions does not apply to conversions, so income limitations don’t matter. Repeat the same process every year your MAGI is too high to make a direct Roth contribution.

If you don’t have a traditional IRA, this strategy leaves you owing no taxes on your contribution.

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