Yesterday, there was a great article in the Wall Street Journal that we would like to share with you. Here goes:
Going through the back door can pay off for high-income retirement savers.
We're talking about the backdoor route into popular Roth individual retirement accounts, which offer tax-free income in later life.
The front door into Roths is shut for many investors. Married couples earning $191,000 or more and singles earning $129,000 or more in 2014 are barred from contributing directly to Roth IRAs. But there's a simple detour that works for many of them. They can put money into a traditional IRA-and then roll that into a Roth IRA, getting all the benefits.
More than 40% of the Silicon Valley executives working with adviser Bijan Golkar of FPC Investment Advisory Inc. in Petaluma, Calif., do this year after year, he says. Roth IRAs are "a great tool" for these clients, who are likely to be in high tax brackets even in retirement because of hefty 401(k) accounts, he says.
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