Can a high earner have a roth ira?

A clandestine Roth IRA can be a good way for high-income households to avoid the income limit and build wealth tax-free. However, if you want to apply for a clandestine Roth IRA, you may need to act quickly. Last year's Build Back Better plan sparked talk about banning conversions to Roth through the clandestine Roth IRA, so you never know when this opportunity will expire. If you or your spouse participate in a traditional qualified retirement plan at work that accepts the renewal of pre-tax (deductible) IRA balances, then you have another way to avoid taxes if you use the clandestine strategy to fund a Roth.

You'll pay taxes by converting a traditional 401 (k) to a Roth IRA when you make the switch, but later on you'll be left with the profits and income tax-free. Roth IRAs are a special brand of retirement accounts that include tax-exempt benefits during retirement. You can always access your contributions and the profits are also tax-free once you turn 59 and a half years old (to convert dollars, you must have had the Roth open for five tax years). Although funded with after-tax money, the Roths offer tax-free withdrawals of contributions and earnings during retirement (as long as the account holder is 59 and a half years old or older and has held the account for at least five years).

It's called a clandestine Roth IRA and it may be the perfect solution for you to take advantage of the benefits of a Roth if you have a high income. If you have one or more IRAs that you've funded with deductible contributions, even the clandestine strategy can't stop you from owing taxes for a conversion to Roth. However, with a little planning, even people with high incomes can contribute to a Roth account and take advantage of its benefits. If you think you've lost your chance to earn tax-free income in retirement through a Roth IRA (individual retirement account), there's another opportunity to take advantage of it.

Another advantage of making a conversion is that you are not subject to the annual Roth IRA contribution limits. Here's a breakdown of how it all works and why you should consider a clandestine Roth IRA to accelerate your wealth goals. You should seek the help of a professional to determine if a clandestine Roth IRA is the best strategy for you before making a move. The good news is that there is a legal loophole to circumvent the limit and take advantage of the tax benefits offered by Roth IRAs.

If your income is within the phase-out range, split your contribution directly into a Roth IRA and another into a traditional non-deductible IRA that you can convert. After the conversion, you'll have more money at your disposal to invest in a wider list of assets in your Roth IRA.