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Don't Get Caught Paying Tax Twice On Your Backdoor Roth IRA

Don't Get Caught Paying Tax Twice On Your Backdoor Roth IRA

The backdoor Roth IRA is a clever strategy used to get the same benefits as direct Roth IRA contributions without the income limitations imposed by the IRS. The backdoor Roth IRA works because the IRS allows you to make non-deductible contributions to a traditional IRA if you're over the income limitation to qualify for a deductible contribution. When you go to make a distribution from the IRA in retirement, the original contribution comes out tax-free, but you'll pay taxes on the earnings.