# @thejoserafaelhernandez on Instagram

- **Type:** Image
- **Original URL:** https://www.instagram.com/p/C__HoEOOVpd
- **Gondola URL:** https://gondola.cc/posts/59827355-thejoserafaelhernandez-instagram
- **Thumbnail:** https://img.gondola.cc/tr:w-,h-,fo-auto/postThumbnails/5be8bba623.jpg
- **Posted:** 2024-09-16T17:22:05.000+00:00
- **Account Owner:** Jose Hernandez (@thejoserafaelhernandez) — https://gondola.cc/thejoserafaelhernandez

## Caption

Once your income starts going over a certain amount…👇🏼
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You start being “blocked” from being able to add $$$ to a Roth IRA “the regular way”
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In other words, you can get penalized for trying to contribute to a Roth IRA
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The “Backdoor Roth” is a workaround that higher income earners have used for years to still be able to build tax free wealth in a Roth IRA even though their income is over the threshold 
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In a nutshell, the Backdoor Roth conversion involves:
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1) Maxing out a Traditional IRA w/ after-tax $$$
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2) Converting the cash over to a Roth IRA
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3) Investing the cash in the Roth IRA
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4) Avoiding the pro-rata rule (so you don’t have to pay taxes “again” on $ that’s already been taxed)
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5) Filing Form 8606 come tax time
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If it’s your first time doing it, it can feel a bit overwhelming but once you do it correctly once, it’s a matter of rinsing and repeating in future tax years
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The keys are to make sure you keep accurate records and most important of all, avoiding the pro-rata rule by not having any assets in IRAs by the end of the tax year
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If you found this post helpful make sure to give it a ❤️
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And feel free to share it with a friend that might also find us useful 🤝
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#investing #stockmarket #rothira #beginnerinvesting #longterminvesting #dividends #compoundinterest

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## Tags

dividends, stockmarket, beginnerinvesting, compoundinterest, longterminvesting, investing, rothira

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