An individual retirement account (IRA) is a savings and investment account with tax advantages. A traditional IRA uses pre-taxed dollars, while a Roth IRA uses after-tax dollars. As a result, they both have tax savings, either now or later.
A Roth IRA is an individual retirement account (IRA) funded with after-tax dollars. It allows funds to grow over time without incurring taxes on the profits. In other words, withdrawals aren’t taxed during retirement, leaving more money in the pockets of retirees.
The backdoor Roth IRA allows high-income earners to transfer funds from a traditional IRA to a Roth IRA. Individuals must pay taxes on the money that is transferred and may transfer up to the maximum $6,000 contribution limit for individuals younger than 50 years of age.
The Mega Backdoor Roth IRA allows you to supercharge your investments. After maximizing your contributions to a traditional 401(k), you can contribute after-tax dollars up to the annual maximum contribution if your employer plan allows it.
It can rapidly increase overall retirement savings rates. The Mega Backdoor Roth IRA allows for significant tax-deferred growth when done correctly.