The recent White House budget proposals have called for doing away with “back door” Roth IRA contributions. Back door Roth IRAs are a financial planning strategy often used by high income earners that allows people to make a non-deductible to a traditional IRA and then convert it into a Roth IRA. This article explains the income limitations that will be imposed on contributions made towards a traditional IRA. “For 2015, the combined contributions to all of your traditional and Roth IRAs cannot be more than $5,500 ($6,500 if age 50 or over) or the amount of your taxable earned income, whichever is less.” The back door Roth is a way for individuals who have incomes above the phase-out limits to rollover a traditional IRA into a Roth IRA.
See Kenneth Petersen, Kenneth Petersen, Financial Planning: The back door to a Roth, Monterey Herald, August 12, 2015.
Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.
