A Reddit user facing a rising income finds that he can no longer fully contribute to a Roth IRA due to income limitations. However, he learns about the backdoor Roth IRA strategy, which enables him to continue investing by first contributing to a traditional IRA before converting those funds to a Roth IRA. This method can circumvent income restrictions if done correctly and helps maintain his retirement savings goals despite his income increase.
A backdoor Roth IRA is a strategy allowing higher earners to contribute to a Roth IRA despite income limits by first funding a traditional IRA.
Understanding the requirements and phases of Roth IRA contributions is crucial for maximizing retirement savings, especially when facing income eligibility changes.
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