FYI, just completed this in November of 2023. On the desktop site, go to support (top right)/forms and applications/*select your contributory traditional Ira account from dropdown*/convert traditional Ira to Roth IRA/ complete the form online. This will take you the the setup screen shown in the video
@jetsetsea
8 ай бұрын
Life saver. Thank you!
@CHenry-lg1nl
Жыл бұрын
I just want to say thank you so much for providing this information! I've been avoiding doing a backdoor roth ira because I thought it was just too complicated, but your video made it clear that it is actually fairly straightforward. I just did it for this year and plan to do it going forward!
@YingcredibleTips
Жыл бұрын
Awesome. Congrats! First step towards FIRE!🔥
@latinconnectionhi5338
Ай бұрын
can you update this video because Schawb page layout and tabs are no the same as the one you show and i can't find the page where allow you to contribute
@lphiekratos
2 ай бұрын
Could you provide instructions or video on doing a backdoor roth for Schwab here in 2024? Not too many videos on youtube for Schwab on how to do the backdoor roth
@GTOYMPodcast
4 жыл бұрын
Really great video of the Roth IRA. It's such a useful tool with great tax benefits. Thanks for sharing this guide!
@YingcredibleTips
4 жыл бұрын
Thank you for coming by! Glad you enjoyed it. I will post similar videos in the future ☺️
@jcmolina5354
10 ай бұрын
This video helps a lot. Thank you
@JessieOpportunityCostInvesting
4 жыл бұрын
Yo i watched this video like I was in a seminar with notes and all. I checked out Jims channel and I went into the internet because all of this was so new to me. I haven't yet needed to do the backdoor but I will soon, hopefully. I really appreciate your videos tge slays have great quality. BTW what a friggin tease on that ending! I've never heard of such thing!
@YingcredibleTips
4 жыл бұрын
Thanks for noticing and watching it in detail! I'm trying to do a new thing or two in my video to see if it helps with retention. The slides like explanation I made it with imovie and I think it works pretty well :)
@jasoncornwell4959
3 жыл бұрын
Thanks for the step by step it was great! I saved it to look over next year as well.
@YingcredibleTips
3 жыл бұрын
You are very welcome!
@nhungngayxuathanai6970
3 жыл бұрын
You got a new subscriber. Very helpful. Thanks so much
@YingcredibleTips
3 жыл бұрын
You're welcome! Thanks for the sub
@leonardwalker2730
7 ай бұрын
Do you need to continously make a new traditional IRA each year in order to do the backdoor (assuming you don't but just curious) or can you just transfer your money into traditional and then back into the roth before the tax deadline to use the loophole? For example, for myself I would like to frontload my r-IRA with the full amount limit (2023 year = 6500 if making under 138k MAGI). However, to take advantage of the loophole do I need to take the money from my r-IRA already and then put it in the t-IRA just to then convert right back to my r-IRA? That seems like a really backwards way to do things especially in this day in age but alas here we are.
@ktc1898
10 ай бұрын
Hello Ying, Thanks very much for your videos. Your delivery is very clear with very useful information! For some reason, I cannot find the video you mentioned that explains the mega backdoor IRA in detail. Where can I find it? Thank you!
@bradalanfoster
Жыл бұрын
thanks for the video. i did my IRA contribution then converted to a Roth a couple weeks later. but after i converted, schwab paid $0.64 of interest into my traditional IRA, so now I have a balance of $0.64 instead of $0.00. if i just withdraw the $0.64 will that make my tax return more complicated? or completely mess up the taxes of my Roth conversion?
@jennaahn1178
4 жыл бұрын
Super helpful ying!! I may come back to you for more questions! 🙃🙃🙃🙃
@YingcredibleTips
4 жыл бұрын
Thanks! Glad you find it helpful. Ask me anytime :)
@Vintagecollectorsclub
3 жыл бұрын
Hey I am opening up one of my first Roth IRA with Charles Schwab I have equities in other trading portfolios which I will keep there for the long term but I was wondering when I set this up should I start it as a traditional and transition into a Roth IRA or keep it as a Roth IRA from the start. Thanks for the video !!!
@YingcredibleTips
3 жыл бұрын
Hi Michael, it depends on whether you are over the income limit or not? If you are over you need to do a backdoor roth, which means you need to open a traditional IRA first put money in it and convert money from traditional to roth IRA. It won't allow you to directly contribute to roth if you are over income limit. Hope that helps!
@alrocky
3 жыл бұрын
Deciding traditional IRA vs Roth IRA has primarily to do with your current tax bracket: the lower your tax bracket the more you should favor Roth IRA/401(k) and the higher your tax bracket the more you should favor traditional IRA/401(k). Did you make less than $40k (12% Federal Tax Bracket) in 2020?
@jclwu8892
2 жыл бұрын
Thanks for the guide and did it last year. Wondering if you could locate it in the new webpage? Thanks again!
@rachitranjan
2 жыл бұрын
Thanks so much ! This was really helpful. Do you have a reference to a CPA in bay area ?
@YingcredibleTips
2 жыл бұрын
I don't unfortunately because I do tax myself 🙂
@MRRANDOM1
Жыл бұрын
Great video thanks for sharing. Do I have to pull money from the traditional or can I just add money to the Roth IRA from my bank account?
@YingcredibleTips
Жыл бұрын
It has to come from traditional IRA
@TheSimpleEngineer
3 жыл бұрын
I did this last year and found your video, but can no longer find the tool on their site. Did the UI change?
@YingcredibleTips
3 жыл бұрын
You mean the chat function? It's still available on mobile. I just used it recently.
@TheSimpleEngineer
3 жыл бұрын
@@YingcredibleTips the conversion tool
@YingcredibleTips
3 жыл бұрын
@@TheSimpleEngineer it looks the same to me on the web. Click on Manage My Money (one of the bubbles on the bottom) and then click on Manage Roth Conversions (ROTH bubble) which should lead you to the page. Let me know if you find it!
@TheSimpleEngineer
3 жыл бұрын
@@YingcredibleTips sweet got it and converted. Thanks for the video!
@LisaB-lv9if
3 жыл бұрын
I already have 20,000 in a traditional ira from 2010. Can I just convert a portion of that money to the Roth IRA ? After I do that, are you saying that I have to Roll over the 13,000 remaining to Roth IRA or 401 k plan to avoid the pro rata rule. But how can I convert the remaining 13,000 to a Roth IRA when I already maxed out ( assuming my employer doesn’t allow conversion). Does that mean I will be taxed according to the pro rata rule? Does that mean I can never have money in traditional IRA? Trying to understand this. I asked my accountant but she is not familar with back door rRoth. Does anybody know online financial planner that can walk me through this.
@YingcredibleTips
3 жыл бұрын
Yes, if you have a mix of traditional IRA and roth IRA it would trigger the pro rata rule. So the best way is to roll over your traditional IRA into an employer 401K so you only have IRA in Roth. You can convert your traditional IRA into Roth but you need to pay tax. The backdoor allows you to contribute up to after-tax 6K or 7K if over 50 (if you are over the income limit). In your situation (if I understand correctly), I would contribute an additional 6K/7K into Roth IRA and then convert your 20K traditional IRA into a 401K. But definitely consult with an expert because everyone's tax situation can be different.
@alrocky
3 жыл бұрын
@ Lisa If you have any traditional IRA money at year's end after you convert some t-IRA to a Roth IRA, pro rata takes affect. "Can I just convert a portion of that money to the Roth IRA?" Yes "... Roll over the 13,000 remaining to Roth IRA or 401 k plan to avoid the pro rata rule." Yes. If converted to Roth IRA you will owe tax which essentially like the pro rata rule. Have you contributed $6,000 to your 2020 IRA and will you contribute $6,000 to your 2021 IRA.
@alrocky
3 жыл бұрын
@@YingcredibleTips "if you have a mix of traditional IRA and roth IRA it would trigger the pro rata rule." That doesn't sound right. Holding Roth IRA should have nothing to do with pro rata rule.
@amitarora8377
3 жыл бұрын
Thank for a very helpful video! Do I need to do this exercise every year? If so, can I contribute to the same Traditional IRA account and then convert it? Also I assume I would need to file 8606 every year too.
@YingcredibleTips
3 жыл бұрын
Yes, you can use the same traditional IRA account that you've opened previously and do the same conversion as explained in my walk-through. Exactly, form 8606 is required for tax filing.
@josephpai5439
3 жыл бұрын
Hey Ying, you said do not leave money in the traditional Contributory account, but because I put $6000 in there, and it's giving me an interest of $0.01. I already converted the $6000 to Roth IRA. Should I transfer the $0.01 to my Individual brokerage account so there's nothing in the Contributory? Thanks.
@YingcredibleTips
3 жыл бұрын
Yes! It's because of the pro rata rule. Do you have any other money in the traditional IRA account? Since the balance is so small, I don't see it being a big issue. If you move the money out to brokerage, I believe that's an early withdraw so you are subject to tax but the amount is so small I think it's negligible.
@v1rotate391
7 ай бұрын
Do I need to do this same process and open a new account every single year and convert it?
@itsjareds
7 ай бұрын
No, just contribute to the Traditional IRA you created last time, wait for the funds to settle, and convert to the same Roth IRA as last time.
@dipeshah
3 жыл бұрын
Thanks for the video Ying. Really helpful. I had one question, is it ok to contribute for 2020 tax year before april. In one of the link you posted in descritpion it said its advisable to do so in the calendar year but not sure what are the implications if one does it before april and than again later this year for 2021? Please advise.
@YingcredibleTips
3 жыл бұрын
Yes you have til tax filing deadline - April 15th, 2021 to contribute to ROTH IRA for 2020. Generally speaking, I advise doing it earlier because of front loading since you can accumulate more growth through an earlier initial investment assuming a positive return. Another minor thing is you have to fill out the form 8606 slightly differently if you were to contribute during the calendar year 2020 vs. Jan 1st to April 15 2021. When you contribute, make sure you indicate it's for 2020 if you choose to do it in 2021. Disclaimer: I'm not an accountant or CPA.
@dipeshah
3 жыл бұрын
@@YingcredibleTips Thanks Ying !
@YingcredibleTips
3 жыл бұрын
You are welcome!
@jjalmightywins
3 жыл бұрын
Thanks for the video. Can you plz explain how I will be double taxed if I do not fill out a form 8606? Is the tax going to apply towards 6k portion contributed to Traditional IRA (which eventually went to Roth IRA) if I don't fill out the form? I ask this because I am technically contributing 6k from my checking account which is already taxed by my current employer, is that why you call it a double tax issue? I assume IRA will tax on the 6k contribution if I fail to file the form 8606? Is my assumption correct?
@YingcredibleTips
3 жыл бұрын
Since you are already contributing after tax money into the account (aka. from checking), the form 8606 gets it "on the record" that the money in your IRA has already been taxed so later on when you take distributions the money you get back will not be subject to income tax.
@jjalmightywins
3 жыл бұрын
@@YingcredibleTips Thank you, I guess all I need to indicate on the form is that the IRA contribution was already taxed.
@MRRANDOM1
Жыл бұрын
@@YingcredibleTips Thanks 👌
@zyraajero5708
Жыл бұрын
Hi Ying! Do you also have a video on recharacterization / removal of excess contribution? What would be the scenario if I already contributed to my Roth IRA but exceeded the income limit?
@YingcredibleTips
Жыл бұрын
there might be a penalty I'm not too sure about this scenario. if i come across an answer i'll let you know
@wailingwalrus685
Жыл бұрын
Hey, for that you'll want to call the broker that holds your IRA. For Schwab there was a form I could fill out to remove the excess contribution, but when I called Schwab ran the calculation on what needed to be removed from my IRA to avoid an over contribution based on the income limit. (The removal isn't as straightforward as just taking out the contribution as you need to look at the ratio of the account balance at the time of the over contribution and the time of the withdrawal to know what the IRS actually requires to be removed)
@rebeccatrinn3862
2 жыл бұрын
Hi Ying! Any tips on how to keep the Schwab Traditional IRA open to convert to Roth year after year with a zero balance? I heard Schwab auto closes zero balance accounts every 6 months or so. Can you help with this? :)
@YingcredibleTips
2 жыл бұрын
My traditional IRA account has zero balance and haven't run into this problem
@kunalsinha3362
3 жыл бұрын
Hello, what is the negative of leaving the post tax money in traditional IRA, will the growth be taxed even though the money going in has been taxed?
@YingcredibleTips
3 жыл бұрын
Thanks for your question! Do you mean putting after tax money in the traditional IRA and never convert it to Roth IRA?
@kunalsinha3362
3 жыл бұрын
Yingcredible Tips yes, if I leave the money in Post Tax Traditional IRA, will the growth be taxed when I take the money out?
@YingcredibleTips
3 жыл бұрын
@@kunalsinha3362 I'm not sure if I understand the question. Why would you ever put after tax money in traditional IRA and don't convert it? The main advantage of traditional IRA is to reduce your taxable income now so you pay tax later. Also, be aware of the pro rata rule if you have money in both traditional IRA and roth IRA. Disclaimer: I'm not a CPA.
@kunalsinha3362
3 жыл бұрын
Yingcredible Tips What I wanted to know is are the growth in traditional IRA taxable when we take the money out after retirement? If no, then it does not matter even if Roth conversion is not done since the growth will be not taxable either place but if yes then of course converting it will make sense.
@YingcredibleTips
3 жыл бұрын
The traditional IRA by definition is a retirement account in which the earnings will be taxed. Here are some resource I found www.investopedia.com/terms/a/aftertaxcontribution.asp.
@cuddzmustafa9277
3 жыл бұрын
Thank you so much for the detail information. Is there income limit if choose to contribute $6K into after tax IRA account in order to do this backdoor conversion?
@YingcredibleTips
3 жыл бұрын
No there isn't an income limit. That's why it's called the "backdoor" roth.
@cuddzmustafa9277
3 жыл бұрын
@@YingcredibleTips Thank you for the reply. If I currently have IRA account and follow your strategy to rollover 100% to 401K this month. Next month, I deposit $6K after tax to IRA account. At the end of the year when I file 8606, does it qualify that I have zero pre-tax IRA account and won't have pro rata rule and can convert 100% of $6000 to Roth IRA?
@YingcredibleTips
3 жыл бұрын
Do you currently have a traditional IRA or ROTH IRA? The pro rata rule will be triggered if there's money in traditional IRA. As long as you move all money out of traditional IRA before the year end it won't be a problem. Also if you wanna do backdoor roth ira, you need to convert from traditional IRA ASAP because if there's any income in traditional IRA then there might be a problem too. Hope it helps!
@cuddzmustafa9277
3 жыл бұрын
@@YingcredibleTips Thank you for reply. just to confirm that even both events happen in this year, at the year end file 8086, it will not trigger pro rata rule (move 100% money out from traditional IRA to 401K in this year then deposit 2021 after tax IRA contribution and then immedidately convert this after tax IRA contribution to Roth IRA for Backdoor Roth IRA). I saw some post saying need to wait to next year to prevent pro rata rule (no Backdoor Roth IRA this year if I just move money out from Traditional IRA this year).
@YingcredibleTips
3 жыл бұрын
As far as I know, it won't trigger pro rata rule as long as no money in traditional IRA. You might wanna double check with CPA just to make sure there are no other edge cases.
@DistrictCapital
2 жыл бұрын
Great guide! It may be better to invest your Traditional IRA contributions first, before doing the Roth conversion. To prevent the IRS step transaction doctrine from being triggered.
@cburke7718
2 жыл бұрын
What is the IRS step transaction doctrine?
@DistrictCapital
2 жыл бұрын
@c burke If you do a step 1, 2, & 3 in immediate succession, it'll consider it as one step. Meaning if you contributed to a Trad IRA then converted it immediately, they'll treat it as if you contributed to a Roth IRA!
@RodrigoGarciaPerera
2 жыл бұрын
@@DistrictCapital but then, it would not make sense to do this since high earning people are not allowed to have an IRA, and that is the whole point of doing this right?
@YingcredibleTips
2 жыл бұрын
This video is meant for backdoor Roth method (aka. for people who are over the income limit)
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