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Investing Specialists

Want Another Shot at a 'Backdoor' Roth IRA?

There's a workaround for some high-income investors with sizable Traditional IRA balances.

Every article about the backdoor IRA maneuver--a way for high-income investors to fund a Roth IRA despite income limits--should carry two asterisks. 

The first should tell you to think twice about using the backdoor maneuver if you have a lot of Traditional IRA assets, because you could trigger an unexpectedly high tax bill. But the second should say that there's a workaround for investors who are participating in a 401(k) plan that allows "roll-ins." By rolling their Traditional IRA assets into their current employer's plan, the investor can avoid the tax hit that would otherwise accompany the conversion.