Roth Strategies for High Earners

Many high earners assume Roth IRAs are not an option because income limits prevent direct contributions. While that’s true, it does not mean tax-free retirement income is completely off the table.

There are Roth strategies that may allow higher-income households to build tax-free assets over time. One commonly discussed approach is the “backdoor Roth,” which involves contributing after-tax dollars to a traditional IRA and then converting them to a Roth IRA.

However, these strategies can become complicated when pre-tax and after-tax dollars are mixed together inside retirement accounts. The IRS pro-rata rule may apply, which can make part of the conversion taxable and create additional calculations on future tax returns.

This is why Roth strategies are best evaluated as part of a broader tax planning approach, which is the first pillar of Keystone’s TRIPP® Process.

Explore more tax-related topics in our video library.