Back door Roth IRA for high earners like physicians
Money in Roth IRA grows tax free forever until you withdraw
They do not force you to withdraw with RMDs [Required Minimum Distributions] like they do for Traditional IRA. Distributions =Withdrawals.
Steps of BACK DOOR ROTH IRA:
Take Traditional IRA and Roth IRA accounts in Brokerage of your choice like Vanguard
First put Post tax money in Traditional IRA from your checking account then Convert to Roth IRA before earning any interest on that money. Their website shows you how to convert to Roth IRA. You just transfer from Traditional IRA to Roth IRA account. No big deal. This conversion is legal for high earners at this point.
We can put $6,000 after tax money x 2 = $12,000 for both spouses at the current time
Need to fill form 8606 during taxes
Roth IRA is one of the best ways to pass your money on to your kids tax free if you do not remove from Roth IRA ever
One should do this after putting 401K up to employer match if you do not have enough money to invest in this account. After doing this, you can then put more money in 401K and 457 etc if you have not maxed them out yet.
Back door ROTH IRA is for high income families as they are not eligible for tax-deductible IRA contribution or a direct Roth IRA contribution.
For step by step process of Back door Roth IRA, read here.
Also, read here to know how to avoid mistakes doing Backdoor Roth IRA.