If you earn too much to contribute directly to a Roth IRA, a backdoor Roth IRA might seem like the perfect workaround. But before you jump in, there are two critical considerations you need to be aware of.

1. Pro-Rata Rule: This rule may impact how much of your Roth conversion gets taxed. If you don’t account for it, you may receive an unexpected tax bill.

2. Record-Keeping: Keep detailed records and file the appropriate tax forms to avoid overpaying in taxes.

Is a backdoor Roth conversion the right strategy for you? The answer is it depends.

Consult with a financial or tax professional for guidance on your unique circumstance and goals.

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