How To Open A Roth/Backdoor Roth IRA | Step By Step | Aja Dang

If you're looking for a step-by-step tutorial on how to invest in a backdoor Roth IRA with Fidelity, look no further! In this video, I'll break down the process of opening a Roth or backdoor Roth IRA in easy-to-follow steps. I’ll also share why I like investing in Target Date Funds for an easy way to invest. Start planning for your financial future today!
s/o to my financial advisor Todd. Since I get scared about talking about investing, Todd double checked all the info in this video :)
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[@Kemyale]

*Great video!! I have a Roth 401k with my company I contribute 8% of my income to; only need to contribute 7% to get a 50% match. So counting my Roth IRA contributions, my Roth 401K contributions and employer match. My total retirement contributions is 27.7% of a $43,000 in earned income.*

[@Kemyale]

My FA, Megyn Beth's strategy is the best at the moment, I recommend it for beginners because it is perfect for now and it is known.

[@BevamiGlenn]

How do I contact Megyn???, my portfolio needs diversification.

[@Kemyale]

Exactly, she's verified on the app. Get it installed and search her up using the name above, make sure there's no added letter or number.

[@kinghatred]

Wow, Aja went from financially broke with tons of student debt to now making too much money to invest into Roth the regular way that she has to do back door 😂amazing transition. Good inspiration to all the rest of the people who are heavily in debt but also have the same qualities like her

[@AjaDang]

LOL! it's true though, you definitely don't want to be in the same financial situation you were in 7 years ago so happy for the growth

[@leilani2258]

Aja can I just say thank you. No one talks about this topic.

[@jesseeec]

I’m already a fidelity account owner. My tax accountant told me to do the back door method yesterday. I did the money xfer from my bank to fidelity yesterday and it was reflected in my balance as of yesterday! Was super quick. I will transfer to Roth on Monday per my accountant’s instruction

[@AjaDang]

ok, amazing! I figured the process took us longer bc it was a new account. Thanks for sharing!

[@mynameisreb]

My mind is blown that it’s this easy. I’ve been trying to figure this out for years 😮

[@evechase7129]

Excellent, video! I've been waiting for someone to make a video like this for ages. Thank you

[@AjaDang]

yay! Hope it was easy to follow

[@heeeeyamy]

wait this is so easy, i always thought it was more difficult so i never did it but WOW IM DOING THIS THIS YEAR NOW. thank you SO MUCH FOR THIS VIDEO!!! the world needs more of this for real.

[@AjaDang]

it's because the website interface is so scary looking. even though i know what I'm doing I STILL get scared.

[@leslievalenciano-lopez8887]

Such a great video explaining how to set up an IRA! Thank you for simplifying and not complicating the process!

[@nicolegarvin4723]

This video was so helpful! Thanks Aja!

[@aarinmurray3751]

This video was the driving force behind me opening up an account. Thank you Aja, love your work ❤

[@katheyleen]

You did such a great job on this video! Thorough, but concise! Brava, please keep this content coming!

[@kgal1298]

It's funny why do so many finance guys just now show this process? I feel like this is one of the few videos I've seen on here that actually showed it being done. I appreciate it it's easy to follow. I really need to start doing this I do have a traditional, but I'm also trying to limit my tax liability more. I think I owed 16K in taxes last year.

[@bngr_bngr]

Careful you don’t convert to much into a Roth each year because it will push you into a higher tax bracket.

[@chelseacohen3465]

Do more research since you already have a traditional IRA. I believe it complicates things if you’ve already gotten a tax break on those dollars. To do this you need to put after tax dollars into the traditional and then convert them into a Roth

[@CaRoLinaVasqueZ07]

I love what you are teaching ❤ or showing how to do it. Just make sure to let everyone know that when they do this transfer of IRA’s they will be charged with taxes from the transfer of Traditional to Roth upfront.

[@carmina8143]

Thank you Aja ❤ this was so easy to follow

[@jacqmart85]

Thank you so much for sharing this!

[@SaintGuillem]

Aja, I appreciate this content! Thank you. I love you. lol

[@AjaDang]

THANK YOU!

[@MayAstrid]

Congratulations!!!

[@TheLadyDanielle]

The IRS calls this a Roth Conversion. I work for a mutual fund company and we do these everyday. Luckily, investors don’t have the ability to do it online themselves though. We’d be getting so many correction requests.

[@letaek]

Can you cover how to do tax reporting on a roth that is funded the following year its for?

[@Lauren.Wagstaff]

Yay!! This is great. Ok, next big question: can you make a video on 401k? Specific how to roll over after that job has ended, and even what roll over means

[@modelno2004]

Been looking into this for years. It’s SOOOO difficult to find someone to explain it simply. Most people tell me to default to a CPA or tax professional. Neither of which want to give up that secret for free.

[@fdfgfdgdfgfddf]

I’ve just called my previous 401k company (in my case fidelity) and asked them to roll it over (pretty much transfer it over) to my current retirement account (in my case now I have a 403b). They mailed me a check payable to the company where my current retirement account is and then I mailed that check to my current retirement account company. @lauren.wagstarr

[@vvnlewin]

I agree! I rolled over my 401k and now have a Rollover IRA but not sure how or where to put my investments?

[@rachelsunderland2413]

Enjoying the content! Just want to mention the pro-rata rule may apply if doing the backdoor roth, which will come into play if you have money in pre-tax (non-roth) ira accounts

[@bngr_bngr]

People can be pushed into a higher tax bracket by doing the conversion. Especially if they take the IRA contribution as a deduction against income.

[@KnittyMatcha]

What about ur the interest of $3, did that put you over the contribution limit?

[@krnphan]

Ajaaaa!!! I wish this video had come sooner! Thank you so much! I was wondering if you or the community could comment on what happens with the interest accrued while sitting in the traditional account before transferring? Is it taxed? I did max 6500 last year and it accrued a little interest before I moved it over and I didn’t know what to do with the little bit!! 😬 Also I would like to include that people shouldn’t forget to file the tax form 8606

[@bngr_bngr]

It’s hard to say by your brief description but it would be added to your taxable income. How much would depend on several factors such as having other IRS accounts.

[@bellgirlamy]

What is modified adjusted income?

[@ccap3211]

I keep seeing videos about how putting money in IUL’s (indexed universal life insurance) is more lucrative and you can take out loans against yourself. I’ve I also heard that they’re scams so idk.

[@jeannewong3489]

I heard any money placed into a Roth account is taxed at your current tax rate but once you retire, the money you pull out of that Roth account is not taxed.

[@bngr_bngr]

This video is problematic for several reasons. One of them is the total lack of discussion of any tax implications doing a conversion. It’s possible to be taxed for doing the conversion and pushing your income into a higher tax bracket. Of course if you already have other IRA accounts then they are considered when calculating the tax. Of course you will need to set up a new Roth account each year to protect your self from a possible audit of pre and post tax contributions.

[@BrutusHiatus]

Not entirely correct. Money contributed to a Roth is already tax (after you get your net pay in your paycheck). When you retire, it is not taxed. If you pull out money before 59.5 years of age, then you will be taxed and penalties will apply.

[@Daisy.368]

Hey Aja, Can you tell us the purpose in using the backdoor Roth IRA versus just doing the a Roth? For example, the Roth has one less step versus the backdoor but what does that actually mean for us? Will it change anything in getting taxed?

[@julietchu7008]

Some ppll aren't eligible to contribute directly to a Roth IRA because they have too much income - check the 2024 limits.

[@cheeketamabone1205]

If I role over my funds from another institution to another pre-existing account into a Roth. Can I still do the back door Roth? I thought taxes would have to be paid before your can open the Roth? Thanks Aja for the information.

[@rachelsunderland2413]

which account is it coming from? cash? brokerage? IRA?

[@dr.jasminehanson255]

I have a goofy question- what if you have been investing monthly with a financial advisor thru Edward jones and now want to switch over to doing this on my own? Love that you made this video- gives me the confidence to finally do it on my own!

[@julietchu7008]

Aka said she invests in target date funds. Or you may consider S &P 500 index funds. I do both!

[@throughandreaseyes]

Dumb question, what is a backdoor roth and the difference between it and an ira? And if I contribute to 401k and roth would it need to total 6.5k?

[@julietchu7008]

Pay taxes on it now vs. later.

[@julietchu7008]

401k limit is 23k. Roth IRA limit is 7k. No limit on Roth conversions. But you'll have to pay tax on the amount you convert.

[@throughandreaseyes]

@@julietchu7008 appreciate this! Thank you

[@C1nderfire]

But if you invest and the market tanks, your money is gone right?

[@KiaMuha]

This is a question I would also like to know the answer to, can you potentially lose your money ?

[@akirebara]

Wait, so for me, I don't have a traditional. I just have Roth IRA but I'm a single filer and make less than $100K a year. Is this OK? Or should I also have a traditional?

[@rachelsunderland2413]

the traditional is for the backdoor roth (over income limit), otherwise you contribute directly

[@akirebara]

@@rachelsunderland2413 ok thank you!!! roth ira is ok for me then!

[@justinmartin1666]

SECOND COMMENT : 🥈 hi Aja Happy Friday T.G.I.F ❤

[@AjaDang]

Appreciate you always!

[@jmac4979]

So very creepy...

[@jules0325]

thank you for making this video 🤍

[@AjaDang]

you're welcome!