- STEP-BY-STEP CHECKLIST TO CORRECTLY REPORTING
BACKDOOR ROTH CONTRIBUTIONS -
RTS 8606 Guide
to getting it right
Hoping for the best doesn’t have to be your strategy
anymore. The RTS 8606 Guide shows you exactly
how and where everything gets reported when a
backdoor Roth gets done right!
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Back Door Roth Conversions Can Potentially Save Clients Hundreds Of Thousands Of Dollars In Taxes Over Their Lifetime And Position You As A Rock-Star Advisor OR…
...they can become an IRS nightmare for everyone.
Your team will have the 5 questions they need to ask on every backdoor Roth contribution (along with the answers they need to look for!), including:
- Where to look on the client’s tax return to confirm eligibility.
- How to articulate the benefits of this strategy to clients.
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How to correctly make the Traditional IRA contribution.
- How to correctly make the Traditional IRA distribution (which is NOT the same as the Conversion).
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How to correctly communicate the strategy to the client’s tax preparer to insure it is reported correctly to the IRS.
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How to confirm on the following year’s tax return that everything is correct.
Most importantly, this checklist will allow you and your team to recommend Back-Door Roth contributions with confidence that they will be completed correctly.
Plus, you get the following bonuses:
- BONUS: 2023 RTS Desktop Tax Guide.
- BONUS: $100 discount code for RTS Summit.
If you’ve ever considered this strategy for a client or prospect, this detailed guide to making backdoor Roth contributions easier is a must-have!
Back-Door Roths can potentially generate hundreds of thousands of dollars of tax savings over the client’s lifetime OR they can be the source of a lifetime of tax headaches.
If you are NOT recommending Back-Door Roths to clients and prospects, Great News: NOW IS THE PERFECT TIME TO START (and one of the many strategies we help RTS members improve in their practices).
How To Use The Guide
One of the great things about the RTS 8606 Guide is that anyone on your team can use it. It includes snippets from the actual forms so the process can be delegated and involve the whole team. We made sure that you’ll have what
you need to go from start to finish as you help your clients take advantage of this powerful tax strategy.
Determining Eligibility
Make sure the client is and is NOT eligible. Not a typo, the guide includes the limits and where to find them on a tax return to see if your client can directly contribute to a Roth (thus skipping the need for using the backdoor) and reminders on what to look out for before you even start the process.
Making The Traditional IRA Contribution
The first step in the process is making a non-deductible IRA contribution and ensuring that no deduction was inadvertently taken on 1040 (yes, the software will often catch this, but it’s not fool proof).
Making The Traditional IRA Distribution
A backdoor Roth contribution is actually a traditional IRA contribution followed by a Roth conversion. Which means we have to distribute the funds from the traditional IRA and make sure our clients don’t get hit with a tax bill on the distribution (this is a common error we see and help people amend returns to correct).
Completing The Conversion
You haven’t tapped into tax-free growth until the contribution has been moved into a Roth AND reported correctly to the IRS. This includes reporting every step of the strategy on IRS form 8606, and this is a piece we see done wrong all the time.
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