By J. Matthew Illian
NEW YORK ( AdviceIQ) -- Many high earners find the front door locked when trying to fund a Roth individual retirement account directly. When the front door's locked, try the back.
This year, married couples filing taxes jointly begin to lose eligibility to contribute directly to a Roth IRA -- and reap its tax-free benefits -- when their modified adjusted gross income reaches $178,000. The phase-out range for individuals is $112,000 to $127,000. If your income makes you eligible, just open a Roth and fund it.
Steps for the back-door method take more work:
Make a nondeductible contribution to a traditional IRA. These accounts impose no income limit for contributing to a TIRA, but you do not get to deduct the contribution against your income. Even the highest-paid athlete (golf megastar Tiger Woods, according to Forbes, who last year putted his way to $78.1 million), can contribute $5,500 this year. Those 50 or older can add another $1,000, for a total of $6,500.Convert a traditional IRA to a Roth IRA. When your TIRA contribution posts, convert the funds to a Roth IRA. Because you initially invested after-tax dollars, the conversion incurs no taxes. You now have tax-free money in your Roth IRA.