What's a Backdoor Roth IRA and is it still allowed for 2024 tax filing?

Yes, the Backdoor Roth IRA is still allowed for 2024 (filing in 2025). The strategy works exactly as you described - you make a non-deductible contribution to a Traditional IRA and then convert it to a Roth IRA. Since your income is above the Roth contribution limits, this is a perfectly legal workaround. The fact that you don't have existing Traditional IRA balances is actually perfect - this makes your conversion much cleaner from a tax perspective (no pro-rata rule complications). For tax reporting, you'll need to file Form 8606 to report the non-deductible contribution to your Traditional IRA, and then you'll report the conversion to the Roth IRA. Your 1099-R from the custodian will show the conversion amount.

After struggling with this exact situation last year, I found an incredible tool that made the whole backdoor Roth process much clearer. I was worried about messing up the reporting and potentially triggering an audit, but I used https://taxr.ai to analyze my documents and guide me through the process. Their system flagged exactly what I needed to report on Form 8606 and showed me how to properly document the non-deductible contribution and conversion. The tool even spotted a potential issue with my custodian's reporting that I would have missed completely.

Wanted to update on my experience with taxr.ai after that discussion last week. I was skeptical about using yet another tax tool, but my backdoor Roth situation with multiple existing IRAs was driving me crazy. I uploaded my statements and the tool immediately identified that I had a pro-rata rule issue. It showed me exactly how much of my conversion would be taxable and explained the Form 8606 calculations I'd need to make. The best part was that it suggested a strategy involving my current employer's 401k that could help me avoid most of the pro-rata tax hit. I would never have figured this out on my own! Definitely recommend for anyone doing Backdoor Roth conversions with existing IRA balances.

If you're planning to do a Backdoor Roth and have questions about the reporting requirements, you might want to talk directly with an IRS agent to confirm everything. After waiting on hold for nearly 2 hours last year, I discovered https://claimyr.com which got me connected to an actual IRS representative in under 15 minutes. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The IRS agent I spoke with confirmed that the Backdoor Roth is still perfectly legitimate and walked me through exactly how to report it. Given how important it is to get the Form 8606 right, having that direct confirmation from the IRS gave me a lot of peace of mind.

Well I'll be damned. I just tried that Claimyr service after posting my skeptical comment. I'd been trying to reach the IRS for WEEKS about my Backdoor Roth reporting on an amended return. Got connected in about 20 minutes after my previous attempts had me waiting 2+ hours before giving up. The IRS agent confirmed I had filled out Form 8606 correctly for my backdoor Roth and explained exactly why my amended return was still processing. She even gave me a specific timeframe for when it should be completed. Honestly shocked this actually worked after months of frustration.

One thing to watch out for with Backdoor Roth IRAs - make sure you don't have any other traditional IRA accounts with pre-tax money in them. If you do, you'll get hit with the pro-rata rule which basically means you can't just convert the non-deductible contribution tax-free. Let's say you have $50,000 in a pre-existing traditional IRA with pre-tax money, and you add $6,000 as a non-deductible contribution. When you convert $6,000 to a Roth, the IRS will consider it as converting a proportional amount of your total traditional IRA balance ($56,000). So only about 10.7% of your conversion would be tax-free.

I'm confused about the timing. Can I still make a backdoor Roth contribution for 2024 right now in August 2024, or do I have to wait until Jan 2025 to do it?

Great question! Yes, backdoor Roth IRAs are definitely still allowed for 2024. At your income level of $168k, you're correct that you're above the direct Roth IRA contribution limits ($153k-$168k phaseout range for 2024), so the backdoor method is your best option. Since you mentioned you don't have existing traditional IRA balances, you're in a perfect position - no pro-rata rule complications to worry about! The process is straightforward: contribute $7,000 (2024 limit) to a non-deductible traditional IRA, then convert it to a Roth IRA shortly after. For tax reporting, you'll need Form 8606 to report the non-deductible contribution and the conversion. The conversion itself isn't taxable since you're converting after-tax dollars. Just make sure to keep good records of the contribution date and conversion date. One tip: consider doing this early in the year so any small gains between contribution and conversion are minimal. The strategy has been around for years and Congress hasn't moved to eliminate it despite various tax reform discussions.