If you think a certain type of well-known tax-free retirement account is beyond your reach because you earn too much, think again.
Roth individual retirement accounts allow savers to put away up to $5,500 (or $6,500 if you are age 50 or older), have the money grow free of taxes and then tap it in retirement on a tax-free basis.
Yet Roth IRAs aren't available to everyone: Filers whose modified adjusted gross income exceeds $120,000 if single (or $189,000 for joint filers) are currently unable to make a full contribution directly to a Roth IRA.
Instead, those individuals can use a strategy known as the “backdoor Roth.”
In this case, a saver would make a nondeductible contribution with after-tax dollars to a traditional IRA account and convert it to a Roth. This conversion would be free of income taxes in most cases.