An individual retirement account (IRA) is a savings and investment account with tax advantages. It's used to purchase stocks, bonds, and mutual funds.
Although both types of IRAs come with similar contribution limits, high-income earners lose out on tax-free growth that comes with a Roth IRA.
The backdoor Roth IRA allows high-income earners to transfer funds from a traditional IRA to a Roth IRA. Individuals must pay taxes on the money that is transferred.
The Mega Backdoor Roth IRA allows you to supercharge your investments. The Mega Backdoor Roth IRA is complicated.
Individuals investing in a Mega Backdoor Roth IRA earn more than $144,000 annually. They must work for a company that allows after-tax contributions and Roth rollovers.