Backdoor IRAs and personal finance for IB Analysts
As an IB analyst starting full-time this Summer, I've naturally been thinking about my plan for personal finances as I enter the workforce. I'm frugal and have historically maxed my Roth IRA every year. I'm aware that the income limit to contribute to a Roth IRA is about $150,000, so after bonus I expect to be just around there or above that, and therefore unable to contribute directly to a Roth IRA. I plan on maxing out my 401k at work ($22,500 plus mid-single digits match) and saving a good amount on top of that, since my rent is $1,900 and I live fairly simply.
From my research, it sounds like despite being above the income limit for a Roth IRA, I could just contribute the maximum yearly amount ($6,500) to a normal IRA as post-tax contributions (so income after paying taxes), then convert that straight to a Roth IRA via a backdoor Roth IRA strategy, without paying further taxes or penalties if it's all post-tax contributions. So, I would not be deducting the IRA contributions from my income, as one can do if they are below a separate income limit. The goal here is to benefit from the Roth's tax-free gains rather than investing in traditional brokerage. This would be on top of maxing my 401k, which it sounds like doesn't eliminate my ability to contribute to an IRA. Does anyone know if this is correct? Seems too good to be true that there's a complete loophole to the income limit to fund a Roth IRA given it's after-tax dollars either way.
Curious to hear about anyone else doing similar things, and how that's gone for you. Also of course, if I'm wrong about any of the legal/tax strategies outlined, please let me know! Trying to figure out a tax-optimal strategy to make sure I'm setting myself up for success and can help my parents (and future children) out down the road.