High-income earners in Greenwood often ask how they can build tax-efficient retirement savings while also creating a strong legacy for their family. One tool that continues to stand out is the backdoor Roth IRA. Used correctly, it protects long-term growth, reduces the tax burden on heirs, and coordinates well with an overall estate plan.
A recent article from Kiplinger, Backdoor Roth IRAs: Help Your Kids Keep More of Their Inheritance (Oct. 25, 2025), explains how this strategy works and why it can be incredibly valuable. We often see the same benefits in our own estate planning work for families here in Greenwood and the Southside.
Below is a deeper look at how the backdoor Roth IRA fits into a complete plan, how it benefits your heirs, and how Vick Law can work alongside your financial advisor to make sure everything is structured properly.
Why Roth IRAs Are So Valuable for Families
Roth IRAs offer something uncommon. Contributions are made with after-tax dollars, which means withdrawals for both owners and heirs are tax-free. That single feature can save your family thousands of dollars over time.
Roth IRAs also do not require Required Minimum Distributions (RMDs), which gives the assets more time to grow. When you pass the account to your beneficiaries, they inherit tax-free growth rather than a tax bill.
For families working with a Greenwood financial advisor, this can be a powerful way to balance retirement planning with long-term legacy planning.
What Makes It a “Backdoor” Roth
High-income earners often cannot contribute to a Roth IRA directly. In 2025, the IRS blocks Roth contributions once income exceeds:
• $165,000 for single filers
• $246,000 for married couples filing jointly
That is where the backdoor Roth comes in. It allows higher-income earners to access Roth benefits through a legal process:
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Open a traditional IRA funded with non-deductible after-tax dollars.
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Convert that IRA to a Roth IRA.
Since you did not deduct the contribution, the conversion amount is generally not taxed, although gains may be.
You must also file IRS Form 8606 to document your after-tax basis. This is a key detail, and errors on this form can create tax problems. At Vick Law, we often coordinate with clients’ CPAs and financial advisors to make sure these filings are handled correctly.
Understanding the Pro-Rata Rule
If you already have other IRAs that contain pre-tax dollars, the IRS will treat all your IRAs as a single pool when calculating taxes on a conversion. This is known as the pro-rata rule and it can create unexpected tax consequences.
This is why families should always consult with both a financial advisor and an estate planning attorney before completing a backdoor Roth. At Vick Law, we regularly work with Greenwood financial advisors to ensure that asset structure, conversions, and estate planning goals all match up.
Contribution Limits Still Apply
Backdoor Roth contributions follow standard IRA limits.
In 2025, that is:
• $7,000 for individuals under age 50
• $8,000 for individuals 50 and older
Even though the contribution amounts are modest, the long-term tax savings for your beneficiaries can be significant.
How Your Heirs Benefit From a Backdoor Roth
The goal of every good estate plan is to reduce stress for your family. A backdoor Roth IRA helps achieve that by giving your heirs:
• Access to tax-free withdrawals
• Long-term growth without RMD pressure
• The ability to manage inheritances without risking a jump into a higher tax bracket
Even though most non-spouse heirs must withdraw Roth accounts within ten years, the growth during those ten years remains tax-free. This makes a backdoor Roth one of the most valuable tools for wealth transfer.
How Vick Law Helps Families Use Backdoor Roth IRAs Wisely
Backdoor Roth strategies should never stand alone. They work best when they are part of a coordinated estate plan that protects your assets now and after you have passed away.
At Vick Law, we:
• Work directly with your Greenwood financial advisor so your retirement planning and estate planning stay aligned
• Review the tax implications of conversions within your broader estate goals
• Help ensure forms like IRS Form 8606 are completed accurately
• Build trust and legacy strategies around these accounts to keep your family protected
• Clarify how beneficiary designations fit into your will or trust
We care deeply about helping you make informed decisions. Every family situation is different, and these strategies can feel overwhelming. We welcome your questions and take the time you need to feel comfortable with each step.
If you have a traditional IRA you do not need for retirement or you want to reduce future tax burdens for your children, a backdoor Roth may be a strong option to consider.
A Simple Next Step
If you are looking for guidance on whether a backdoor Roth IRA fits your estate plan, we invite you to talk with us. Let us know if you already work with a financial advisor. We are glad to coordinate so every part of your plan works together to protect your family today and in the future. Give us a call at (317)884-3133 or book a call online with Vick Law today to schedule your free consultation.
Reference: Kiplinger (Oct. 25, 2025) “Backdoor Roth IRAs: Help Your Kids Keep More of Their Inheritance”
