By Dr. James K. Dahle, WCI Founder

Every year or two, Vanguard changes its process slightly. If you lot empathise the Backdoor Roth IRA, these little tweaks are no big deal. If it'south your showtime fourth dimension, they tin exist confusing. For instance, in 2022 I noticed it was a iii-day process for u.s.. On Sunday, January 3rd I put in an order for an IRA contribution. I didn't look it to happen on Sunday as the markets are closed and then is Vanguard, but even by Mon (January 4th) evening, I could not move on to the next footstep. Information technology wasn't until Tuesday morning (Jan 5th) that I was able to do the conversion pace. All the same, Vanguard did non let me really invest the new money in the Roth IRA on Tuesday. That had to occur on Wednesday (January 6th). Once more, not a big bargain. Here'southward all yous need to know to exercise a Backdoor Roth IRA with Vanguard:

Step 1: Contribute to Vanguard Traditional IRA

Click on "Contribute to IRA" and it volition then have yous to a screen that looks like this:

backdoor roth ira vanguard

Normally on this page, you would have the selection to cull 2022 as the year you want to contribute to (or 2022 too if you haven't done that yet, at least until April 15, 2022). I merely forgot to accept the screenshot before I actually did it. And so you lot only option the settlement fund (the Federal Money Market Fund) for the coin to get into.

how to backdoor roth ira vanguard

Step 2: Convert Vanguard Traditional IRA to Roth IRA

So on Solar day 2, you get to your traditional IRA and striking the "Catechumen to Roth IRA" button.

There are other means y'all tin become to the same place. For example, if you just go to the "commutation funds" link (on the buy and sell menu) information technology will look like this:

Backdoor Roth IRA Conversion

Even if yous get to the incorrect identify, it'll still guide you lot back to the Roth conversion folio when you try to move money from your traditional IRA to your Roth IRA. That folio looks like this:

Backdoor roth ira exchange funds vanguard

In the starting time step, you simply choose to convert the entire business relationship.

backdoor roth ira conversion vanguard

In step two, you select the holdings in the traditional IRA that y'all desire to catechumen (it did it automatically for me equally my merely holding was the settlement fund). In step three, you select the Roth IRA account you lot want to move the money into (it did it automatically for me every bit I only take one).

step 2 and 3 backdoor roth ira vanguard

Step 4 confuses a few people. Think you don't owe any taxes on a Backdoor Roth IRA, and so don't have any withheld. Be sure to check that box that says you lot elect non to take taxes withheld. You can become an electronic mail that tells you that yous didn't take them withheld if yous want. I have plenty of emails to read and then I check the box that says "Do not send a tax withholding notice." Then y'all hit keep.

step 4 tax withholding backdoor roth vanguard

That will take you to the standard Vanguard "Review and Submit" screen.

step 5 backdoor roth ira vanguard

Look it over, then hit submit and you'll go to the standard Vanguard confirmation screen which looks similar this:

step 6 backdoor roth ira vanguard

Step three: Choose Vanguard Roth IRA Investments

On Twenty-four hours iii, you can finally choose the investment you want in the Roth IRA. Just go into your Roth IRA account.

You tin see the $half dozen,000 credit there. This shot is of my Roth IRA, which is entirely in the Vanguard REIT Alphabetize Fund. So I'thousand going to just add the $vi,000 to that fund. Merely click the "buy" link at the top left or bottom right and y'all'll get to this folio:

backdoor roth ira choosing investments vanguard

Put $half-dozen,000 in for stride i, and then use the drib-down card to indicate your settlement fund in pace 2. And so striking keep.

selecting investments backdoor roth ira vanguard

Information technology will then make you consent to electronic delivery of the fund prospectus.

consent form backdoor roth ira vanguard

Just hit "Have" and it will accept y'all to the next screen which looks like this:

review and submit backdoor roth ira vanguard

Annotation that this particular screenshot is from my wife'southward account (which is all invested in the Minor Cap Value Index Fund). Also, notation that she had a few pennies left in her settlement fund from concluding twelvemonth (63 cents to be precise). I simply invested that along with the $6,000 contribution for 2022. Once you hit submit, it will take y'all to the confirmation page.

vanguard roth ira steps

All that is left now is to go do information technology for your spouse's business relationship (if whatever).

Unfortunately, Vanguard is known for low costs, not crawly customer service and great user interfaces. Some brokerages allow you lot to practice the contribution, conversion, and investments steps all in the aforementioned day. Vanguard used to let yous exercise this over two days. At present it takes three. In fact, if you bring money in from an exterior banking concern, it might have a whole calendar week as Vanguard waits for the coin to "settle" before letting yous catechumen it. But in the stop, a couple of days are no big deal as long as you recall to come dorsum and complete the process. It does lead to the "pennies result" more frequently though.

The process will exist slightly different at Fidelity, Schwab, and other IRA custodians, but the bones steps will remain the same.

If y'all have a question about the Backdoor Roth IRA and not Vanguard specifically, you should FIRST read this very in-depth Backdoor Roth IRA Tutorial earlier asking your question in the comments beneath. I promise you there is a 99% gamble your question is answered there.

What do you think? Exercise you practise your Backstairs Roth IRA(s) at Vanguard each twelvemonth? What problems have you see? Whatever questions? Comment below!