Craig Wear, CFP® explains that for high-income earners the backdoor Roth strategy is inefficient compared with doing Roth conversions. He notes high earners often have large 401(k)/IRA balances and may delay conversions because of high current tax brackets, but argues that mathematically waiting can worsen their tax outcome and that conversions offer greater opportunity.
If you're a high income earner, it makes no sense at all to play the backdoor Roth game. There's just so much more opportunity for you in doing conversion. So some people that are high income earners, they, they typically have larger 401k and IRA balances too. And so their, their pushback is, gosh, I'm already in such a high tax bracket and if I just wait a few years, that's, I'm probably going to be a lot better off to do that. And that's, that's actually, while it's logical, by the time you do the math on it, you're just creating a bigger problem.
