Backdoor Roth IRA
Above a certain income, you cannot contribute to a Roth IRA directly. You can still get there through the side door: put $7,500 into a nondeductible traditional IRA, then convert it to Roth. Done cleanly, the conversion costs little or no tax, and every dollar of future growth comes out tax-free in retirement.
Reviewed by Ebot Mbi, CPA, EA · Last reviewed October 9, 2026
Who it fits
- Earners whose income is above the Roth IRA contribution limit, which is indexed for inflation each year.
- People with no pre-tax money in traditional, SEP or SIMPLE IRAs, or who can roll it into an employer plan.
- Married couples who want $15,000 a year of new Roth money ($7,500 each), more with the age-50 catch-up.
- Anyone with a long horizon who expects to be in the same or a higher bracket later.
Who it's not for
- People with large pre-tax IRA balances they cannot move into a 401(k). The pro-rata rule makes most of the conversion taxable.
- Anyone who needs the money within five years or before 59½.
- Earners already below the income limit. They can contribute to a Roth directly.
How it works
Two steps. First, you make a nondeductible contribution to a traditional IRA: $7,500 for 2026, or $8,600 if you are 50 or older. You get no deduction, so that money becomes your basis. Second, you convert the traditional IRA to a Roth IRA. Conversions have had no income limit since 2010.
Because the contribution was already taxed, only earnings between contribution and conversion are taxable. Convert promptly and that number is usually a few dollars.
The trap is the pro-rata rule. Think of all your traditional, SEP and SIMPLE IRAs as one pitcher. Pour in $7,500 of after-tax water and the pitcher already holds pre-tax water, and every glass you pour out is a mix. You cannot convert only the after-tax part. The mix is measured on December 31 of the year you convert, not the day you convert.
The fix is to empty the pitcher of pre-tax money first, usually by rolling it into your employer's 401(k), if the plan accepts roll-ins. Employer plan balances are not in the pitcher.
Every year you do this, Form 8606 reports the nondeductible contribution and the conversion. That form is your proof that the money was already taxed.
Illustrative example
Illustrative: a 45-year-old in the 35% bracket contributes $7,500 nondeductible and converts it. She also holds a $92,500 pre-tax rollover IRA from a former employer.
- Total IRA balance on December 31: $92,500 pre-tax + $7,500 basis = $100,000.
- After-tax share: $7,500 / $100,000 = 7.5%.
- Non-taxable part of the $7,500 conversion: $7,500 x 7.5% = $562.50.
- Taxable part: $7,500 - $562.50 = $6,937.50.
- Tax at 35%: $6,937.50 x 35% = $2,428.13.
- Fix: she rolls the $92,500 into her current 401(k) before December 31. Pre-tax IRA balance becomes $0, the after-tax share is 100%, and taxable conversion is $0 (ignoring small earnings).
Moving the pre-tax IRA first avoids about $2,428 of tax on this year's conversion and keeps the full $7,500 growing tax-free.
The rules
| Rule | Citation |
|---|---|
| Direct Roth IRA contributions phase out above income limits that are indexed each year. | IRC §408A(c)(3) |
| You may make nondeductible traditional IRA contributions at any income and must report them. | IRC §408(o) |
| A traditional IRA can be converted to a Roth IRA; the taxable portion is included in income. | IRC §408A(d)(3) |
| All traditional, SEP and SIMPLE IRAs are treated as one for figuring the taxable share, using the year-end balance. | IRC §408(d)(2) |
Watch-outs
- Forgetting Form 8606. Without it, the IRS may treat the whole conversion as taxable.
- A SEP IRA from side business income counts in the pitcher. Opening one later in the year can make an earlier conversion partly taxable.
- Each conversion has its own five-year clock for penalty-free withdrawal of converted amounts before 59½.
- Rolling pre-tax money into a 401(k) depends on plan rules. Confirm the plan accepts roll-ins before relying on it.
What we do
We check the year-end IRA balances across both spouses, size the pro-rata exposure, and tell you whether a roll-in is needed first. We prepare Form 8606 each year and keep the basis record that proves the money was already taxed. Your custodian or advisor executes the trades; we coordinate the timing.
Questions
Is the backdoor Roth legal?
Yes. Nondeductible contributions and conversions are both written into the Code, and Congress removed the income limit on conversions starting in 2010. The work is in the reporting and the pro-rata math.
How long should I wait between contributing and converting?
There is no required waiting period in the Code. Many people convert within days so there are almost no earnings to tax. We document the steps either way.
Does my spouse's IRA affect my pro-rata math?
No. The pro-rata rule applies per person. Each spouse's own traditional, SEP and SIMPLE IRAs form that spouse's pitcher.