If your income exceeds the Roth IRA limits ($168,000 for single filers, $252,000 for married filing jointly in 2026), you might think Roth contributions are off the table. They're not. The backdoor Roth IRA is a legal workaround that lets high earners access tax-free retirement growth.
How It Works
The backdoor Roth is a two-step process:
- Contribute to a traditional IRA: There's no income limit for non-deductible traditional IRA contributions
- Convert to Roth IRA: There's no income limit for Roth conversions
The Result: You've effectively made a Roth IRA contribution despite exceeding the income limits. The contribution wasn't deductible (you used after-tax dollars), and conversions are allowed at any income level.
Step-by-Step Execution
- Open a traditional IRA (if you don't have one) at your preferred brokerage
- Contribute up to $7,500 ($8,600 if 50+) as a non-deductible contribution
- Wait briefly (a few days to a week is prudent, though not legally required)
- Convert the entire balance to your Roth IRA
- File Form 8606 with your tax return to document the non-deductible contribution
๐ ๏ธ Recommended Tool
Major brokerages like Fidelity, Schwab, and Vanguard make backdoor Roth conversions easy with online tools. The entire process can be completed in minutes.
The Pro-Rata Rule: The Critical Complication
Here's where many people get tripped up. If you have existing pre-tax money in any traditional IRA (including SEP-IRAs and SIMPLE IRAs), the IRS treats all your traditional IRAs as one pool for conversion purposes.
Example of the Pro-Rata Problem:
You have $93,000 in a rollover IRA (pre-tax) and contribute $7,000 non-deductible to a new traditional IRA.
Total IRA balance: $100,000 (93% pre-tax, 7% after-tax)
If you convert $7,000 to Roth, only 7% ($490) is tax-free. The other 93% ($6,510) is taxable.
The solution: Before doing a backdoor Roth, roll any existing traditional IRA money into your 401(k) (if your plan accepts rollovers). This leaves your traditional IRA empty except for the new non-deductible contribution.
Tax Implications
When executed properly (no existing pre-tax IRA balances), the backdoor Roth has minimal tax impact:
- The contribution itself isn't deductible (you use after-tax money)
- The conversion is tax-free (you're converting after-tax dollars)
- Any earnings between contribution and conversion are taxable (keep this window short)
๐ Further Reading
The New Retirement Savings Time Bomb by Ed Slott covers Roth strategies extensively, including backdoor Roth execution and avoiding common mistakes.
Common Mistakes to Avoid
- Forgetting about existing IRAs: The pro-rata rule can create unexpected taxes
- Not filing Form 8606: Required to document non-deductible contributions
- Waiting too long to convert: Earnings before conversion are taxable
- Converting during high-income years: If you have pro-rata issues, time conversions wisely
Is the Backdoor Roth Legal?
Yes. The IRS has explicitly acknowledged this strategy. Congress has considered eliminating it several times but hasn't done so. Use it while it's available, but stay informed about potential legislative changes.
The Zen Take
The backdoor Roth is one of the few remaining tax optimization strategies for high earners. It's legal, straightforward (once you understand it), and provides decades of tax-free growth.
The key is execution: clear out existing traditional IRA balances, contribute non-deductible dollars, convert quickly, and file the right forms. Do it once correctly, then repeat annually. The administrative effort is minimal compared to the long-term tax savings.