Backdoor Roth IRA, explained
If you earn too much to contribute to a Roth IRA directly, there’s a legal side door. It’s simple in concept and easy to get wrong in one specific way — the pro-rata rule.
The idea in two steps
The Roth IRA has an income limit, but the traditional IRA has none for nondeductible contributions, and a Roth conversion has no income limit either. Put those facts together:
- Step 1. Contribute after-tax money to a traditional IRA (a nondeductible contribution).
- Step 2. Convert that traditional IRA to a Roth IRA, usually right away.
Because you contributed after-tax dollars and convert before much growth, the conversion is typically little- or no-tax — and the money now grows tax-free in the Roth. That’s the “backdoor.”
For 2026 the front door phases out between $153,000–$168,000 for single filers and $242,000–$252,000 for married filing jointly; above the top, you're shut out of a direct Roth. The contribution cap you can push through the back door is $7,500 ($8,600 if you're 50 or older).
A clean example
You're a single filer earning $200,000 — over the limit. In January you put $7,500 of after-tax cash into a new traditional IRA and leave it in the settlement fund. Ten days later you convert the full $7,500 to your Roth. It earned $3 of interest in the meantime, so your taxable conversion is $3 — essentially nothing. You've moved $7,500 into the tax-free bucket the front door wouldn't allow.
The one big trap: the pro-rata rule
Here’s where people get burned. If you hold any pre-tax money in traditional, SEP, or SIMPLE IRAs, the IRS treats all your IRAs as a single pool when you convert. Your conversion is then taxed in proportion to the pre-tax share — so you can’t just convert “only the after-tax part.” The backdoor Roth is clean only when you have no other pre-tax IRA balances.
What that looks like in dollars. Say you already have a $60,000 rollover IRA (all pre-tax). You add your $7,500 nondeductible contribution, so the pool is $67,500 — only ~11% after-tax. Convert $7,500 and the IRS says ~89% of it is taxable: roughly $6,675 added to your taxable income, even though you "meant" to convert only the new money. The pre-tax balance poisons the whole conversion.
The fix: many high earners do a “reverse rollover” first — moving pre-tax IRA money into a current employer’s 401(k) (which is allowed and isn’t counted in the pro-rata calculation). That empties the IRA pool and clears the way. See 401(k) rollover options.
Don't forget the paperwork — Form 8606
The nondeductible contribution and the conversion are both reported on IRS Form 8606, filed with your return. This form is what tells the IRS your contribution was already taxed — skip it and you can end up taxed twice on the same money. File it for the contribution year even if the conversion happens early the next year. The reporting is fiddly enough that this is a strategy worth doing with a tax professional.
Who it suits — and who it doesn't
A good fit if you earn above the Roth limit, have little or no pre-tax IRA balance (or can reverse-roll it into a 401(k)), and want to keep feeding the tax-free bucket each year. Probably not worth it if you have a large pre-tax IRA you can't move (the pro-rata tax may swamp the benefit), expect to need the money within five years, or aren't confident the Form 8606 reporting will be done right year after year.
Is it still allowed?
As of 2026, the backdoor Roth remains legal. Lawmakers have proposed closing it more than once, but no ban has passed. Because the rules can change and the tax reporting (Form 8606) is fiddly, this is a strategy worth doing with a professional — and worth re-checking against current law before each year’s contribution.
Where it fits
The backdoor Roth is one way to keep building the tax-free bucket after income rules close the front door. For high earners who’ve also maxed it, other tax-advantaged vehicles without income caps (see types of life insurance) can extend that bucket further.
Frequently asked questions
- What is a backdoor Roth IRA?
- A two-step move for high earners: contribute to a nondeductible traditional IRA (no income limit), then convert it to a Roth. You end up with Roth money you couldn’t contribute directly.
- What is the pro-rata rule?
- If you hold pre-tax IRA money, all IRAs are treated as one pool and the conversion is partly taxable in proportion. Cleanest with no pre-tax IRA balances.
- Is it still allowed?
- Yes, as of 2026 — though it’s been targeted by proposals. Do it with professional guidance and confirm current rules.
- How much can I put in for 2026?
- Up to $7,500, or $8,600 if you’re 50 or older (the $1,100 catch-up included).