The Backdoor Roth IRA: A High Earner's Secret

The Roth IRA has income limits. But there's a legal loophole that lets high earners contribute anyway. It's called the "Backdoor Roth."

The Problem

2026 Roth IRA Income Limits:

• Single: phaseout ends at $168,000
• Married filing jointly: phaseout ends at $252,000

If you make too much, you can't contribute directly to a Roth IRA. But you CAN do it through the back door.

How the Backdoor Roth Works

1. Contribute to a Traditional IRA (no income limit for contributions)
2. Convert it to a Roth IRA (no income limit for conversions)
3. Pay taxes on any gains (usually minimal if done quickly)

That's it. Completely legal, IRS-approved.

Step-by-Step Process

Step 1: Open Both IRAs

You need a Traditional IRA and a Roth IRA at the same brokerage.

Step 2: Contribute to Traditional IRA

• 2026 limit: $7,500 ($8,600 if 50+)
• Make a non-deductible contribution (you won't get a tax break)

Step 3: Wait a Few Days

Some people convert immediately; others wait 1-2 business days. Either works.

Step 4: Convert to Roth

Call your brokerage or do it online. Request a "Roth conversion" of your Traditional IRA balance.

Step 5: Report on Taxes

File Form 8606 with your tax return to document the non-deductible contribution.

The Pro-Rata Rule (Important!)

The IRS treats ALL your Traditional IRA money as one pool. If you have:

• $7,000 new non-deductible contribution
• $63,000 in an old Traditional IRA (pre-tax)

Then 90% of your conversion is taxable. You can't just convert "only the new money."

Solutions:

1. Roll old Traditional IRA into your 401k first (if allowed)
2. Convert everything to Roth (pay the taxes)
3. Accept the partial taxation

The Mega Backdoor Roth

If your 401k allows after-tax contributions AND in-plan Roth conversions, you can contribute up to $72,000 total (2026) and convert the after-tax portion to Roth.

Regular 401k limit: $24,500 After-tax + conversion: Up to $47,500 more before catch-up contributions Total possible Roth savings: $72,000/year before catch-up contributions

Not all 401k plans allow this—check with your HR.

Common Mistakes

Is It Worth It?