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Backdoor Roth IRA Conversion

Difficulty Intermediate Risk Low Applies To All Potential Savings $5,000 - $50,000+ over a lifetime Last Verified 2026-02-10

Backdoor Roth IRA Conversion

What Is It?

High-income earners are normally barred from contributing directly to a Roth IRA once their modified adjusted gross income (MAGI) exceeds certain thresholds ($161,000 for single filers, $240,000 for married filing jointly in 2024). However, there is no income limit on converting a Traditional IRA to a Roth IRA. The “Backdoor Roth IRA” strategy exploits this gap by making a non-deductible contribution to a Traditional IRA and then immediately converting it to a Roth IRA.

How It Works

  1. Contribute to a Traditional IRA. Make a non-deductible contribution up to the annual limit ($7,000 for 2024, $8,000 if you’re 50 or older). You do not claim a tax deduction for this contribution.
  2. Convert to a Roth IRA. Shortly after the contribution settles, request a Roth conversion with your brokerage. Since you already paid taxes on the contribution (it was non-deductible), the conversion itself incurs little to no additional tax — as long as the funds haven’t gained significant value between the contribution and conversion.
  3. Report on your tax return. File IRS Form 8606 to document the non-deductible contribution and the conversion.

Important Caveats

  • Pro Rata Rule: If you have existing pre-tax money in any Traditional IRA (including SEP or SIMPLE IRAs), the IRS treats all your IRAs as one pool for tax purposes. This means a portion of your conversion will be taxable. The workaround is to roll any existing pre-tax IRA balances into a 401(k) before doing the conversion.
  • Convert quickly. If the funds grow between the contribution and conversion, you’ll owe taxes on the gains. Most people convert within a few days to minimize this.
  • Congress has considered closing this. The Build Back Better Act (2021) included provisions to eliminate backdoor Roth conversions for high earners, but those provisions did not pass. As of early 2026, the strategy remains fully legal.

Who Benefits Most?

High-income earners who exceed the Roth IRA income limits but want access to tax-free growth and tax-free withdrawals in retirement. Over a 20-30 year investing horizon, the tax-free compounding can result in tens of thousands of dollars in savings.

  • IRC § 408A(d)(3) — Governs Roth IRA conversions and places no income limit on conversions.
  • IRC § 408(o) — Allows non-deductible contributions to a Traditional IRA regardless of income.
  • IRS Form 8606 — The required reporting form for non-deductible IRA contributions and conversions.
  • IRS Publication 590-A — Contributions to Individual Retirement Arrangements, covering Traditional and Roth IRAs.

Frequently Asked Questions

Is the backdoor Roth IRA still legal in 2026?

Yes. As of 2026, the strategy remains fully legal. Congress considered closing it via the Build Back Better Act in 2021, but those provisions did not pass. The One Big Beautiful Bill Act (2025) did not include any restrictions on backdoor Roth conversions.

I have a rollover IRA from an old employer with pre-tax money in it — will the pro-rata rule apply to my backdoor Roth?

Yes. The IRS treats all your Traditional, SEP, and SIMPLE IRA balances as one pool. If you have, say, $93,000 in a pre-tax rollover IRA and contribute $7,000 non-deductible, 93% of your conversion will be taxable. The standard fix is to roll the pre-tax IRA balance into your current employer’s 401(k) before December 31 of the same year you do the conversion.

How long should I wait between making the traditional IRA contribution and converting to Roth?

Most people convert within a few days to a week. The goal is to minimize any growth between contribution and conversion — if the funds appreciate before you convert, you’ll owe ordinary income tax on the gains. There is no legal “waiting period” required; converting quickly is the standard approach.

What tax form do I need to file to report a backdoor Roth conversion?

You must file IRS Form 8606 with your tax return for the year of the contribution. Part I documents the non-deductible Traditional IRA contribution (so you don’t pay tax on it again when you withdraw), and Part II reports the Roth conversion. Skipping this form can result in double taxation.

What are the contribution limits for the backdoor Roth IRA in 2026?

The underlying IRA contribution limit for 2026 is $7,500 ($8,600 if you are age 50 or older). You contribute this amount to a Traditional IRA on a non-deductible basis and then convert it — so the effective backdoor Roth contribution is the same as the standard IRA limit for the year.

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