Roth IRAs are one of the best retirement accounts available: money grows tax-free, and qualified withdrawals are tax-free too. But once your income passes the limits — in 2026, the ability to contribute directly starts phasing out at $153,000 for single filers and $242,000 for married couples — you can't contribute directly.
The backdoor Roth is a fully legal workaround that's been used for years. Here's how it works.
The idea in one sentence
Anyone with earned income can make a non-deductible contribution to a traditional IRA, and anyone can convert a traditional IRA to a Roth — so you contribute, then convert.
Step by step
1. Check for pre-tax IRA money. Look at all your traditional, SEP and SIMPLE IRAs. If any have pre-tax balances, read the pro-rata section below before going further.
2. Contribute to a traditional IRA. In 2026 the limit is $7,500, or $8,600 if you're 50 or older. Don't take a deduction for it. Keep the money in a cash or money market option for now.
3. Convert to your Roth IRA. After the contribution settles — often a few days — convert the full balance to a Roth IRA. Most brokerages let you do this online.
4. Invest inside the Roth. Choose your long-term investments, such as a target-date or broad index fund.
5. File Form 8606. At tax time, report the non-deductible contribution and the conversion on Form 8606. This shows the IRS you already paid tax on the money.
That's it. If you're married, your spouse can do the same, even if they don't work, using your earned income.
The pro-rata rule
This is where people get tripped up. When you convert, the IRS looks at all your traditional, SEP and SIMPLE IRA balances together, measured on December 31 of the year you convert. The taxable share of your conversion is:
pre-tax IRA balances ÷ total IRA balances
For example, if you have $30,000 in an old SEP IRA and contribute $7,500 non-deductible, 80% of your conversion is taxable — even though you meant to convert only the new $7,500.
The fix: roll pre-tax IRA money into your employer's 401(k) or 403(b), if the plan accepts roll-ins, before December 31. 401(k)s and 403(b)s don't count for the pro-rata rule. The backdoor Roth calculator shows the tax effect.
Common questions
Is it allowed? Yes. Congress has discussed limiting it, but it remains legal. Watch for law changes each year.
When should I do it? Many people do it each January for the new year. Any time before the tax filing deadline works for the contribution.
What if I earned a little interest before converting? That small amount is taxable when you convert. It's not a problem; just report it.
What it's worth
At a 7% return, $7,500 a year from age 35 to 62 grows to roughly $598,000 — all of it tax-free in retirement. The same savings in a regular brokerage account, losing about 1% a year to taxes on dividends and gains, would reach about $504,000, and you'd still owe tax on the gains when you sell. For a married couple doing it together, double those numbers. It takes about 20 minutes a year.
Where it fits
A common order for retirement savings is:
- Contribute enough to your workplace plan to get the full match.
- Fund a backdoor Roth for you and your spouse.
- Max out your workplace plan, and a 457(b) if available.
- Consider an HSA if you have a high-deductible health plan.
- Invest in a taxable brokerage account.
If you're: Practice owner
Practice owners often have SEP IRAs, which trigger the pro-rata rule. Switching to a solo 401(k) or practice 401(k) moves that money out of IRAs and keeps your backdoor Roth clean.
Project your workplace plan with the 403(b) calculator and set a target with the FI number calculator.