The Moment
Your income exceeds the Roth IRA contribution limits ($161,000 single / $240,000 married filing jointly for 2025). You want the tax-free growth of a Roth IRA but cannot contribute directly.
The backdoor Roth IRA is a legal, IRS-approved workaround that lets high earners access Roth IRA benefits regardless of income. It has been used by millions of taxpayers and was effectively codified by Congress in the SECURE Act 2.0.
The Steps
Step 1 — Contribute to a Traditional IRA (non-deductible). Contribute up to $7,000 ($8,000 if 50+) to a Traditional IRA. Because your income is too high, you will not get a tax deduction — this is a non-deductible contribution. That is fine.
Step 2 — Convert to Roth IRA. Contact your brokerage and request a Roth conversion of the Traditional IRA. Most brokerages have an online button for this. Do this as soon as possible after contributing — ideally the next business day.
Step 3 — Report on your taxes. File Form 8606 with your tax return to document the non-deductible contribution and conversion. Your tax software handles this if you enter the transactions correctly.
That is it. The money is now in a Roth IRA growing tax-free. You can repeat this every year.
The Pro-Rata Trap
If you have existing Traditional IRA balances (including rollover IRAs), the conversion is partially taxable.
The IRS uses the pro-rata rule: the taxable portion of your conversion equals the ratio of pre-tax money to total IRA balances across all Traditional IRAs.
Example: You have $93,000 in a rollover Traditional IRA (pre-tax) and contribute $7,000 non-deductible. Total IRA balance: $100,000. When you convert $7,000 to Roth, 93% ($6,510) is taxable — because 93% of your total IRA money is pre-tax.
The fix: Roll your existing Traditional IRA balance into your employer's 401(k) (if the plan allows). This removes the pre-tax money from the pro-rata calculation, making the backdoor Roth conversion tax-free on the non-deductible contribution.
If you have no existing Traditional IRA balances: There is no pro-rata issue. The conversion is essentially tax-free (only taxable on any minimal gains between contribution and conversion).
Run Your Numbers
See how annual backdoor Roth contributions compound tax-free.
Compound Growth Projector
What to explore next
- →What is the mega backdoor Roth strategy?
- →How do I roll my Traditional IRA into my 401(k)?
- →Should I do a Roth conversion of old 401(k) money?
Frequently Asked Questions
Is the backdoor Roth IRA legal?
Yes. The strategy has been used for over a decade, acknowledged by the IRS, and effectively codified by Congress. There have been proposals to close it, but none have passed. Until the law changes, the backdoor Roth is a legitimate tax planning tool.
Should I convert immediately or wait for gains?
Convert immediately — ideally the next business day. Any gains between contribution and conversion are taxable. By converting quickly, the taxable amount is minimal (often zero or a few dollars).