How to Contribute to a Backdoor Roth IRA: Pro-Rata Rule and Form 8606

To contribute to a backdoor Roth IRA, you put after-tax money into a traditional IRA, convert that balance to a Roth IRA, and file IRS Form 8606 to document the move. The strategy exists because direct Roth contributions phase out at higher incomes. For 2026, that phase-out starts at $153,000 for single filers and $242,000 for married couples filing jointly.¹ No legislation has closed the workaround, and it remains one of the most common ways high earners get money into a Roth.

Before you start, check one thing: whether you already have pre-tax money in any traditional, SEP, or SIMPLE IRA. If you do, read the pro-rata section below first. That single detail decides whether the strategy will work cleanly or generate a surprise tax bill.

Step 1: Make a Non-Deductible Traditional IRA Contribution

Open a traditional IRA and a Roth IRA at the same brokerage if you don’t already have both. Keeping them under one roof matters at conversion time because the transfer happens internally instead of moving between firms. Link a checking account so you can fund the traditional IRA electronically.

For 2026, you can contribute up to $7,500 if you’re under 50, or $8,600 if you’re 50 or older. The catch-up amount rose to $1,100 from $1,000.¹ Deposit up to that amount. Do not claim a tax deduction for it. Your income is almost certainly high enough that you’re past the deduction phase-out for traditional IRAs anyway, and going in after-tax is what lets the conversion happen without generating fresh income tax.

You can make a contribution for a given tax year any time from January 1 through the following April tax deadline, typically April 15.² A 2026 contribution can go in as late as April 15, 2027. Filing extensions don’t push the deadline back. Contributing early gives the money more time growing tax-free once it lands in the Roth.

Step 2: Convert to a Roth IRA

Once the deposit settles, usually one to three business days, convert the whole balance to your Roth IRA. Every major brokerage has a “convert to Roth” option inside its account management tools. Pick the traditional IRA as the source, the Roth IRA as the destination, and convert the full amount.

Decline any offer to withhold federal taxes from the conversion. When the money going in is after-tax and the conversion happens promptly, you owe little or no tax on the conversion itself, so withholding just pulls dollars out of the Roth for no reason.

Speed matters. Convert as soon as the funds clear. Any earnings that build up in the traditional IRA between the deposit and the conversion are taxable as ordinary income when you convert.³ Two days of interest in a settlement fund is trivial. Weeks of market gains on an invested balance can create a real, reportable tax event. Most people leave the contribution in cash until it’s converted.

Step 3: File IRS Form 8606

Form 8606 is the paperwork that tells the IRS your traditional IRA contribution was made with after-tax dollars. File it with your Form 1040 for every year you make a non-deductible contribution or do a conversion.⁴ Part I records the non-deductible contribution and tracks your total after-tax basis. Part II reports the conversion and calculates how much of it is taxable.

Skipping this form is the most expensive mistake in the whole process. Without it, the IRS has no record that you already paid tax on the money, and years later the entire conversion could be treated as taxable when you take distributions. The direct penalty for not filing is $50 per missed form, but the real damage is double taxation from lost basis records.⁵ File it every year you use the strategy, and keep copies for the life of the account.

Check Your Other IRAs First: The Pro-Rata Rule

This is where most backdoor Roth plans fall apart. If you have any pre-tax money in any traditional, SEP, or SIMPLE IRA, the IRS treats every one of those accounts as a single combined pool when you convert.⁶ You can’t isolate the after-tax dollars and convert only those. A proportional formula decides how much of any conversion is taxable.

Suppose you put $7,500 of new, non-deductible money into a traditional IRA for your backdoor Roth. You also have $92,500 in an old SEP IRA from freelance work, all pre-tax. The IRS sees one combined balance of $100,000, of which 7.5% is after-tax. Convert $7,500, and only $562.50 of that conversion is tax-free. The other $6,937.50 is taxed at your ordinary income rate. Most of the benefit is gone.

The measurement date is December 31 of the year the conversion happens.⁶ You can’t convert in January and then move pre-tax money in later to game the math. Whatever sits in those accounts at year-end sets your ratio.

If the only balance across all your traditional, SEP, and SIMPLE IRAs is the fresh non-deductible contribution, the pro-rata rule does nothing. Everything is after-tax basis, and the conversion is tax-free. A clean backdoor Roth requires zero pre-tax IRA money at year-end.

Clearing Pre-Tax Money With a Reverse Rollover

If you do have pre-tax IRA balances, the standard fix is a reverse rollover: move that pre-tax money into your employer’s 401(k). Once it’s inside the 401(k), it no longer counts in the IRA aggregation formula, and what remains in your traditional IRA is entirely after-tax basis ready for conversion.⁷

There’s a catch. Your plan has to accept incoming rollovers, and not all of them do.⁷ Ask your plan administrator before you count on this option. If it’s available, use a direct trustee-to-trustee transfer through your 401(k) provider, and move only the pre-tax portion. If you’re self-employed and don’t have an employer plan, a solo 401(k) can play the same role.

Deal with this before the conversion, not after. The December 31 balance is what the IRS looks at, so trying to clean things up afterward doesn’t undo a pro-rata problem for that tax year.

The Five-Year Clock on Converted Amounts

Roth IRAs pay out in a set order: regular contributions first, then converted amounts starting with the oldest, then earnings.⁸ Each category has its own tax and penalty treatment.

For a clean backdoor Roth where the whole conversion was after-tax, the converted principal generally comes out without income tax because you already paid tax on it. The five-year rule that triggers a 10% early withdrawal penalty on converted amounts applies only to the portion that was taxable at the time of conversion.⁸ If your conversion was fully tax-free, the penalty doesn’t apply to that principal even if you withdraw within five years while under 59½.

If the pro-rata rule made part of your conversion taxable, that taxable portion is subject to the 10% penalty if you pull it out within five years and you’re under 59½. Each conversion starts its own five-year clock. After 59½, the penalty is off the table regardless of when you converted.

Earnings are tighter. To take earnings out completely tax-free, you need to be at least 59½ and to have had any Roth IRA open for at least five tax years.⁸ Pull earnings before both conditions are met, and you owe income tax plus the 10% penalty on that portion.

If You’re Married Filing Separately

Filing status doesn’t change any of the steps. If you’re married filing separately and lived with your spouse at any point during the year, the Roth phase-out runs from $0 to $10,000, so almost any income blocks a direct contribution.¹ The backdoor route still works the same way, because non-deductible traditional IRA contributions and Roth conversions have no income limits of their own.

1
Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500
2
Internal Revenue Service. Retirement Topics – IRA Contribution Limits
3
Internal Revenue Service. Retirement Plans FAQs Regarding IRAs
4
Internal Revenue Service. Instructions for Form 8606
5
Office of the Law Revision Counsel. 26 USC 6693 – Failure to Provide Reports on Certain Tax-Favored Accounts
6
Office of the Law Revision Counsel. 26 USC 408 – Individual Retirement Accounts
7
Internal Revenue Service. Publication 590-A, Contributions to Individual Retirement Arrangements (IRAs)
8
Office of the Law Revision Counsel. 26 USC 408A – Roth IRAs