How to Do a Backdoor Roth IRA If You Earn Too Much

If your income is too high to contribute to a Roth IRA directly, the backdoor Roth IRA lets you get there in two steps: put after-tax money into a traditional IRA, then convert it to a Roth. There is no income limit on conversions, so the strategy works at any earnings level. For 2026, direct Roth contributions phase out entirely above $168,000 in modified adjusted gross income for single filers and above $252,000 for married couples filing jointly.¹

The mechanics are simple. The tax traps are not. Most of the problems people run into come from a single rule — the pro-rata rule — and from missing a required tax form.

Who Needs the Backdoor

The 2026 phase-out ranges for direct Roth IRA contributions are:

Single or head of household: full contribution below $153,000 MAGI, partial between $153,000 and $168,000, none above $168,000.
Married filing jointly: full below $242,000, partial between $242,000 and $252,000, none above $252,000.

These limits apply only to direct contributions. Conversions from a traditional IRA have no income cap, which is what makes the backdoor work.¹

MAGI is not your gross salary. It starts with adjusted gross income (line 11 of Form 1040) and adds back items such as the foreign earned income exclusion and student loan interest deduction.² If you sit near the boundary, run the exact number before deciding you need the backdoor at all.

The Two Steps

Step 1: Contribute to a Traditional IRA

Open a traditional IRA if you don’t already have one. For 2026, contribute up to $7,500, or $8,600 if you’re 50 or older.¹ Because your income is above the Roth threshold, you almost certainly also exceed the deductibility limits for traditional IRA contributions, so this contribution will be nondeductible. You forgo the upfront deduction and, in exchange, don’t owe tax on those same dollars when you convert.³

Leave the money in cash or a money market fund. Any earnings between contribution and conversion become taxable when you convert, so you want that window as short as possible.

Step 2: Convert to a Roth IRA

Once the contribution settles (usually one business day), request a conversion of the traditional IRA balance into your Roth IRA. If both accounts are at the same brokerage, this is typically a same-trustee transfer processed through the online portal. Trustee-to-trustee transfers between institutions and 60-day rollovers are also permitted, but the same-trustee route leaves the least room for error.⁴

Speed matters. If your $7,500 contribution earns $2 of interest before you convert, you owe ordinary income tax on $2. Wait months and let it grow to $8,000, and you now owe tax on $500.

The Pro-Rata Rule

This is where most high earners get burned. The IRS treats all your traditional, SEP, and SIMPLE IRA balances as a single pool when you convert.⁵ You cannot selectively convert only the after-tax portion. The tax-free share of any conversion is the ratio of your total nondeductible contributions to your total IRA balance.

An example makes it concrete. Suppose a rollover IRA holds $92,500 of pre-tax money from an old 401(k). You add a $7,500 nondeductible contribution to a new traditional IRA. Total IRA balance: $100,000, of which 7.5% is after-tax. Convert $7,500 to a Roth and only 7.5% of that conversion, or $562, is tax-free. The other $6,938 gets taxed as ordinary income. The backdoor collapses.

The calculation happens on Form 8606. The denominator is the value of all your traditional IRAs on December 31 of the conversion year, plus any distributions taken that year. The numerator is your unrecovered nondeductible basis.⁶

Clearing the Pro-Rata Problem

The cleanest fix is to move all pre-tax traditional IRA money into your employer’s 401(k) before you convert. Most 401(k) plans accept incoming rollovers of pre-tax IRA balances. Once the rollover finishes, the only money in your traditional IRA is the fresh nondeductible contribution, and 100% of the conversion is tax-free. Self-employed people can use a solo 401(k) for the same purpose.

Watch the December 31 balances. The pro-rata math uses year-end values, so a large pre-tax rollover IRA sitting in your name on December 31 will contaminate a January conversion done in that same year. The 401(k) rollover has to be completed before year-end.

Two Deadlines, Not One

The contribution deadline and the conversion deadline are different, and this catches people out.

You can make a 2026 traditional IRA contribution anytime between January 1, 2026 and April 15, 2027. A Roth conversion, by contrast, is reported in the calendar year it actually occurs. For a conversion to count as a 2026 event on your 2026 return, it must be completed by December 31, 2026.⁷

Contributing in January 2027 for the 2026 tax year and converting immediately splits the transaction across two returns and complicates Form 8606 in both years. If you can, contribute and convert in the same calendar year.

Form 8606 and the Rest of the Paperwork

A backdoor Roth generates three forms. You file one; your brokerage issues two.

Form 8606 is yours to file, attached to your 1040 for every year you make a nondeductible traditional IRA contribution or convert traditional IRA money to a Roth. Part I tracks your nondeductible basis. Part II runs the pro-rata calculation and reports the taxable portion of the conversion. This form is how the IRS knows you already paid tax on those dollars.⁶
Form 1099-R comes from your brokerage and reports the distribution out of the traditional IRA. The distribution code in Box 7 flags it as a conversion.⁸
Form 5498 also comes from your brokerage and confirms the Roth IRA received the converted funds.⁹

Form 5498 often arrives in May because brokerages have until May 31 to issue it. You don’t need to wait for it; your 1099-R and your own records are enough to complete Form 8606 on time.

Keep copies of every Form 8606 you file. If you can’t prove which contributions were nondeductible, the IRS may tax the same money a second time when you eventually take distributions.¹⁰

If You Might Need the Money Before 59½

Each Roth conversion carries its own five-year holding period. Withdraw converted amounts before age 59½ and before five years have passed since January 1 of the conversion year, and the IRS imposes a 10% early withdrawal penalty on the taxable portion of that conversion.¹¹

For a clean backdoor Roth converting only nondeductible contributions, the taxable portion is close to zero, so the penalty exposure is minimal. When pre-tax dollars get pulled in through the pro-rata rule, those amounts do carry penalty risk if withdrawn early. Past 59½, the five-year rule stops mattering.

Doing It Every Year

Nothing prevents you from running the backdoor annually. Many high earners contribute the maximum to a traditional IRA in January, convert within a few days, and file Form 8606 with that year’s return. Over a decade, that’s a meaningful Roth balance growing tax-free. The routine is the same each year: keep the pre-tax IRA balance at zero, convert quickly, and file the form.

1
Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500
2
Internal Revenue Service. Modified Adjusted Gross Income
3
Internal Revenue Service. About Form 8606, Nondeductible IRAs
4
Internal Revenue Service. Retirement Plans FAQs Regarding IRAs
5
Office of the Law Revision Counsel. 26 U.S.C. 408 – Individual Retirement Accounts
6
Internal Revenue Service. 2025 Form 8606 – Nondeductible IRAs
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Office of the Law Revision Counsel. 26 U.S.C. 408A – Roth IRAs
8
Internal Revenue Service. 2025 Instructions for Forms 1099-R and 5498
9
Internal Revenue Service. Form 5498 IRA Contribution Information
10
Internal Revenue Service. Instructions for Form 8606
11
Office of the Law Revision Counsel. 26 U.S. Code 408A – Roth IRAs