How to Reduce MAGI for Roth IRA Contributions: 401(k), HSA, and Backdoor

To reduce your MAGI for Roth IRA contributions, cut your adjusted gross income first: max out pre-tax 401(k), 403(b), or 457(b) deferrals, fund a health savings account and a health care FSA, harvest up to $3,000 in capital losses, and, if you’re self-employed, contribute to a SEP-IRA or Solo 401(k). For most people, modified adjusted gross income sits at or very near AGI, because the items the IRS adds back — the foreign earned income exclusion, excluded adoption benefits, and the student loan interest deduction — rarely apply.¹ Lower your AGI and your MAGI almost always follows.

The 2026 Thresholds You’re Trying to Get Under

Your MAGI decides how much you can put into a Roth IRA. For 2026, the phase-out ranges are:²

Single or head of household: full contribution below $153,000; reduced from $153,000 to $168,000; none at $168,000 or above.
Married filing jointly: full contribution below $242,000; reduced from $242,000 to $252,000; none at $252,000 or above.

The maximum contribution itself is $7,500 for 2026, or $8,600 if you are 50 or older.³ Inside the phase-out band, the allowed amount slides down. Even a few thousand dollars of MAGI reduction can restore part of your contribution room, and a larger reduction can restore all of it.

Max Out Pre-Tax Workplace Retirement Contributions

A traditional (pre-tax) 401(k), 403(b), or governmental 457(b) deferral is the single strongest lever. The money is withheld before your W-2 taxable wages are calculated, so it never lands in AGI, and it isn’t added back for MAGI purposes.⁴

The 2026 elective deferral limits:²

Under 50: up to $24,500.
Age 50 or older: up to $32,500 ($24,500 plus an $8,000 catch-up).
Ages 60 through 63: up to $35,750 ($24,500 plus an $11,250 enhanced catch-up under SECURE 2.0).

A single filer earning $180,000 who defers the full $24,500 pulls baseline AGI down to $155,500 before any other adjustments — close enough to the $153,000 threshold that an HSA contribution or a capital loss can finish the job. If your employer offers both a 403(b) and a governmental 457(b), the limits apply separately to each plan, so you can defer up to the maximum in both.⁵⁶

One trap: only traditional pre-tax contributions lower MAGI. Designated Roth 401(k) contributions come out of after-tax dollars, so they’re already in your taxable wages and do nothing for your Roth IRA eligibility. If lowering MAGI is the goal, check that your deferrals are flowing into the pre-tax side of the plan.

Fund an HSA and a Health Care FSA

If you’re enrolled in a high-deductible health plan, HSA contributions are excluded from your W-2 wages when made through payroll, or claimed as an above-the-line deduction on Schedule 1 when made directly.⁷ Either way, the deduction lowers AGI.

The 2026 HSA limits:⁸

Self-only coverage: $4,400.
Family coverage: $8,750.
Age 55 or older: an extra $1,000 catch-up.

A health care Flexible Spending Account offers a smaller reduction and doesn’t require a high-deductible plan. The 2026 FSA limit is $3,400, set aside through your employer’s cafeteria plan and excluded from taxable wages.⁹ FSA money generally has to be used within the plan year, though some employers permit a modest carryover or grace period. Between a family HSA and a full FSA, a household can shave over $12,000 off AGI before touching a retirement plan.

Self-Employed Retirement Plans

If you have self-employment income, two plans give you an above-the-line deduction on Schedule 1 that flows straight through to AGI without any MAGI add-back.

SEP-IRA

A Simplified Employee Pension lets you contribute the lesser of 25% of net self-employment earnings or $69,000 for 2026.¹⁰¹¹ Setup is simple, no annual IRS filing is required, and you have until your tax return’s due date, extensions included, to fund it. That lets you decide the contribution after your income is known.

Solo 401(k)

A Solo 401(k) lets you contribute in two roles: as employee, up to $24,500 in 2026 deferrals; and as employer, up to 25% of net self-employment earnings in profit-sharing.² The combined total can reach $72,000 for 2026, higher with age-based catch-ups. At moderate earnings, this dual structure often produces a bigger deduction than a SEP alone. Keep the employee deferral on the pre-tax side, not the Roth side, if you’re trying to lower MAGI.

Harvest Capital Losses

Selling investments at a loss can trim AGI. Losses first offset any capital gains you realized during the year; if losses exceed gains, up to $3,000 of the excess deducts against ordinary income ($1,500 if married filing separately).¹² That deduction flows through to AGI on Form 1040 and isn’t added back for MAGI.¹³ Any losses over the $3,000 cap carry forward indefinitely.

Watch the wash sale rule. If you sell at a loss and buy a substantially identical security within 30 days before or after the sale, the IRS disallows the loss for that year and adds it to the basis of the replacement.¹⁴ To keep the deduction for the current year, wait 31 days before repurchasing, or buy a different fund that tracks a similar segment without being substantially identical.

When MAGI Still Won’t Come Down: The Backdoor Roth

If you’ve used every lever and MAGI still sits above the phase-out, you can move money into a Roth IRA through a two-step conversion. There is no income limit on converting a traditional IRA to a Roth — the income limit applies only to direct Roth contributions.¹⁵

Contribute to a traditional IRA. You can put in up to $7,500 for 2026 ($8,600 if 50 or older) at any income, though the contribution will be nondeductible at higher MAGI.³
Convert the traditional IRA to a Roth IRA. Because tax was already paid on the contribution, the conversion is generally tax-free, aside from any earnings between contribution and conversion.
Report the nondeductible contribution on Form 8606 with your return.¹⁶

Convert soon after contributing to keep taxable earnings inside the traditional IRA near zero.

The Pro-Rata Rule

This works cleanly only if you have no other pre-tax money in any traditional, SEP, or SIMPLE IRA. If you do, the IRS treats all of your traditional IRA balances as one pool when deciding how much of a conversion is taxable.¹⁷ With $90,000 of pre-tax IRA money and a $10,000 nondeductible contribution, only 10% of the pool is after-tax, so converting $10,000 leaves $9,000 taxable as ordinary income. One workaround: roll any existing pre-tax IRA money into your employer’s 401(k), if the plan accepts rollovers, before the conversion. That empties the traditional IRA pool and lets the nondeductible contribution convert with little or no tax.

If You’ve Already Overcontributed

If MAGI came in higher than you expected and you put too much into a Roth IRA, the IRS applies a 6% excise tax on the excess for every year it sits in the account.³ Two ways to fix it:

Withdraw the excess plus earnings by your tax-filing deadline, including extensions. The earnings are taxable in the contribution year and, if you’re under 59½, may face an early-withdrawal penalty.
Recharacterize the contribution. Ask the custodian to transfer the contribution, adjusted for gains or losses, from the Roth IRA to a traditional IRA; the money is then treated as if it had gone into the traditional IRA all along. Complete the transfer by your filing deadline, including extensions.¹⁶

Miss the filing deadline and you still have a six-month window after the original due date without extensions to recharacterize, filing an amended return to note the change. Recharacterization applies to contributions only. A Roth conversion made in 2018 or later cannot be reversed.¹⁶

1
Internal Revenue Service. Modified Adjusted Gross Income
2
Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500
3
Internal Revenue Service. Retirement Topics – IRA Contribution Limits
4
Office of the Law Revision Counsel. 26 USC 401 – Qualified Pension, Profit-Sharing, and Stock Bonus Plans
5
Office of the Law Revision Counsel. 26 USC 403 – Taxation of Employee Annuities
6
Office of the Law Revision Counsel. 26 USC 457 – Deferred Compensation Plans of State and Local Governments and Tax-Exempt Organizations
7
Office of the Law Revision Counsel. 26 USC 223 – Health Savings Accounts
8
Internal Revenue Service. Publication 969 – Health Savings Accounts and Other Tax-Favored Health Plans
9
Office of the Law Revision Counsel. 26 USC 125 – Cafeteria Plans
10
Office of the Law Revision Counsel. 26 USC 408 – Individual Retirement Accounts
11
Internal Revenue Service. SEP Contribution Limits (Including Grandfathered SARSEPs)
12
Office of the Law Revision Counsel. 26 USC 1211 – Limitation on Capital Losses
13
Internal Revenue Service. Topic No. 409, Capital Gains and Losses
14
Office of the Law Revision Counsel. 26 USC 1091 – Loss From Wash Sales of Stock or Securities
15
Office of the Law Revision Counsel. 26 USC 408A – Roth IRAs
16
Internal Revenue Service. 2025 Instructions for Form 8606 – Nondeductible IRAs
17
Office of the Law Revision Counsel. 26 USC 408 – Individual Retirement Accounts