What Is a Backdoor Roth IRA and Should I Use One?

Many high-income professionals assume they're no longer eligible to benefit from a Roth IRA because of income restrictions. Fortunately, the backdoor Roth IRA provides a legal way to continue building tax-free retirement savings even when your income exceeds the Roth IRA contribution limits.

If you've ever tried to contribute to a Roth IRA only to find out you make too much money, you're not alone. In 2026, single filers with a modified adjusted gross income (MAGI) of $168,000 or more and married couples filing jointly with MAGI of $252,000 or more cannot contribute directly to a Roth IRA. Fortunately, there's a perfectly legal workaround that high earners have been using for years: the backdoor Roth IRA.

How Does a Backdoor Roth IRA Work?

It's not a special account. It's a two-step process.

First, you make a non-deductible contribution to a traditional IRA. Most taxpayers can make a non-deductible IRA contribution regardless of income level. Then, you convert that traditional IRA balance to a Roth IRA. The result is the same as if you'd contributed directly to a Roth IRA.

Why Does a Backdoor Roth IRA Matter?

Roth IRAs are powerful because your money grows tax-free, and qualified withdrawals in retirement are generally tax-free as well. For high earners who expect to be in a similar or higher tax bracket later in life, that's a significant advantage.

The backdoor Roth IRA allows high-income earners to continue building tax-free retirement assets even when they can no longer contribute directly to a Roth IRA because of income limits.

Annual IRA contribution limits still apply. For 2026, individuals can contribute up to $7,500 to an IRA, or $8,600 if age 50 or older. Whether you're contributing directly to a Roth IRA or using the backdoor Roth IRA strategy, you're subject to the same IRS contribution limits.

What's The Catch?

There are two important things to know before implementing a backdoor Roth IRA strategy.

First, the pro-rata rule. If you have other traditional IRA money sitting around from old rollovers, for example, the IRS doesn't let you convert only the new after-tax dollars. Instead, it treats all of your traditional IRA assets as a single pool and taxes the conversion proportionally. This can create an unexpected tax bill and is one of the most common reasons backdoor Roth IRA strategies become more complicated than expected.

Second, timing matters. We generally recommend completing the Roth conversion shortly after making the non-deductible IRA contribution to help minimize potential taxable earnings and simplify recordkeeping.

Is a Backdoor Roth IRA Right for You?

The backdoor Roth IRA generally works best for people who:

• Have little or no existing traditional IRA balance

• Can roll pre-tax IRA assets into an employer-sponsored retirement plan, such as a 401(k), if appropriate

• Expect their tax rate to remain the same or increase in retirement

• Want to diversify their future retirement income between taxable, tax-deferred, and tax-free sources

  
  

If you're unsure whether the pro-rata rule applies to your situation, that's exactly the kind of question worth discussing with a financial advisor before taking action. Done correctly, the backdoor Roth IRA can be one of the most valuable planning tools available to high-income earners. Done carelessly, it can create unnecessary paperwork and unexpected taxes.

Have questions about whether a backdoor Roth IRA makes sense for your situation? Contact us below.