Backdoor Roth IRA Explained: Step by Step, Plus the Pro-Rata Rule

A backdoor Roth IRA is a legal way for high earners to get money into a Roth IRA when their income is too high to contribute directly. You put money into a traditional IRA without taking a tax deduction, then convert it to a Roth IRA. If done correctly, there is little or no tax to pay, and the money then grows tax-free.

In 2026, you need this if your income is above $168,000 as a single filer or $252,000 married filing jointly. See the full ranges in our Roth IRA income limits guide.

Why the backdoor works

There is an income limit on contributing directly to a Roth IRA. But there is no income limit on contributing to a traditional IRA, and no income limit on converting a traditional IRA to a Roth. Combining the two gets you to the same place. Congress has known about it for years, and it has been widely used since conversion income limits were removed in 2010.

How to do a backdoor Roth, step by step

1. Check for other pre-tax IRA money. If you have money in any traditional, SEP or SIMPLE IRA, read the pro-rata rule below first.
2. Open a traditional IRA and a Roth IRA at the same broker. This makes the conversion simple.
3. Contribute to the traditional IRA. Up to $7,500 for 2026, or $8,600 if you are 50 or older. You can do this until the April 2027 tax deadline.
4. Leave it in cash until the contribution settles, so there are no gains to tax.
5. Convert to your Roth IRA, usually a few days later. Most brokers have a “convert” button.
6. Invest the money inside the Roth IRA. Many people forget this step.
7. File Form 8606 with your tax return to report the non-deductible contribution and the conversion. This is how the IRS knows you already paid tax on that money.

The pro-rata rule: the big catch

When you convert, the IRS looks at all your traditional, SEP and SIMPLE IRA balances together as of December 31 of the year of the conversion. You cannot choose to convert only the after-tax money.

Example: you have $92,500 of old pre-tax money in a rollover IRA and add $7,500 of after-tax money. Your total is $100,000, and only 7.5% of it is after-tax. If you convert $7,500, only 7.5% of it, about $560, is tax-free. The other $6,940 is taxable income.

The common fix: roll your pre-tax IRA money into your current employer’s 401(k), if the plan accepts roll-ins. 401(k) balances do not count for the pro-rata rule. Do it before December 31 of the year you convert.

Other rules to know

• Your spouse: each spouse has their own IRAs and their own pro-rata calculation.
• The five-year rule for conversions: if you are under 59½, each converted amount must stay in the Roth for five years before you withdraw it, or you may owe a 10% penalty.
• Small gains: if the money earns a few dollars before you convert, those dollars are taxable. That is normal and small.
• You need earned income at least equal to your contribution.

The mega backdoor Roth

Some 401(k) plans allow after-tax contributions beyond the normal $24,500 limit, up to the total plan limit of $72,000 in 2026 including employer money. If your plan also allows in-plan Roth conversions or in-service withdrawals, you can move those after-tax dollars into a Roth. This can add tens of thousands a year to Roth savings. Ask HR whether your plan supports it. See 401(k) contribution limits for the numbers.

Is a backdoor Roth worth it?

For most high earners with no pre-tax IRA balances, yes. It is simple, costs nothing extra in tax, and every dollar inside a Roth grows tax-free for life, with no required minimum distributions. Over 25 years at 7%, $7,500 a year grows to about $474,000, all of it tax-free.

It is less attractive if you have large pre-tax IRA balances you cannot move into a 401(k). Compare the accounts in Roth vs traditional IRA, and see your growth in the Roth IRA calculator.

Frequently asked questions

Is the backdoor Roth legal?

Yes. It uses two legal steps, and the IRS has acknowledged the strategy. Report it correctly on Form 8606.

How long should I wait between contributing and converting?

There is no required waiting period. Many people wait a few days until the contribution settles. Some prefer a little longer to avoid any appearance of one combined step.

Can I do a backdoor Roth every year?

Yes, up to the yearly IRA limit, as long as your income stays above the Roth limit.

What if I already contributed directly to a Roth and earned too much?

You can recharacterize the contribution as a traditional IRA contribution before your tax deadline, then convert it. That fixes the excess.

This article is general information, not tax advice. The pro-rata rule and reporting can be tricky, so consider a tax professional.