Originally published January 2015. Last updated March 2026.
If you earn too much to contribute directly to a Roth IRA, there’s a legal workaround: the backdoor Roth. Here’s how it works and what to watch for.
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Who Needs a Backdoor Roth?
In 2025, you can contribute directly to a Roth IRA only if your modified adjusted gross income is below $150,000 (single) or $236,000 (married filing jointly). Above those limits, the contribution phases out. Above $165,000 (single) or $246,000 (married), you can’t contribute directly at all.
But there’s no income limit on contributing to a non-deductible traditional IRA, and no income limit on converting a traditional IRA to a Roth. The backdoor strategy uses both steps.
How to Do a Backdoor Roth (Two Steps)
- Contribute to a non-deductible traditional IRA: $7,000 ($8,000 if 50+) for 2025.
- Convert to a Roth IRA: Do this quickly, ideally within days, before the contribution earns significant investment gains. You’ll owe tax only on any gains between the contribution and conversion (usually minimal if done quickly).
The Pro-Rata Rule (This Is the Trap)
If you have other pre-tax IRA balances (traditional, SEP, SIMPLE), the IRS treats all your IRAs as one pool for conversion purposes. You can’t cherry-pick which dollars to convert.
Example: You have $93,000 in a traditional IRA (pre-tax) and make a $7,000 non-deductible contribution. Your total IRA balance is $100,000, of which only 7% is after-tax. If you convert $7,000, only $490 (7%) is tax-free. The other $6,510 is taxable.
The fix: Roll your pre-tax IRA balances into your employer’s 401(k) before doing the backdoor conversion. This removes the pre-tax dollars from the pro-rata calculation. If you don’t have a 401(k), the backdoor strategy may not be worth the tax hit.
Mega Backdoor Roth
Some 401(k) plans allow after-tax contributions above the normal $23,500 limit, up to $70,000 total (employee + employer contributions). If your plan allows in-service conversions of those after-tax dollars to a Roth account, you can potentially move $46,500+ per year into a Roth. This is the “mega backdoor” and it’s the single most powerful Roth savings tool available.
Not all plans allow it. Check with your HR department or plan administrator.
FAQ
Is the backdoor Roth legal?
Yes. Congress has been aware of it for years and has not closed the loophole. The Build Back Better Act of 2021 proposed eliminating it, but that provision did not become law.
Can I do a backdoor Roth every year?
Yes. Many high earners do this annually. The key is to keep the timing tight (contribute and convert quickly) and manage the pro-rata rule.
What if I already have a traditional IRA?
Roll it into your employer’s 401(k) first. If that’s not an option, calculate the tax impact of the pro-rata rule before proceeding. It may still be worth it if the pre-tax balance is small relative to the conversion.
Schedule a free 20-minute consultation to see if a backdoor Roth makes sense for your situation.
R.L. Brown Wealth Management
106 W Vine St, Suite 300, Lexington, KY 40507
859.317.5889
