Backdoor Roth IRA: Step-by-Step Guide

Who actually needs this

For 2026, the IRS phases out direct Roth IRA contributions for higher earners. If your income is above that range, direct contributions are off the table. The backdoor route still lets you get money into a Roth through a conversion. Check the current IRS figures to see where the phaseouts start.

The two steps, in order

First, make a nondeductible contribution to a traditional IRA, up to the annual IRA limit ($7,500 for 2026 per the site's IRS figures). Second, convert that traditional IRA balance to a Roth IRA. The conversion itself has no income limit, which is why this path exists. You report both steps on your tax return using Form 8606.

The pro-rata rule warning

The pro-rata rule is the trap. If you hold pre-tax money in any traditional, SEP, or SIMPLE IRA, the IRS treats your conversion as coming proportionally from all of them. That means part of your conversion is taxable, even if you converted only the new contribution. Rolling old pre-tax IRA money into a 401(k) first can clear the path.

The calendar split: contribute for last year, convert this year

You can make a prior-year IRA contribution up until the tax filing deadline, usually April 15. The conversion, though, always counts in the calendar year it happens. Contribute in February for the prior year, convert in March, and your paperwork spans two tax years: the contribution on last year's Form 8606, the conversion on this year's. That's normal. Just don't mix up which form reports which step.

The paper trail: 5498, 1099-R, and 8606

Your custodian reports the contribution to the IRS on Form 5498 and the conversion on Form 1099-R. Your job is Form 8606, where you report the nondeductible contribution and figure the taxable part of the conversion. File it every year you touch this strategy, even in years you only contributed and didn't convert. Skipping it is how after-tax basis gets lost and conversions get taxed twice.

You need earned income to play

IRA contributions require compensation: wages, salaries, self-employment income, and a few similar kinds. Investment income, rental income, and Social Security don't count. Your contribution can't exceed what you earned that year. A nonworking spouse can still contribute through a spousal IRA as long as the working spouse earned enough to cover both.

Your records checklist

1. Confirm your income is above the direct Roth phaseout for the year.
2. Make a nondeductible traditional IRA contribution within the annual limit.
3. Convert the balance to a Roth IRA; keep the two steps documented.
4. File Form 8606 with your tax return to track after-tax basis.

Common questions

Do I pay taxes on the backdoor Roth conversion?

The conversion is tax-free if you convert only after-tax money with no earnings. Any growth before the conversion is taxable as ordinary income. This is why many people convert quickly after contributing.

Can I do a backdoor Roth every year?

Yes, as long as you have earned income and the rules stay the same. The annual IRA contribution limit caps each year's amount. Many people repeat the two steps each January.

Can I undo a backdoor Roth if I mess it up?

Conversions can't be undone. Congress eliminated recharacterization of Roth conversions starting in 2018. If you converted the wrong amount or at the wrong time, it stays converted. That's why people convert quickly after contributing and double-check the pro-rata math first.

What are the 2026 Roth IRA income limits that make the backdoor necessary?

Direct Roth contributions phase out from $153,000 to $168,000 of modified adjusted gross income for single filers, and $242,000 to $252,000 for joint filers. Above those ranges, the backdoor route is the way in.

Sources and current instructions

Check the tax year and any later updates before acting. These are the primary sources used for this guide.

• Source: IRS individual retirement arrangements (IRAs)
• Source: IRS Roth IRAs
• Source: IRS Publication 590-A
• IRS: About Form 8606, Nondeductible IRAs