Backdoor Roth IRA: What It Is and How to Set One Up

A backdoor Roth IRA lets you convert a traditional IRA to a Roth, even if your income is too high for a Roth IRA.
Andrea CoombesSep 23, 2021

Many or all of the products featured here are from our partners who compensate us. This may influence which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money.

The investing information provided on this page is for educational purposes only. NerdWallet does not offer advisory or brokerage services, nor does it recommend or advise investors to buy or sell particular stocks or securities.

A backdoor Roth IRA is a way for people with high incomes to sidestep the Roth's income limits.

Basically, a backdoor Roth IRA boils down to some fancy administrative work: You put money in a traditional IRA, convert your contributed funds into a Roth IRA, pay some taxes and you're done. Even though you didn’t qualify to contribute to a Roth, you get to go in the back door anyway, no matter what your income.

That's good news, because your money grows tax-free -- and that's a pretty sweet perk when it comes time to take your money out in retirement.

About those Roth IRA income limits: For 2021, the government allows only those people with modified adjusted gross incomes below $208,000 (married filing jointly) or $140,000 (single) to contribute to a Roth IRA.

If your income is above the limit, a backdoor Roth might be a good solution for you. (Check out this story for more on .)

» Ready to get going? Check out our top picks for .

Here’s a step-by-step guide on how to make a backdoor Roth IRA conversion:

» Learn more about

Keep these rules in mind to avoid penalties:

A backdoor Roth IRA is probably a bad idea if ...

On a similar note...
Dive even deeper in Investing