Backdoor Roth IRA: What It Is and How to Set It Up
Roth IRAs have annual income limits, but there is a way for high earners to sidestep this requirement.
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Lead Writer What is a backdoor Roth?
A backdoor Roth is a strategy that allows high-income earners to contribute indirectly to a Roth IRA if their income level is too high to make a direct contribution. Instead, they'll contribute to a traditional IRA, then convert it to a Roth account to take advantage of tax-free growth and withdrawals.
» Learn more about other types of Roth IRA conversions.
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Who can set up a backdoor Roth IRA?
Anyone can complete a backdoor Roth IRA if they want to move funds from their traditional IRA to a Roth IRA account. However, most people who take on a backdoor Roth do so because their modified adjusted gross income (MAGI) is above the Roth IRA income limit, which prevents them from making a direct contribution.
For 2025, the Roth IRA income limit is $165,000 for single filers and $246,000 for married filing jointly. For 2026, those Roth IRA income limits are $168,000 for single filers and $252,000 for married filing jointly . Whether a backdoor Roth is right for your situation depends on a few other factors we'll detail below (skip ahead here ).
Below these income limits, you can make a full or partial contribution directly to a Roth IRA up until the Tax Day deadline.
» Learn more: Roth IRA income limits and contribution limits
How to do a backdoor Roth conversion
Follow these steps to do a backdoor Roth IRA conversion.
1. Put money in a traditional IRA.
You might already have an account, or you might need to open one and fund it.
2. Convert your contribution to a Roth IRA.
Your IRA administrator will give you the instructions and paperwork. If you don’t already have one, you’ll open a new Roth IRA during the conversion process. If you'd rather have someone take on this work for you, many financial advisors offer support in handling backdoor Roth conversions for their clients.
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When it comes to rolling over your money, you can choose to convert any amount you'd like — rollovers are not subject to the annual limit.
3. Prepare to pay taxes.
Only post-tax dollars go into Roth IRAs. So, if you deducted your traditional IRA contributions on your tax return and then decide to convert your traditional IRA to a backdoor Roth, you’ll need to be prepared to pay income tax on the money you converted to a Roth. The pro rata rule, described below, plays a big part in determining your tax bill.
Backdoor Roth IRA rules
Keep these rules in mind to avoid penalties.
1. Only certain types of transfers are allowed.
The conversion needs to be one of the following:
- A rollover, where you receive the money from your traditional IRA and deposit it into the Roth IRA within 60 days.
- A trustee-to-trustee transfer, where the traditional IRA provider sends the money directly to your Roth IRA provider.
- A "same trustee transfer," where your money goes from the traditional IRA to the Roth at the same financial institution.
2. There's a pro rata rule for backdoor Roths.
If your traditional IRA is made of dollars you contributed both pretax and after-tax, the IRS requires rollovers to Roth IRAs to be done pro rata — that is, the rollover must include shares of pretax and after-tax contributions that are proportional to the overall account. This matters because of the implications for your tax bill.
To calculate pro rata, you’ll need to know:
- The total balance of your traditional IRAs.
- The total amount of your pretax contributions.
To determine the share of your total balance that is composed of pretax contributions, divide the pretax total by the total balance.
For example, if the total balance of your traditional IRAs is $100,000 and $70,000 of that is from pretax contributions, then 70% of your total IRA balance is composed of pretax contributions. This ratio determines what percentage of the money you convert to a Roth is going to be taxable.
In this example, no matter how much money you convert or which IRA you pull the money from, 70% of the amount you convert to the Roth will be taxable. You can't choose to convert only after-tax money; the IRS won't allow it .
And a word about timing: the IRS applies the pro rata rule to your total IRA balance at year-end, not at the time of conversion.
» Need help? Search for a financial advisor near you
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When to avoid a backdoor Roth IRA
A backdoor Roth IRA isn’t always worth it. It may not be a good idea if:
- The only way you can pay the taxes due is with money from your IRA withdrawal. Not only are you sacrificing any future investment growth on that money, but also there's the risk that, if you're under age 59 ½, you'll owe a 10% early withdrawal penalty on that money .
- You'll need the money in five years or less. Money converted from an IRA to a Roth IRA falls under a Roth five-year rule: If you don't wait five years to withdraw it, you could owe taxes and a 10% penalty.
- The withdrawal from your IRA can push some of your income into a higher tax bracket. It's generally a good idea to convert just enough that you're not pushed into paying a higher tax rate that year.
» Ready to get started? See our picks for the best Roth IRAs
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- 1. Internal Revenue Service. 401(k) limit increases to $24,500 for 2026, IRA limit increases to $7,500. Accessed Nov 14, 2025.
- 2. Internal Revenue Service. Rollovers of After-Tax Contributions in Retirement Plans. Accessed Nov 14, 2025.
- 3. Internal Revenue Service. Retirement Topics - Exceptions to Tax on Early Distributions. Accessed Nov 14, 2025.
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