How does a backdoor Roth work?
Step-by-step, with the pro-rata trap.
If your income exceeds the Roth IRA limit, you can still contribute via the backdoor Roth. Two steps: contribute to a Traditional IRA, then convert to Roth. This page walks through the mechanics, the pro-rata rule that trips up most people, and how to report it on Form 8606.
Earn too much for a direct Roth IRA contribution? Contribute to a Traditional IRA (non-deductible), then immediately convert to Roth. It's legal, IRS-sanctioned, and works at any income level. The catch: the pro-rata rule. If you have existing pre-tax IRA balances, part of the conversion is taxable.
- Backdoor Roth: (1) contribute to Traditional IRA (non-deductible), (2) convert to Roth, (3) pay tax only on gains between steps.
- No income limit on Traditional IRA contributions or Roth conversions. The "backdoor" is just combining two unrestricted moves.
- Pro-rata trap: if you have $50K pre-tax in a Traditional IRA and convert $7,500, ~87% of the conversion is taxable.
- The fix: roll pre-tax IRA balances into your 401(k) before doing the backdoor. This zeroes out the pro-rata calculation.
- Mega backdoor Roth: some 401(k) plans allow after-tax contributions up to $69,000 total, then in-plan Roth conversion.
This is the mechanics as of 2026. Tax law changes. Verify current limits and rules on IRS.gov before executing. The pro-rata rule is where most people lose money; read that section carefully. Not financial or tax advice.
Two steps. Contribute to a Traditional IRA (no deduction because your income is too high). Convert that balance to Roth. The trap: if you have other pre-tax IRA money anywhere (Traditional IRA, SEP, SIMPLE), the pro-rata rule makes your conversion partially taxable. Roll those old balances into your 401(k) first so the backdoor works cleanly.
Who needs the backdoor
Roth IRA direct contribution phase-outs for 2026 verify×DON'T TRUST, VERIFYClaim: 2026 Roth IRA MAGI phase-out: Single $153,000-$168,000, MFJ $242,000-$252,000.Verify at: IRS Roth IRA contribution limits ↗Phase-outs indexed for inflation. The IRS publishes the official 2026 figures in its annual inflation-adjustment Rev. Proc.:
- Single: $153,000 to $168,000 (phase-out range)
- Married filing jointly: $242,000 to $252,000
Above these limits, direct Roth contribution is not allowed. The backdoor route is always available, regardless of income.
The pro-rata rule, the trap most people hit
If you have any pre-tax IRA money (Traditional IRA, SEP IRA, SIMPLE IRA), the IRS treats ALL your IRAs as a single account for calculating the taxable portion of your conversion verify×DON'T TRUST, VERIFYClaim: The pro-rata rule applies across all traditional, SEP, and SIMPLE IRAs when calculating taxable portion of a Roth conversion.Verify at: Form 8606 instructions ↗401(k)s are excluded from the calculation, which is why the rollover fix works.. 401(k)s are excluded from the calculation, which is the workaround.
- Existing Traditional IRA: $50,000 (all pre-tax)
- New non-deductible contribution: $7,500
- Total IRA money: $57,500
- Non-deductible portion: 13% tax-free on conversion
- Pre-tax portion: 87% taxable on conversion
- Instead of a clean tax-free conversion, you owe income tax on $6,525 of the $7,500
The fix
Roll your existing pre-tax Traditional IRA into your employer 401(k) plan if it accepts incoming rollovers. Most large-employer plans do. After that rollover, you have no pre-tax IRA money, the pro-rata rule does not apply to your backdoor conversion, and the backdoor works cleanly. Do this step first. Do not contribute to the Traditional IRA and then figure out the rollover later.
Step-by-step at Fidelity
Step 1: Contribute to Traditional IRA
- Log in to Fidelity. Open a Traditional IRA if you do not have one.
- Navigate to the Traditional IRA, click "Contribute."
- Amount: $7,500 (2026 limit under 50) or $8,600 (50+) verify×DON'T TRUST, VERIFYClaim: 2026 IRA contribution limits estimated at $7,500/$8,600. Confirm when IRS publishes final figures.Verify at: IRS IRA limits ↗Annually indexed for inflation..
- Select "Non-deductible" if prompted.
- Keep the contribution in cash. Do NOT invest it before converting.
- Wait 1 to 3 business days for the contribution to settle.
Step 2: Convert to Roth IRA
- Open a Roth IRA at Fidelity if you do not have one.
- Navigate to your Traditional IRA, select "Convert to Roth IRA."
- Select the amount. Select destination Roth IRA. Confirm.
Step 3: Invest the converted funds
Now that the money is in the Roth IRA, invest per your plan. Index funds, target date funds, or whatever your allocation calls for.
Step 4: Report on Form 8606
When you file your taxes: Form 8606 Part I reports the non-deductible contribution. Part II reports the conversion. This establishes your basis and prevents double taxation. Most tax software handles this if you correctly enter the 1099-R from the conversion and the Form 5498 from the contribution verify×DON'T TRUST, VERIFYClaim: Form 8606 Parts I and II are required to correctly report backdoor Roth contributions and conversions.Verify at: Form 8606 instructions ↗Missing Form 8606 filings can lead to double taxation years later..
Timing pitfalls
If $7,500 grows to $7,600 before you convert, the $100 gain is taxable income. Keep it in money market until converted.
Cleaner Form 8606 reporting. Technically the contribution can be for the prior year until April 15, but match the conversion year when possible.
You will receive a 1099-R for the conversion. Expected. Code 2 or 7 in Box 7. Report it correctly.
See the glossary for plain-English definitions of every term used here.
Related
Last updated 2026-04-22. Not financial or tax advice. Consult a CPA for your specific situation.
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