Backdoor Roth IRA, step-by-step at Fidelity.

Before you start: prerequisites

• You have a Fidelity account. If not, open one first. The full backdoor walkthrough at a different broker (Schwab, Vanguard, etc.) has the same logic but different button labels.
• You have earned income. IRA contributions require earned income (wages, self-employment, or qualifying alimony). A non-working spouse can use the earned income of the working spouse via a spousal IRA.
• You have $0 in any pre-tax Traditional, SEP, or SIMPLE IRA at the end of the calendar year. If you have pre-tax IRA balances, the pro-rata rule applies and the strategy is meaningfully less efficient. See the pro-rata section below.
• It is before April 15 of the year following your contribution year. IRA contributions can be made up to the tax filing deadline.

Step 1: Open a Traditional IRA (if you don't already have one)

At Fidelity, log in and go to Accounts & Trade → Account Positions → Open an Account. Pick "Traditional IRA." Name the account something obvious like "Backdoor Roth Holding." The account opens with a $0 balance, ready to receive contributions.

If you already have a Traditional IRA that has been used as a rollover destination for old 401(k)s, you have a pro-rata problem. Don't make the contribution yet; read the pro-rata section first.

Step 2: Contribute non-deductible to the Traditional IRA

Transfer the IRA contribution limit ($7,500 in 2026, or $8,600 if 50+) from your linked bank account or Fidelity Cash Management Account into the new Traditional IRA. Make sure the contribution is designated for the correct tax year (the platform asks; check 2026 if making the contribution in 2026, or 2025 if making it before April 15, 2026, intended for 2025).

Critical: do not invest the contribution. Leave it as cash (the SPAXX core position is fine). If you invest it and the position gains value before you convert, the gain becomes a taxable event in step 4.

The contribution is technically deductible if you are under the income limits and don't have an employer retirement plan. For backdoor Roth users this is rarely the case; the contribution will be reported as non-deductible on Form 8606 at tax filing.

Step 3: Open a Roth IRA (if you don't already have one)

Same flow as step 1, but pick "Roth IRA" this time. This is the destination for the conversion. Leave the balance at $0 for now.

Step 4: Convert Traditional to Roth

At Fidelity, go to Transact → Transfer → Roth ConversionRoth conversionMoving money from a tax-deferred retirement account (where you'll owe tax later) into a Roth account (where everything grows and comes out tax-free). You pay regular income tax this year on the amount moved.Full definition. Select the Traditional IRA as the source and the Roth IRA as the destination. Convert 100% of the balance. The conversion is processed the same business day.

Withholding: Fidelity asks if you want federal income tax withheld from the conversion. Select 0% (no withholding). The non-deductible contribution has no taxable gain (because you kept it as cash), so there is nothing to tax. If you let Fidelity withhold, you create a deduction on the wrong side of the ledger.

After the conversion, your Traditional IRA balance is back to $0 and your Roth IRA has $7,500 of post-tax dollars ready to invest.

Step 5: Invest the Roth IRA

Now invest the $7,500. The Roth wrapper means all future gains are tax-free at retirement, so the most asymmetric assets get the most leverage from being inside. Common defaults:

• FZROX · Fidelity total US stock market, 0.00% expense ratioexpense ratioThe yearly fee an investment fund charges, taken as a small slice of your balance. A 0.03% ratio costs $3 per year on every $10,000 invested. Lower is better.Full definition
• FXAIX · Fidelity 500 index, 0.015% expense ratio
• FBTC · Fidelity spot Bitcoin ETFExchange-Traded Fund (ETF)A basket of investments (stocks, bonds, or Bitcoin) that trades on a stock exchange like a single share. (if Bitcoin allocation is part of the plan)

See index funds for portfolio construction inside the Roth.

Step 6: File Form 8606 with your taxes

Form 8606 (Nondeductible IRAs) reports the non-deductible contribution to the Traditional IRA AND the conversion to the Roth IRA verify×DON'T TRUST, VERIFYClaim: Form 8606 is required to report non-deductible IRA contributions and Roth conversions.Verify at: IRS Form 8606 ↗Form 8606 has been the required reporting vehicle for non-deductible IRAs since 1987. Penalty for failing to file: $50 per missing form.. Tax software (TurboTax, FreeTaxUSA, H&R Block) handles this automatically if you enter the contribution and conversion correctly during the IRA section. If you prepare returns manually, file Form 8606 with your 1040.

Keep a copy of every Form 8606 you ever file. The IRS uses them to track basis across years. Losing the basis history can cost real money if you have non-deductible IRA balances later in life.

The pro-rata problem

The single biggest pitfall in the backdoor Roth. If you have any pre-tax balance in any Traditional, SEP, or SIMPLE IRA on December 31 of the year of conversion, the IRS treats the conversion proportionally as a mix of pre-tax and post-tax dollars verify×DON'T TRUST, VERIFYClaim: Pro-rata rule applies based on total pre-tax IRA balance across Traditional, SEP, and SIMPLE IRAs on December 31.Verify at: IRS Publication 590-A ↗Pro-rata rule comes from IRC Section 408(d)(2). The aggregation rule is widely misunderstood; verify against the IRS publication..

The fix: move any pre-tax IRA balance into your current employer's 401(k) before December 31 of the conversion year. Employer plans are excluded from the IRA aggregation calculation. After the rollover, your IRA balance is $0 plus the new $7,500 non-deductible contribution, and the conversion is fully tax-free. Use the pro-rata calculator to see your specific math before deciding.

Timing: same calendar year is best

Contributing in one tax year and converting in the next is allowed but creates two years of Form 8606 paperwork. Doing both in the same calendar year is cleaner. The whole maneuver can happen in fifteen minutes on a single afternoon.

A common annual cadence: contribute in early January for the current tax year, convert the next business day. Repeat each year.

Common questions

Related reading

• Backdoor Roth IRA · the conceptual companion (the "why")
• Pro-rata calculator · model your specific situation
• Mega backdoor Roth
• 2026 contribution limits
• High-income tax strategy · the umbrella for $200K+ households