Tax & Retirement

What is Backdoor Roth IRA?

A legal two-step IRS strategy allowing high earners above the Roth MAGI phase-out limit to contribute to a Roth IRA via a non-deductible Traditional IRA conversion.

What is a Backdoor Roth IRA?

In 2026, single filers with a Modified Adjusted Gross Income (MAGI) above $165,000 (and married couples filing jointly above $246,000) are barred from contributing directly to a Roth IRA. However, federal tax law places no income limit on making a non-deductible Traditional IRA contribution or converting a Traditional IRA to a Roth IRA.

The 3-Step Execution Process

Contribute: Deposit up to $7,000 ($8,000 if age 50+) into an empty Traditional IRA as a non-deductible contribution (leaving the cash in the settlement fund).
Convert: Once the deposit settles (1–2 business days), convert 100% of the Traditional IRA balance into your Roth IRA at the same brokerage (such as Fidelity, Charles Schwab, or Robinhood).
File IRS Form 8606: Report your non-deductible basis on Form 8606 with your annual tax return so the conversion is 100% tax-free.