Roth IRAs come with an income ceiling: earn above the annual limit and you cannot contribute directly. But there is no income limit on converting money to a Roth. The backdoor Roth IRA stitches those two facts together into a legal, IRS-acknowledged workaround that lets high earners get money into a Roth every year.
The two-step move
- Contribute to a traditional IRA. Put up to the annual limit ($7,000 for 2025, or $8,000 if you are 50+) into a traditional IRA as a nondeductible contribution. Because you are over the income limit, you take no deduction — this is after-tax money going in.
- Convert it to a Roth IRA. Shortly after, convert that traditional IRA balance to a Roth. Since the contribution was already after-tax, there is little or no additional tax on the conversion — only on any gains earned in between.
You report the nondeductible contribution on Form 8606, which tracks your after-tax "basis" so you are not taxed twice. The result: $7,000 of new Roth money despite being over the direct-contribution limit.
See where your income lands →The free calculator shows your marginal bracket — useful context for whether a backdoor Roth or other moves make sense this year.The pro-rata rule — the trap that catches everyone
This is the part people get wrong. The IRS does not let you cherry-pick and convert only your after-tax dollars. Under the pro-rata rule, the taxable portion of any conversion is based on the ratio of pre-tax to after-tax money across all your traditional, SEP, and SIMPLE IRAs combined, measured at year-end.
Example: if you have $93,000 of pre-tax money in a rollover IRA and add a $7,000 nondeductible contribution, your IRAs are 93% pre-tax. Converting $7,000 means about 93% of it — roughly $6,510 — is taxable, even though you "meant" to convert only the new after-tax money. The clean backdoor Roth only works well when you have little or no existing pre-tax IRA balance.
The fix: roll pre-tax IRAs into a 401(k). Employer 401(k) balances are not counted in the pro-rata calculation. If your workplace plan accepts incoming rollovers, moving your pre-tax IRA money into the 401(k) first empties the "IRA bucket," so a subsequent backdoor Roth converts cleanly with essentially no tax.
Mega-backdoor Roth: the bigger cousin
If your 401(k) plan allows after-tax contributions (a separate bucket beyond the normal $23,500 deferral) and permits in-plan Roth conversions or in-service withdrawals, you may be able to funnel tens of thousands more into Roth each year — the mega-backdoor Roth. It only works if your specific plan offers both features, so check the plan documents or ask HR before counting on it.
Is it legal?
Yes. The backdoor Roth has been widely used for years, and Congress has acknowledged the technique in legislative history. That said, execution details matter — the pro-rata rule, Form 8606, the timing of the conversion, and any gains between steps — and there have been periodic legislative proposals to curtail it. Because a mistake can create unexpected taxable income, many people have a CPA handle the first one and confirm the strategy still applies for the current tax year.