The Roth IRA has an income ceiling. For 2026, direct contributions phase out between $153,000 and $168,000 of modified adjusted gross income for single filers, and between $242,000 and $252,000 for married couples filing jointly. Above those thresholds, the IRS says no — at least, not directly.
The "backdoor Roth" is a two-step maneuver that gets money into a Roth IRA anyway, and it's completely legal. It's not a loophole in the sense of exploiting a mistake in the tax code — it's a documented, IRS-acknowledged path that exists because of how two separate rules interact.
The two steps
Step one: contribute to a Traditional IRA. Unlike Roth contributions, Traditional IRA contributions have no income limit — anyone with earned income can contribute up to the annual limit ($7,500 for 2026, $8,600 if you're 50 or older). At high income, this contribution typically isn't deductible, so you're contributing after-tax dollars into a Traditional IRA.
Step two: convert that Traditional IRA balance to a Roth IRA. Roth conversions have no income limit at all — anyone can convert any amount, regardless of how much they earn. Because the contribution was already after-tax, converting it shortly afterward triggers little or no additional tax, since there's little or no pre-tax growth to be taxed yet.
Put together: contribute after-tax money to a Traditional IRA, then convert it to a Roth IRA almost immediately. The money ends up in a Roth, growing tax-free, despite an income level that would have blocked a direct contribution.
The rule that trips people up: pro-rata
This strategy works cleanly when the only money in your Traditional IRA is the after-tax contribution you just made. It gets complicated — and can generate an unexpected tax bill — if you already hold other pre-tax money in any Traditional, SEP, or SIMPLE IRA.
The IRS applies what's called the pro-rata rule: when you convert, you can't cherry-pick only the after-tax dollars to convert tax-free. The conversion is treated as coming proportionally from all your IRA dollars combined — pre-tax and after-tax together — across every Traditional, SEP, and SIMPLE IRA you own (employer 401(k)s aren't included in this calculation).
Example: if you have $93,000 of pre-tax money sitting in an old rollover IRA and you contribute a new $7,500 after-tax amount, your total IRA balance is $100,500, of which only 7.5% is after-tax. Convert that $7,500, and the IRS treats 92.5% of the converted amount as taxable — not the clean, tax-free conversion you were expecting.
This is the single most common way people mess up a backdoor Roth: they don't realize an old 401(k) rollover sitting in a Traditional IRA changes the math entirely.
How people work around the pro-rata problem
The most common fix is rolling existing pre-tax IRA money into a current employer's 401(k), if the plan accepts incoming rollovers — this removes that money from the pro-rata calculation, since 401(k) balances aren't counted. Once the only money left in any IRA is the fresh after-tax contribution, the conversion is clean again.
This is exactly why it's worth checking your full IRA picture — including old employer plans you rolled over years ago — before doing a backdoor Roth for the first time, not after.
Other things worth knowing
- File Form 8606. This form tracks your after-tax "basis" in IRAs, so you don't get taxed twice on the same money later. Skipping it is a common, avoidable mistake.
- There's no dollar limit on the conversion step — the limit only applies to the initial contribution. This is what makes a related strategy, the "mega backdoor Roth" through certain 401(k) plans, able to move much larger amounts.
- Timing matters less than people think. Waiting a few days or weeks between the contribution and the conversion doesn't cause a problem on its own — what matters is whether there was meaningful growth (and therefore taxable gain) between the two steps, and whether the pro-rata rule applies.
The takeaway
The backdoor Roth is a well-established, IRS-recognized strategy for high earners who are otherwise locked out of Roth contributions — but it's a strategy with a specific failure mode, and that failure mode is almost always a forgotten pre-tax IRA balance sitting somewhere else. Before doing this for the first time, take stock of every Traditional, SEP, and SIMPLE IRA you hold, not just the new account you're about to fund.