Backdoor Roth
A backdoor Roth may let high earners fund a Roth IRA indirectly. The pro-rata rule across pre-tax IRA balances is the trap that determines whether it's efficient for you.
At a glance
- Category
- Retirement
- May be relevant for
- High earners above Roth limits
- Our approach
- Document review → proposal → implementation
- Service area
- Nationwide (office in Westlake Village, CA)
Whether this applies to you depends on your specific facts and circumstances.
Ask a CPA about your situationImportant: This page is for educational purposes only. It describes how this strategy may work under current law. Whether it is appropriate for you, and how to implement it correctly, depends entirely on your specific facts, timing, and documentation. This is not individualized tax advice. Speak with a licensed CPA before acting.
How it may work
Backdoor Roth — a plain-English overview
The sections below describe how this strategy works under current tax law, what conditions may make it applicable, and what factors affect the outcome.
Why high earners can't contribute directly
Roth IRA contributions phase out above certain modified adjusted gross income (MAGI) thresholds — currently approximately $146,000 single and $230,000 married filing jointly for 2025. Above the phase-out, direct Roth IRA contributions are disallowed. However, there is no income limit on non-deductible traditional IRA contributions, and there is no income limit on Roth conversions.
How the backdoor works
A non-deductible contribution is made to a traditional IRA (Form 8606 is required to establish basis). The contribution is then converted to a Roth IRA — typically promptly, to minimize any pre-conversion earnings that would be taxable on conversion. Because the converted amount consists of after-tax basis (non-deductible contribution), the conversion is generally tax-free if executed correctly. The result is a Roth IRA funded with after-tax dollars, with future earnings and qualified withdrawals being tax-free.
The pro-rata rule — the primary trap
If the taxpayer has other pre-tax IRA balances (traditional IRA, SEP-IRA, or SIMPLE IRA), the pro-rata rule applies. Each conversion is treated as coming from a blended pool of pre-tax and after-tax dollars proportional to total IRA balances. For example, if you have $90,000 of pre-tax IRA funds and make a $10,000 non-deductible contribution, a $10,000 conversion is 90% taxable — not tax-free. The pro-rata rule can substantially or entirely eliminate the tax efficiency of the strategy if pre-tax IRA balances exist.
The rollout option
One approach to the pro-rata problem: roll pre-tax IRA funds into an employer 401(k) or 403(b) plan (if the plan accepts rollovers), reducing or eliminating the pre-tax IRA balance before executing the backdoor Roth. Whether your plan accepts IRA rollovers requires checking the plan documents. Not all plans do.
Document-first
What we'd review before recommending this strategy
We do not guess. We review the documents, propose, and implement. Here is what we'd want to see to evaluate whether this strategy may apply to you.
- All existing IRA balances — traditional, SEP, SIMPLE, and rollover IRAs — for pro-rata calculation
- 401(k) or 403(b) availability and rollover acceptance — to potentially clear pre-tax IRA balances
- MAGI confirmation — to verify the direct Roth contribution limit is indeed phased out
- Basis tracking via Form 8606 — existing 8606 filings must be reviewed before proceeding
- Timing of contribution and conversion — typically in the same year to minimize interim earnings
- State tax treatment — some states do not conform to federal conversion treatment
Who this may fit
Profiles where this strategy comes up most
These are the client situations where we most commonly evaluate this strategy. Whether it applies to you depends on your specific facts.
Common Questions
Questions about Backdoor Roth
Educational answers to questions we often hear when discussing this strategy with clients.
Is the backdoor Roth 'allowed'?
Yes. The IRS has confirmed in its FAQs that the step-transaction doctrine does not apply to invalidate this technique — sometimes called the 'Roth conversion' safe harbor. Congress was aware of the practice and has not moved to eliminate it, though this could change. We track legislative proposals that would affect this technique.
Can we do this every year?
Yes, one non-deductible traditional IRA contribution per year (up to the annual IRA contribution limit) followed by a conversion is a repeatable annual technique, assuming the pro-rata issue is managed and the mechanics are correct each year.
Educational content only
This page describes Backdoor Roth for general educational purposes under current tax law. It is not individualized tax, legal, or investment advice. Whether this strategy is appropriate for you — and how it should be structured, documented, and reported — depends entirely on your specific facts, timing, and circumstances. Tax law changes frequently. Always consult a licensed CPA before acting on any information here.
We do not guess. We review the documents, propose, and implement.
Ask a CPA
Wondering if Backdoor Roth applies to you?
Tell us about your situation and we'll follow up within one business day. We review the actual documents and give you a direct answer — no obligation.
- Document-first review — we start with your actual returns and records
- Clear explanation of what may apply and why
- No obligation — honest if there isn't enough value to act on
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Ready to find out what applies to your situation?
A discovery call is how we start. We review the documents and tell you honestly what may be worth pursuing.