What is a backdoor Roth IRA?

A backdoor Roth IRA is a two-step way to put money into a Roth individual retirement account (IRA) when your income is too high to contribute directly: a nondeductible contribution to a traditional IRA, followed by a conversion of that money to a Roth IRA.

A conversion is taxed only on money that hasn't already been taxed, so a nondeductible contribution converted before it earns anything, with no other pre-tax IRA money in the picture, produces no tax beyond any earnings.

The Internal Revenue Service (IRS) treats each step under its ordinary rules, one as an IRA contribution and the other as a Roth conversion, and both land on Form 8606.

Who uses a backdoor Roth IRA?

For 2026, the amount a taxpayer can contribute directly to a Roth IRA phases 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, according to IRS Publication 590-A. At or above the top of those ranges, direct contributions aren't allowed.

Traditional IRAs carry no income ceiling on contributions; the same publication states there is no upper limit on how much you can earn and still contribute.

Income determines only whether the contribution is deductible, and for someone covered by a workplace retirement plan with income above the Roth limits, it generally isn't.

Conversions have had no income limit since 2010, when a provision of the Tax Increase Prevention and Reconciliation Act of 2005 repealed the old $100,000 cap, as the Journal of Accountancy reported. Combined, those rules let a high earner reach a Roth IRA through the traditional IRA.

The 2026 limit on combined traditional and Roth IRA contributions is $7,500, or $8,600 for people 50 and older. The IRS adjusts these figures each fall, and its IRA contribution limits page lists the current year's numbers.

Physicians whose income falls below the phase-out range can contribute to a Roth IRA directly and have no need for the two-step route.

How does a backdoor Roth IRA work, step by step?

1. Make a nondeductible contribution to a traditional IRA. Contributions for a tax year can be made until the return's due date, not counting extensions, which for 2025 contributions was April 15, 2026, according to Publication 590-A. A contribution made between Jan. 1 and April 15 should be designated for the correct year with the IRA sponsor, or the sponsor can report it as a current-year contribution.
2. Convert the money to a Roth IRA. The IRS lists three ways to convert: a 60-day rollover, a trustee-to-trustee transfer or a transfer between two IRAs at the same institution. Any untaxed amount converted is taxable, including earnings that build up between the contribution and the conversion.
3. Report both steps on Form 8606 when you file your federal return. The instructions for Form 8606 cover nondeductible contributions in Part I and conversions in Part II.

What is the pro-rata rule?

Form 8606 figures the tax-free share of a Roth conversion as a ratio: your after-tax basis divided by the Dec. 31 value of all your traditional IRAs, plus the amount converted and any other distributions that year.

The ratio applies to every dollar converted, so there is no way to convert only the after-tax portion of an IRA balance.

For this calculation, the form counts traditional simplified employee pension (SEP) IRAs and traditional Savings Incentive Match Plan for Employees (SIMPLE) IRAs as traditional IRAs. A SEP IRA opened for moonlighting or locums income is part of the total.

The balance used is the one on Dec. 31 of the conversion year, not the day of the conversion. A 401(k) rolled into a traditional IRA in November, after a job change for example, enters the calculation even if the conversion happened in February.

The ratio is figured for each person separately. If both spouses must file Form 8606, each files a separate form, according to the instructions, and a spouse's IRA isn't part of the other spouse's calculation.

Balances in workplace plans such as a 401(k), 403(b) or 457(b) aren't IRAs and don't enter the Form 8606 ratio.

Pre-tax IRA money moved into a workplace plan before Dec. 31 leaves the calculation, but a plan isn't required to accept rollover contributions, according to the IRS, and can do so only if its plan language allows it.

A pro-rata example

A physician younger than 50 with no basis from prior years makes a $7,500 nondeductible contribution for 2026 during 2026 and converts the full $7,500 to a Roth IRA the same year.

On Dec. 31, 2026, the physician also holds $92,500 in a traditional IRA rolled over from a former employer's 401(k). To keep the math simple, the example assumes no earnings.

In this example, 92.5% of the conversion is taxable, and $6,937.50 of after-tax basis stays behind in the traditional IRA for future years.

With no other traditional IRA money on Dec. 31, line 6 would be $0, line 10 would be 1.000, and the $7,500 conversion would carry no tax.

How is a backdoor Roth IRA reported on Form 8606?

Part I of Form 8606 records the nondeductible contribution, which creates basis, and runs the pro-rata calculation. Part II reports the conversion, and the taxable amount on line 18 carries to line 4b of Form 1040.

The contribution is reported on the form for the tax year it's made for; the conversion is reported on the form for the calendar year it happens.

A contribution made in February 2027 for tax year 2026 goes on line 1 of the 2026 form, and if it's converted in 2027, the conversion goes on the 2027 form. Basis carries from line 14 of one year's form to line 2 of the next, per the instructions.

Form 8606 is required for a nondeductible contribution even if you aren't otherwise required to file a return, according to Publication 590-A.

Failing to file a required Form 8606 carries a $50 penalty, and overstating nondeductible contributions carries a $100 penalty, unless there was reasonable cause.

Unreported nondeductible contributions are treated as deductible when withdrawn, which means that money can be taxed a second time unless you can show the contributions were made.

The IRS says to keep copies of each Form 8606, the Forms 5498 your IRA custodian sends showing contributions and year-end values, and the Forms 1099-R reporting distributions until all the money has been withdrawn. A Form 8606 can be corrected by filing a new one with Form 1040-X within the amended-return deadline.

What other conversion rules apply?

A conversion made on or after Jan. 1, 2018, can't be undone. The Tax Cuts and Jobs Act (TCJA) ended recharacterization of Roth conversions, according to the IRS, though a regular contribution can still be recharacterized from one type of IRA to the other by the return's due date, including extensions.

Each conversion also starts its own five-year period for the 10% additional tax on early distributions.

If you're younger than 59½ and withdraw converted money within five years, counted from the first day of the tax year of the conversion (Jan. 1 for most people), the additional tax can apply to the part of the conversion that was included in income, according to Treasury regulations and Publication 590-B.

Is the backdoor Roth IRA legal?

The conference committee's explanatory statement for the TCJA in 2017 noted that a person whose income exceeds the Roth contribution limits can contribute to a traditional IRA and convert it to a Roth IRA, in House Report 115-466.

In November 2021, the House passed a version of the Build Back Better Act that would have barred converting after-tax IRA contributions to a Roth beginning in 2022, the American Society of Pension Professionals & Actuaries reported. That provision never became law.

The One Big Beautiful Bill Act, signed July 4, 2025, made no changes to IRA rules, according to IRA Help, the analysis site of IRA education firm Ed Slott and Company.

Where can physicians check their own numbers?

The IRS sources behind this explainer are the place to start: Publication 590-A for contributions and conversions, Publication 590-B for distributions and the five-year rule, and the Form 8606 instructions for the line-by-line math.

The Dec. 31 value needed for line 6 appears on the year-end statement IRA custodians send, which should arrive by Jan. 31.

A SEP IRA, a rollover still in transit at year-end or basis from contributions made years ago each changes the ratio, and a certified public accountant or enrolled agent can run the calculation with actual account values.

Frequently asked questions

Can I do a backdoor Roth IRA if I have a 401(k) or 403(b)?

Yes. Workplace plans such as a 401(k), 403(b) or 457(b) aren't IRAs, so their balances don't enter the Form 8606 pro-rata calculation. Being covered by a workplace plan affects only whether a traditional IRA contribution is deductible.

Does my spouse's IRA count toward the pro-rata rule?

No. Each spouse who must file Form 8606 files a separate form, and the calculation uses only that person's own traditional, SEP and SIMPLE IRA balances.

Do I owe tax on a backdoor Roth conversion?

Only on the part of the conversion that isn't after-tax basis. That includes earnings between the contribution and the conversion and, under the pro-rata rule, a share of any pre-tax money in your traditional, SEP or SIMPLE IRAs on Dec. 31.

What is the deadline for a backdoor Roth IRA?

The nondeductible contribution for a tax year must be made by the return's due date, not counting extensions. The conversion has no separate deadline; it's reported on Form 8606 for the calendar year it happens.

What tax forms are involved in a backdoor Roth IRA?

You file Form 8606 with your federal return. Your IRA custodian sends Form 5498, which reports contributions and year-end values, and Form 1099-R, which reports the conversion as a distribution.

Can a backdoor Roth conversion be reversed?

No. Roth conversions made on or after Jan. 1, 2018, can't be recharacterized back to a traditional IRA.

What happens if I don't file Form 8606?

The IRS can charge a $50 penalty for each required Form 8606 not filed, absent reasonable cause. Without the form, nondeductible contributions are treated as deductible, so that money can be taxed again when it comes out.

Is a backdoor Roth IRA the same as a mega backdoor Roth?

No. A mega backdoor Roth uses after-tax contributions to a workplace plan such as a 401(k), which are then moved to a Roth account, and it depends on what the plan allows. The IRS covers those rules in its guidance on rollovers of after-tax contributions in retirement plans.