Learn how the backdoor Roth IRA works, who qualifies, and how to avoid the pro rata rule.

If you earn too much to contribute directly to a Roth IRA, you have probably heard of the "backdoor Roth" strategy. It is a legal workaround that allows high earners to get money into a Roth IRA, but it comes with some important considerations.

What Is a Backdoor Roth IRA Contribution?

Funding a backdoor Roth IRA is a two-step process:

Step 1: Make a non-deductible contribution to a traditional IRA
Step 2: Convert that traditional IRA to a Roth IRA

Since there are no income limits on traditional IRA contributions (only on the deductibility) or on Roth conversions, this strategy lets you get money into a Roth regardless of your income.

Who Is It For?

In 2026, you cannot make a full contribution directly to a Roth IRA if your modified adjusted gross income exceeds:

$153,000 for single filers
$242,000 for married filing jointly

If your income is above these limits but you want Roth benefits like tax-free growth and withdrawals, the backdoor strategy may be right for you.

The Pro Rata Rule: The Biggest Trap

Here is where many people get tripped up.

If you have ANY pre-tax money in traditional IRAs (including rollover IRAs, SEP IRAs, or SIMPLE IRAs), the IRS applies the "pro rata rule." This means your conversion is proportionally taxable based on the ratio of pre-tax money to total money across all your IRAs.

Example:

You have $93,000 in a rollover IRA (pre tax)
You make a non-deductible $7,000 contribution to a new traditional IRA
Total IRA balance: $100,000 (93% pre-tax, 7% after-tax)
If you convert $7,000 to Roth, only $490 (7%) is tax free; $6,510 (93%) is taxable

Solutions to the Pro Rata Problem

Roll pre-tax IRAs into a 401(k): If your employer plan accepts rollovers, moving pre-tax IRA money into your 401(k) removes it from the pro rata calculation.
Convert everything: If amounts are manageable, convert all traditional IRA money to Roth (paying the taxes), then proceed with backdoor contributions in future years.
Evaluate alternatives: For some high earners, taxable brokerage accounts or other strategies may be more appropriate.

The Windward Approach

Backdoor Roth contributions can be valuable, but they require careful planning. Our CPA heritage means we analyze the full tax picture, not just the Roth contribution in isolation.

Want help determining if a backdoor Roth makes sense for your situation? Schedule a Discovery Meeting with our team.

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Learn how the backdoor Roth IRA tax strategy works, who qualifies, how to avoid the pro rata rule, and more.

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