Your Income Is Too High for
a Roth IRA. Now What?

How to use this calculator

The backdoor Roth involves making a non-deductible contribution to a traditional IRA, then converting that contribution to a Roth IRA. Because there is no income limit on conversions, this works regardless of how much you earn. The complication is the pro-rata rule, which applies if you have other pre-tax IRA money and can create an unexpected tax bill.

• 1
  Enter your filing status and modified AGI
  Your MAGI for Roth IRA purposes is generally your adjusted gross income from your tax return. Your tax professional or tax software can confirm this for your situation.
• 2
  Enter any existing pre-tax IRA balances
  This is the pro-rata check. If you have money in traditional, SEP, or SIMPLE IRAs, the IRS does not let you convert just the new after-tax contribution. It spreads the conversion across all your IRA money proportionally.
• 3
  Review whether you are over the income limit
  The calculator shows your direct contribution eligibility, the phase-out amount if you are partially phased out, and your backdoor Roth availability.
• 4
  Read the pro-rata warning carefully if it applies
  If you have pre-tax IRA balances, the calculator shows the taxable portion of your conversion. The fix is typically rolling those pre-tax IRA funds into a 401(k) first.

How to interpret your results

• The backdoor Roth is legal and widely used.Despite the name, this is not a loophole in the pejorative sense. It has been explicitly acknowledged by Congress. Many financial planners, CPAs, and the IRS itself treat it as a standard strategy. There is no indication this will change.
• The pro-rata rule is the part that trips people up.If you have $100,000 in a pre-tax traditional IRA and make a $7,000 non-deductible contribution, you cannot simply convert the $7,000 tax-free. The IRS treats all your IRA money as a single pool. Only about 6.5% of the conversion would be tax-free. The fix is to roll the pre-tax balance into your employer's 401(k) before converting.
• You must file Form 8606.Every year you make a non-deductible IRA contribution or a conversion, you must file IRS Form 8606 with your return. This is what establishes your basis in the IRA and prevents you from being taxed twice. Many people skip this and create problems later.
• Timing within the year matters less than people think.There is no requirement to wait between the contribution and the conversion. Many advisors recommend contributing and converting in the same week to avoid any market risk or complexity. Some advisors suggest waiting, but there is no rule requiring it.
• The annual contribution limit is per person, not per household.Each spouse can make a separate $7,000 non-deductible contribution and convert separately, for a combined $14,000 per year. Dual-income high earners can use this strategy for both partners.

Common mistakes to avoid

• Having pre-tax IRA money and not knowing about the pro-rata rule.This is by far the most common and costly mistake. Someone contributes $7,000 non-deductible, converts it, and then gets a tax bill at tax time because of their $200,000 rollover IRA sitting in an account they forgot about. Always check your IRA balances before executing.
• Not filing Form 8606.If you do not file this form, the IRS does not know your contribution was non-deductible. When you eventually withdraw or convert, you could be taxed again on money you already paid tax on. Every year of a backdoor Roth requires this form.
• Converting and then immediately withdrawing.The conversion itself is generally tax-free if done correctly, but withdrawing from a Roth IRA within five years of a conversion can trigger a 10% penalty if you are under 59 and a half. The money needs to stay in the Roth to serve its purpose.
• Confusing the backdoor Roth with a Roth conversion.A backdoor Roth involves contributing after-tax dollars to a traditional IRA and converting. A Roth conversion involves converting existing pre-tax retirement savings. They are related strategies but have different mechanics, tax implications, and use cases.
• Waiting too long in the year to do it.You can make the IRA contribution for the prior year up until Tax Day, but if you are making the contribution in your brokerage account and need to wait for it to settle before converting, give yourself a few days of buffer before the deadline.