A backdoor Roth IRA is a nondeductible contribution to a traditional IRA followed by a conversion to a Roth IRA. It gives people above the direct Roth contribution income limit another way to fund a Roth. The conversion is not automatically tax-free: pretax money in your traditional, SEP, or SIMPLE IRAs can make part of it taxable.
What is a backdoor Roth?
It is a two-step process, not a special account you open:
- Contribute to a traditional IRA without taking a deduction. You still need eligible compensation and must stay within the annual IRA contribution limit.
- Convert money to a Roth IRA. Report the conversion and work out how much is taxable. A conversion has no income limit and does not use a second contribution allowance.
For 2026, the IRA contribution limit is $7,500, or $8,600 at age 50 or older. That allowance is shared across your traditional and Roth IRAs. You cannot put $7,500 into each.
Direct Roth contributions phase out at modified adjusted gross income of $153,000–$168,000 for single and head-of-household filers, and $242,000–$252,000 for married couples filing jointly. Married filing separately generally has a $0–$10,000 range if you lived with your spouse during the year. The IRS 2026 limits and Publication 590-A explain eligibility.
The backdoor route can get past the direct Roth income limit. It cannot get past the tax on pretax money you convert.
Why does the IRS pile every IRA together?
You cannot open a new IRA, label it “after-tax money,” and ignore an old rollover IRA. For the pro-rata calculation, the IRS generally combines your traditional, SEP, and SIMPLE IRAs.
Your basis is the money you contributed without a deduction and have not already recovered tax-free. That basis belongs to the combined IRA balance for this calculation, even if you keep the accounts at different providers. Roth IRAs and money still inside a 401(k) are outside the calculation.
This is why checking your existing accounts matters more than the sequence of clicks used to convert.
How does Form 8606 compute the taxable share?
Form 8606 tracks your basis and calculates the tax-free and taxable portions. In a straightforward case, with no other distributions or special adjustments:
Tax-free share = IRA after-tax basis ÷ (year-end IRA balance + amount converted).
Multiply that share by the conversion. The remainder is taxable. Other distributions, outstanding rollovers, and contribution timing can change the calculation, so use the form for the actual return.
Example: an old rollover makes most of the conversion taxable
Assume you have a $92,500 pretax rollover IRA, make a $7,500 nondeductible contribution, and convert $7,500 during 2026. No investments change value and there are no other distributions. Your December 31 IRA balance is $92,500.
| Calculation | Result |
|---|---|
| Combined amount for the fraction | $92,500 + $7,500 = $100,000 |
| After-tax share | $7,500 ÷ $100,000 = 7.5% |
| Tax-free part of the conversion | $7,500 × 7.5% = $562.50 |
| Taxable part | $7,500 − $562.50 = $6,937.50 |
You moved $7,500 into a Roth, but $6,937.50 is taxable income. The unused basis remains available for later distributions or conversions. It has not vanished, and it is not all recovered in this conversion.
By contrast, if your only traditional IRA money is a $7,500 nondeductible contribution and you convert it before it earns anything, the conversion can be entirely tax-free. Any earnings before conversion are generally taxable.
What if an old 401(k) rollover sits in a traditional IRA?
It enters the pro-rata calculation. A balance that did not count while it was in a 401(k) counts after it moves to a traditional IRA.
Before converting, list every traditional, SEP, and SIMPLE IRA you own, including accounts left behind at old providers. Check any rollovers planned for later in the year. The December 31 balance in the conversion year matters, not just the balance on the morning you convert.
Keep contribution and conversion years separate. A contribution made early in 2027 might be designated for 2026, but a conversion completed in 2027 is a 2027 transaction. Preserve prior Forms 8606 so your after-tax contributions are not taxed twice.
Should you empty pre-tax IRA balances before you contribute?
Not automatically. Compare the available choices before moving money:
- Roll eligible pretax IRA money into a workplace plan that accepts it. This can remove that money from the IRA calculation. Compare investment choices and fees, and confirm that the receiving plan accepts the rollover. After-tax IRA basis cannot follow those pretax dollars into the plan.
- Convert some or all of the pretax balance. That creates a tax bill, which may be reasonable in a lower-income year. Use a Roth conversion tax estimate rather than assuming the backdoor contribution is the only amount at stake.
- Wait or use another savings account. A backdoor Roth is optional. Avoid moving a large balance into a poor workplace plan merely to make a small contribution tax-free.
SIMPLE IRAs have a two-year participation restriction on rollovers to other types of plans or IRAs. Confirm eligibility and completion timing with both providers. Roth conversions made in 2018 or later cannot be recharacterized back to a traditional IRA.
Does your spouse’s IRA count in your pile?
No. The calculation is individual, even on a joint return. Each spouse tracks their own basis and files their own Form 8606 when required. Inherited IRAs have separate reporting rules; do not casually combine them with your own accounts.
Before you contribute, answer three questions: Do I have contribution room? What pretax IRA balances will I hold at year-end? Who will report the basis and conversion? That turns a “backdoor” idea into a tax calculation you can actually check.