If you've been told you earn too much to fund a Roth IRA, there's a legal workaround that millions of Americans use every year.
It's called the backdoor Roth IRA, and it lets high earners move money into a tax-free retirement account even when their income disqualifies them from contributing directly.
You put money into a traditional IRA, then convert that balance into a Roth.
Since you've already paid taxes on the money, the conversion typically costs nothing extra — as long as you don't have other pre-tax IRA money sitting around.
The IRS "pro-rata rule" looks at all your traditional, SEP, and SIMPLE IRA balances combined, not just the account you're converting.
If most of your retirement cash sits in a pre-tax IRA, a chunk of your conversion becomes taxable, which can produce a surprise bill in April.
For 2026, the contribution limit is $7,500, or $8,000 if you're 50 or older.
That's per person, so a married couple can potentially shelter $15,000 to $16,000 this way in a single tax year.
Roth accounts have no required minimum distributions during the owner's lifetime, and withdrawals in retirement come out tax-free.
With tax rates set to shift after 2025 under current law, locking in today's rates has real appeal for anyone betting on higher taxes later.
The mechanics are simple but the paperwork matters.
You'll file Form 8606 with your return to report the nondeductible contribution and the conversion.
Skip it and the IRS may treat the whole amount as taxable.
Many people use a tax pro the first year, then handle it themselves once they understand the steps.
A "step transaction" doctrine lets the IRS collapse back-to-back moves if they happen too close together, so most advisors suggest letting the traditional IRA sit for a bit before converting.
Some wait days, others wait months — there's no official rule, which is exactly why people get nervous.
One more thing: you can't undo a Roth conversion anymore.
The recharacterization option that once let people reverse a bad conversion was killed by the 2017 tax law.
Once you convert, you're locked in, so run the numbers before you pull the trigger.
If you have a large pre-tax IRA, another path is rolling that money into a 401(k) first, which removes it from the pro-rata calculation.
Not every employer plan allows this, but it's worth a call to HR if you're serious about the strategy. **Our take:** The backdoor Roth is one of the few legal loopholes that hasn't been closed, and it's worth exploring if you've maxed out other tax-advantaged accounts.
Final Thoughts
Just don't wing it — a 20-minute conversation with a tax professional can save you thousands and a headache with the IRS.