If you earn too much to contribute to a Roth IRA, there's a workaround that's been quietly available for years.
It's called the backdoor Roth IRA, and it's drawing renewed attention as more six-figure earners find themselves locked out of the direct route.
Here's the catch that trips people up: the income limits for direct Roth contributions haven't budged much, but salaries have.
In 2024, single filers phase out between $146,000 and $161,000, while married couples filing jointly hit the wall between $230,000 and $240,000.
Cross those thresholds and the front door slams shut.
You contribute to a traditional IRA — which has no income limit — then convert that money to a Roth.
Since you've already paid taxes on the contribution (it's after-tax money), the conversion typically carries little or no additional tax bill.
If you hold any pre-tax money in a traditional IRA — from an old 401(k) rollover, say — the IRS doesn't let you convert just the new after-tax dollars.
It looks at your entire traditional IRA balance and taxes the conversion proportionally.
That can turn a clean maneuver into an unexpected tax hit.
The fix most advisors suggest: roll existing pre-tax IRA money into a workplace 401(k) first, clearing the deck before you convert.
Not every plan allows this, so it's worth checking before you file paperwork.
The converted amount sits in the Roth for five years before you can withdraw it penalty-free if you're under 59½.
And you can't undo a conversion anymore — the recharacterization option vanished after the 2017 tax law.
Some brokers charge nothing to open an IRA and nothing to convert.
Others tack on account fees or trade commissions that eat into the math.
Vanguard, Fidelity, and Schwab generally handle this at no cost, which is part of why they dominate the space.
For high earners with decades until retirement, the appeal is straightforward: tax-free growth and tax-free withdrawals later, plus no required minimum distributions during your lifetime.
That last point alone can be worth real money for someone who doesn't need the cash at 73.
The mechanics take maybe 20 minutes a year once you've set it up.
Contribute after-tax dollars to a traditional IRA, wait for the deposit to settle (often a day or two), then convert to Roth.
Report both steps on Form 8606 when you file.
Skip that form and the IRS may assume the whole conversion was taxable.
One more wrinkle: a small amount of growth between contribution and conversion will be taxable.
Keep the gap short and the number stays trivial.
This isn't a loophole in any shady sense — it's been legal for over a decade, survived multiple tax overhauls, and remains a standard tool in most advisor playbooks.
But it rewards people who read the fine print and punishes those who don't.
Our take: the backdoor Roth is worth the paperwork for anyone with a long investing horizon and no pre-tax IRA baggage.
If you've got a messy traditional IRA balance, sort that out first — otherwise you're inviting a tax bill you didn't plan for.
Final Thoughts
And if your situation is complicated, a few hundred dollars with a CPA now beats a surprise in April.