If you've ever been told you make too much money to open a Roth IRA, there's a legal workaround that thousands of Americans use every year.
It's called the backdoor Roth IRA, and it's not a loophole that the IRS is chasing.
It's a step-by-step maneuver written into the tax code itself.
For 2025, single filers phase out of direct Roth IRA contributions once their modified adjusted gross income passes $150,000, and married couples filing jointly hit the wall at $236,000.
Earn above those numbers and the front door is locked.
First, you open a traditional IRA and put in after-tax money, up to the annual limit of $7,000, or $8,000 if you're 50 or older.
Because the contribution is after-tax, you don't get a deduction.
Second, you convert that traditional IRA to a Roth IRA.
Since you already paid taxes on the money going in, you generally owe little or nothing on the conversion.
Once it's in the Roth, it grows tax-free, and qualified withdrawals in retirement come out tax-free too.
If you already hold a traditional IRA with pre-tax money in it, the IRS looks at all your traditional IRA balances together when calculating how much of your conversion is taxable.
That can turn a clean move into a messy tax bill.
Many people avoid this by rolling existing pre-tax IRAs into a 401(k) first, if their employer allows it.
Paperwork trips people up more than the math does.
You'll file Form 8606 with your tax return to report the nondeductible contribution and the conversion.
Skip it and you could end up paying taxes twice on the same dollars.
A tax preparer who has done these before is worth the fee.
One more thing worth knowing: a 2017 law ended the ability to undo a Roth conversion, so once you convert, you can't recharacterize it back.
If the market drops right after you convert, that's just how it goes.
The move takes maybe 20 minutes online at most brokerages.
You contribute, wait for the money to settle, then click convert.
Some advisors suggest waiting a day or two so the transaction clears cleanly. **The bottom line:** For high earners who've maxed out their 401(k) and still want another tax-free bucket, this is one of the few remaining tools that works exactly as advertised.
It rewards people who read the rules carefully and punishes people who skip the paperwork.
Final Thoughts
If your income just crossed the Roth limit for the first time, this is worth a conversation with a tax pro before the year ends.