If you've been told you make too much money to open a Roth IRA, there's a workaround that financial planners have used for years.
It's called the backdoor Roth IRA, and it lets high earners get money into a tax-free retirement account—legally.
For 2024, single filers phase out between $146,000 and $161,000.
Married couples filing jointly phase out between $230,000 and $240,000.
Cross those lines and you can't contribute directly.
But a traditional IRA has no income limit.
So the backdoor strategy is simple: put money into a traditional IRA, then convert it to a Roth.
You pay taxes on any gains, but if you do it quickly, the growth is minimal.
Roth withdrawals in retirement are tax-free.
And your money grows without Uncle Sam taking a cut later.
For people who expect higher taxes in the future, that's a big deal.
There's one catch that trips people up: the pro-rata rule.
If you already have money sitting in a traditional IRA, the IRS doesn't let you convert just the new contribution.
It looks at all your traditional IRA balances together.
So if you have $50,000 in a traditional IRA and add $7,000, only a fraction of your conversion is tax-free.
Roll existing traditional IRA money into a 401(k) if your plan allows it.
That clears the deck so the backdoor conversion stays clean.
Another thing to watch: the conversion itself is a taxable event.
If your traditional IRA had earnings before you convert, you owe income tax on that amount.
Do it fast and the tax bill is usually tiny.
You'll also need to file Form 8606 with your tax return.
It tracks your basis so you don't get taxed twice.
Miss it and the IRS may assume the whole conversion is taxable.
A Roth IRA gives you tax diversification—some money taxed now, some taxed later.
That flexibility matters when you're pulling income in retirement and trying to stay in a lower bracket.
If you're under the income limit, just contribute directly.
But if you've been shut out of Roth accounts because of your salary, the backdoor is worth a conversation with a tax pro.
One more note: Congress has talked about closing this loophole for years.
But rules can change, and they usually don't give much warning.
Our take: The backdoor Roth isn't a secret hack—it's a legitimate planning tool that's been around for over a decade.
If you're a high earner with extra cash and a long time horizon, it's one of the few tax breaks still on the table.
Final Thoughts
Just run the numbers with a professional first, because the pro-rata rule can turn a simple move into a messy tax surprise.