If your income is too high to contribute directly to a Roth IRA, you're not alone — and you're not necessarily out of options. A strategy known as the "backdoor" Roth IRA lets many high earners work around the income limits and still build tax-free retirement savings.
Here's what a backdoor Roth is, how the related "Roth conversion" strategy works, and a few of the rules worth understanding before you get started.
For 2026, you can contribute directly to a Roth IRA only if your modified adjusted gross income (MAGI) is below $168,000 (single filers) or $252,000 (married filing jointly) — with the amount you're allowed to contribute phasing out starting at $153,000 and $242,000, respectively.1 Above those thresholds, a direct Roth contribution isn't allowed.
The backdoor Roth is a two-step workaround: you contribute to a traditional IRA (which has no income limit on contributions, only on deductibility), then convert that traditional IRA to a Roth IRA. The 2026 IRA contribution limits are $7,500 under age 50 and $8,600 for those 50 and older, including a $1,100 catch-up contribution — so that's the most you could move through this strategy in a given year.2
Once your contribution lands in the traditional IRA, you (or your custodian) convert it to a Roth IRA. If that traditional IRA holds only the new, nondeductible contribution — and no other pre-tax dollars — the conversion is typically close to tax-free, since you already paid tax on that money going in.
This is where things get more complicated. If you already have money sitting in other traditional, SEP, or SIMPLE IRAs — especially pre-tax dollars from years of deductible contributions or old 401(k) rollovers — the IRS doesn't let you cherry-pick which dollars you convert.
Instead, it applies what's called the pro-rata rule: your conversion is taxed based on the percentage of your total IRA balance (across all traditional, SEP, and SIMPLE IRAs) that's pre-tax versus after-tax. For example, if 90% of your combined IRA balances are pre-tax money, then roughly 90% of whatever you convert is taxable — even if the specific dollars you meant to convert were the nondeductible ones.
This is often the step that trips people up, and it's a good reason to look at the full picture of your retirement accounts — not just the new contribution — before converting.
Roth conversions aren't only for people getting around income limits. Some people convert existing traditional IRA or old 401(k) balances to a Roth IRA in lower-income years — for example, after retiring but before required minimum distributions begin — as a way to manage their tax bracket over time. Unlike direct Roth contributions, conversions have no income limit, so this option is available regardless of how much you earn.
Each Roth conversion starts its own five-year clock. Withdraw converted funds before that five-year period is up and before age 59½, and you may owe a 10% early withdrawal penalty on the converted amount, even though you already paid income tax on it at conversion. A separate five-year rule applies to your Roth IRA's earnings, which need both five years of account aging and reaching age 59½ to come out tax- and penalty-free.3
A backdoor Roth or a Roth conversion can be a valuable piece of a long-term, tax-efficient strategy — but whether it makes sense, and how to sequence it around your other accounts, depends on your full financial picture. This is exactly the kind of decision worth coordinating with your financial advisor and your tax professional together, so the move fits your broader plan rather than creating an unexpected tax bill.
*This content is developed from sources believed to be providing accurate information. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel before implementing any strategy discussed here. Neither the information presented nor any opinion expressed constitutes a representation by us of a specific investment or the purchase or sale of any securities. Copyright 2026 King Tide Advisors.
