Tax year 2026  ·  Reviewed October 7, 2026  ·  By Nazim Lokhandwala

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The short version. "Backdoor" is not an IRS term. It describes a two-step move that people above the Roth income limits use: put money into a traditional IRA without taking a deduction, then convert it to a Roth. The step most people miss is the pro-rata rule, which can make part of the conversion taxable.

Backdoor Roth IRA, step by step

  1. Make a nondeductible contribution to a traditional IRA. The 2026 limit is $7,500, or $8,600 if you are 50 or older. [1]
  2. Convert the money to a Roth IRA. There is no income limit on conversions. [2]
  3. File Form 8606 with your tax return to track the after-tax money and report the conversion. [3]

The Roth contribution income limits that this approach works around, for 2026: single or head of household $153,000 to $168,000, and married filing jointly $242,000 to $252,000. [1]

Why the pro-rata rule decides everything

All of your traditional, SEP, and SIMPLE IRAs count as one pot on December 31. If part of that pot is pre-tax money, a share of every conversion is taxable, even if you only meant to convert the new after-tax contribution. Form 8606 does the math: your after-tax basis divided by the total December 31 value of all traditional IRAs, plus what you converted. [3, 4]

Example. You make a $7,500 nondeductible contribution and convert it. You also have $92,500 in a rollover IRA from an old 401(k). Your after-tax share of the combined pot is 7.5%, so only about $563 of the $7,500 conversion comes tax-free, and the rest is taxable. This is an illustration of the formula, not your actual result.

A common way to reduce the problem is a reverse rollover: moving pre-tax IRA money into a current employer plan that accepts it, so it no longer counts in the December 31 balance. Whether your plan accepts it is a plan-document question. [2, 3]

Other points to know

  • Conversions made after 2017 cannot be recharacterized (undone). [2]
  • The IRS charges $50 for failing to file Form 8606 when required. Unreported after-tax contributions can end up taxed again when you withdraw them. [3]
  • Earnings that build up between contribution and conversion are not after-tax basis, so they are taxable under the formula. Converting soon after contributing keeps this small.
  • In the sources I reviewed, the IRS has not issued specific guidance addressing the contribute-then-convert sequence. Have your tax professional confirm how it applies to you.

Mega backdoor Roth: a workplace plan version

Some 401(k) plans let you make after-tax contributions beyond the usual $24,500 limit, up to an overall annual limit of $72,000 for 2026 (employee deferrals, employer contributions, and after-tax contributions combined). The after-tax money can then be moved to a Roth, either inside the plan or by rolling it out to a Roth IRA. [5, 6]

The IRS rules for splitting a rollover let the after-tax part go to a Roth IRA while the earnings go to a traditional IRA or back into a plan. The tax treatment of the pre-tax and after-tax pieces is covered in IRS Notice 2014-54. [7]

Highly compensated employees, which for 2026 means pay above $160,000 or more than 5% ownership, can be limited by nondiscrimination testing of after-tax contributions. [5, 8]

Questions to ask your plan administrator, in writing
#Question
1Does the plan accept after-tax (non-Roth) employee contributions?
2Does it offer in-plan Roth conversions, and are there limits on how often?
3Does it allow in-service withdrawals of the after-tax money and its earnings?
4How did highly compensated employees do on the last after-tax contribution test?
5How much room is there under the $72,000 overall limit after my deferrals and the employer money?
6Does the recordkeeper track after-tax basis and earnings separately?
7How is tax handled on the conversion of earnings, given no automatic withholding?

Questions worth asking your tax professional

  • What is the total of all my traditional, SEP, and SIMPLE IRAs on December 31?
  • Would a reverse rollover into my workplace plan fit my situation?
  • Is converting every year better than converting once?
  • Who prepares Form 8606 each year, and where is the record kept?

Plan a conversation

Frequently asked questions

What is a backdoor Roth IRA?

"Backdoor" is not an IRS term. It describes making a nondeductible traditional IRA contribution and then converting it to a Roth IRA, which has no income limit on conversions.

Why does the pro-rata rule matter for a backdoor Roth?

All your traditional, SEP, and SIMPLE IRAs count as one pot on December 31. If part of that pot is pre-tax, a share of every conversion is taxable.

Which form tracks a backdoor Roth?

Form 8606, filed with your tax return, tracks after-tax money and reports the conversion.

General education, not individualized investment, tax, or legal advice. These strategies are sensitive to your full tax picture and to your plan's rules. Work through them with your tax professional before acting.

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