Photo: Joshua Doubek / Wikimedia Commons, CC BY-SA 3.0, cropped

How to Do a Backdoor Roth IRA in 2026: 5 Steps, the Pro-Rata Rule and the Form That Keeps It Tax-Free

Who needs the backdoor

A Roth IRA is one of the best retirement accounts there is. You put in money you've already paid tax on, it grows tax-free, and you take it out tax-free in retirement.

There's an income cap on contributing directly.

Figures are 2026 modified adjusted gross income.

If you're over the limit, the front door is closed. The backdoor gets the same money into the same account by a different route.

If you're under the limit, skip all this and contribute to a Roth IRA directly.

How it works in one sentence

You put money into a traditional IRA without deducting it, then convert it to a Roth, and since there's no income limit on conversions, it's allowed.

That's the limit for all your IRAs together. The backdoor doesn't add extra room.

Before you start: the check that matters most

Look at every IRA you own. Do any of these hold pre-tax money?

• A traditional IRA you deducted contributions to
• A rollover IRA from an old 401(k)
• A SEP IRA
• A SIMPLE IRA

If the answer is no, the backdoor is clean and simple. Go to step 1.

If the answer is yes, stop and read the pro-rata section below first. Doing the backdoor without dealing with it can cost you a tax bill.

Money in a 401(k) or 403(b) at work does not count. Neither does an inherited IRA.

Step 1: Open a traditional IRA and a Roth IRA

You need both, ideally at the same brokerage so the conversion takes a couple of clicks. Fidelity, Schwab and Vanguard all handle this routinely.

If you already have both, use them.

Step 2: Contribute to the traditional IRA

Move up to $7,500 ($8,600 if 50 or older) from your bank account into the traditional IRA.

Two things to get right:

• Don't deduct it. This is a non-deductible contribution. That's what makes the later conversion tax-free.
• Leave it in cash. Keep it in the settlement or money market fund. Don't buy stocks yet. Any gain before you convert is taxable.

You can make a contribution for 2026 any time from January 1, 2026 until the tax filing deadline in April 2027.

Step 3: Convert to the Roth IRA

Once the deposit has settled, usually a few business days, find the "Convert to Roth" option on your broker's website.

• Convert the entire balance of the traditional IRA, including any few cents of interest.
• When asked about tax withholding, choose none. You don't want part of it held back.

There's no required waiting period in the tax code. Most people convert as soon as the cash is available.

Step 4: Invest it

The money is now in your Roth IRA, sitting in cash. This is where people forget. Buy your investments now, whether that's a target-date fund, an index fund or whatever your plan calls for.

Cash left idle in a Roth for years is the most common backdoor mistake after the pro-rata rule.

Step 5: File Form 8606

At tax time, you report both moves on IRS Form 8606. Tax software handles it if you answer the questions correctly.

• Part I records your non-deductible contribution. This is your "basis": money that's already been taxed.
• Part II records the conversion and works out how much is taxable. For a clean backdoor, that's zero or close to it.

Your broker will send a Form 1099-R showing the conversion. It can look alarming, because it reports the full amount as a distribution. Form 8606 is what tells the IRS that the money was already taxed.

Don't skip the form. Without it, the IRS has no record of your basis and may treat the whole conversion as taxable income.

The pro-rata rule: the trap

You can't choose to convert only your after-tax dollars. The IRS looks at all your traditional, SEP and SIMPLE IRAs as one bucket and taxes the conversion in proportion.

An example

You have a $42,500 rollover IRA from an old job, all pre-tax. You contribute $7,500 after-tax and convert $7,500.

You expected to owe nothing. You owe income tax on $6,375.

The calculation uses your balances on December 31 of the year you convert, not the day you convert.

How to fix it

Roll the pre-tax IRA into your current 401(k). Many workplace plans accept incoming rollovers. Once that money is inside the 401(k), it no longer counts, and your IRA balance is zero on December 31.

Call your 401(k) provider and ask: "Does the plan accept roll-ins from a traditional IRA?" If yes, do that first and finish it before year-end. See how rollovers work.

If your plan won't take it, the backdoor may not be worth doing. Run the numbers, or convert the whole IRA over several years and pay the tax deliberately.

Married? Each spouse is separate

IRAs are individual. The pro-rata rule applies to each person separately.

So if you have a big rollover IRA and your spouse has none, your spouse can do a clean backdoor even if you can't. A couple with both clear can put $15,000 into Roth IRAs for 2026, or $17,200 if both are 50 or older.

A spouse without earned income can still contribute, based on the working spouse's income, if you file jointly.

Common mistakes

1. Having pre-tax IRA money on December 31. The pro-rata rule.
2. Not filing Form 8606.
3. Deducting the traditional IRA contribution by accident in your tax software.
4. Investing before converting and creating a taxable gain.
5. Leaving the money in cash in the Roth afterward.
6. Contributing directly to a Roth when you're over the limit. That's an excess contribution, with a 6% penalty each year until you fix it.

Is it really allowed?

Yes. Congress removed the income limit on Roth conversions in 2010. The steps are reported in full to the IRS on its own form.

Proposals to end the backdoor have come up in Congress more than once and haven't passed. That could change, so check the rules each year. Conversions you've already done have never been undone after the fact.

What about the "mega backdoor"?

That's a different strategy. It uses after-tax contributions inside a 401(k), which some employer plans allow, and can move tens of thousands of dollars a year into Roth accounts. It depends entirely on your plan's rules. Ask your plan administrator whether it allows after-tax contributions and in-plan Roth conversions.

Quick checklist

1. Confirm your income is over the Roth limit.
2. Check that you'll have no pre-tax IRA money on December 31, or roll it into your 401(k).
3. Contribute up to $7,500 ($8,600 if 50 or older) to a traditional IRA. Don't deduct it.
4. Leave it in cash until it settles.
5. Convert all of it to your Roth IRA, with no tax withheld.
6. Invest it inside the Roth.
7. File Form 8606 with your tax return.

Not sure which account suits you in the first place? Start with Roth vs traditional IRA and the 2026 Roth IRA limits.

Frequently asked questions