Backdoor Roth IRA
A backdoor Roth is a legal workaround that lets high earners fund a Roth IRA despite the income limits. You contribute to a non-deductible traditional IRA, then convert it to a Roth — since anyone can convert, the income cap on direct Roth contributions no longer blocks you.
The pro-rata rule is what makes this expensive when it goes wrong. The IRS treats all your traditional, SEP and SIMPLE IRAs as one pot, so the taxable share of a conversion is the pre-tax share of that whole pot — not of the money you just contributed. Add $7,500 of after-tax money to an existing $67,500 pre-tax IRA and 90% of any conversion is taxable, turning a supposedly free manoeuvre into a $6,750 tax event. A 401(k) is not counted in the pot, so rolling pre-tax IRA balances into a workplace plan first is the usual fix. Non-deductible contributions must be tracked on Form 8606 or you risk being taxed twice.
Put it to work
Roth IRA Calculator
Project your Roth IRA's tax-free value at retirement and see how much of it is earnings you'll never pay tax on. Uses the 2026 limit of $7,500.
Traditional IRA Calculator
Project your traditional IRA at retirement, see this year's tax deduction, and estimate the tax you'll owe on withdrawals. Uses the 2026 limit of $7,500.