How the Backdoor Roth IRA Actually Works, Step-by-Step
Step 1: Make a nondeductible contribution to a Traditional IRA
Open or use an existing Traditional IRA and contribute up to the annual limit – $7,500 for 2026, or $8,600 with the $1,100 catch-up if you’re 50 or older. Because this is a backdoor Roth (typically used precisely because your income is too high to contribute to a Roth directly, or to a deductible Traditional IRA), you don’t take a tax deduction for this contribution. Your brokerage generally won’t ask you to mark it “nondeductible” at the time – that designation happens when you file your taxes, not at the point of contribution.
Step 2: Convert the Traditional IRA to a Roth IRA
Once the contribution has settled, initiate a conversion of that balance into a Roth IRA. Many people do this the same day or the next business day specifically to avoid the contribution earning any investment gains while sitting in the Traditional IRA – any growth that accrues before conversion is taxable, while the original contributed principal isn’t (assuming no pro-rata complication, covered below).
Step 3: File Form 8606 – every year this applies
Form 8606 is how you tell the IRS “this money was already taxed, don’t tax it again.” Part I reports the nondeductible contribution; Part II reports the Roth conversion. You must file it for every tax year in which you make a nondeductible contribution or a Roth conversion – if the contribution and conversion happen in the same calendar year, both go on the same year’s form.
| Step | What happens | 2026 limit |
|---|---|---|
| 1. Contribute | Nondeductible contribution to a Traditional IRA | $7,500 ($8,600 if 50+) |
| 2. Convert | Convert the Traditional IRA balance to a Roth IRA | No dollar limit on conversions |
| 3. File | Report both steps on IRS Form 8606 | Required every year this applies; $50 penalty if skipped without reasonable cause |
2026 IRA contribution limit per the IRS’s own November 2025 newsroom release (see Sources); Form 8606 mechanics per Carry’s and the White Coat Investor’s published walkthroughs, cross-checked against IRS instructions for Form 8606.
The pro-rata rule is where most backdoor Roths actually go wrong
The IRS doesn’t let you choose to convert only your new, after-tax contribution if you already hold pre-tax money in any Traditional, SEP, or SIMPLE IRA as of December 31 of the conversion year. Instead, the conversion is taxed proportionally across all your pre-tax and after-tax IRA dollars combined, using a formula on Form 8606 itself. For a genuinely tax-free backdoor Roth, you generally need a $0 pre-tax IRA balance across all your Traditional, SEP, and SIMPLE IRAs at year-end – the standard fix is rolling any existing pre-tax IRA balance into an employer 401(k) that accepts incoming rollovers before doing the backdoor Roth. See our dedicated Backdoor Roth Pro-Rate Rule and Form 8606 guide for the full math.
Not sure a backdoor Roth is the right move for you at all? Do You Actually Need a Backdoor Roth IRA in 2026? →
Frequently Asked Questions
What are the actual steps in a backdoor Roth IRA?
Contribute nondeductibly to a Traditional IRA (up to $7,500, or $8,600 if 50+, for 2026), convert that balance to a Roth IRA, then file Form 8606 to report both steps.
Why does the pro-rata rule matter here?
If you hold pre-tax IRA money elsewhere, your conversion is taxed proportionally across pre-tax and after-tax dollars – you can’t selectively convert just the new after-tax contribution.
What happens if I forget to file Form 8606?
A possible $50 penalty (waivable for reasonable cause), and more importantly, no IRS record that the contribution was already taxed – risking double taxation later.
How long should I wait between the contribution and the conversion?
No mandated waiting period – many convert the same day or next business day to minimize taxable gains before conversion. This is separate from the 5-year rule on withdrawing converted funds.
- Internal Revenue Service, “401(k) limit increases to $24,500 for 2026, IRA limit increases to $7,500” – irs.gov/newsroom/401k-limit-increases-to-24500-for-2026-ira-limit-increases-to-7500 – 2026 IRA contribution and catch-up limits.
- White Coat Investor, “How to Do a Backdoor Roth IRA [Step-by-Step Guide]” – whitecoatinvestor.com/backdoor-roth-ira-tutorial – the contribute-then-convert mechanics and timing practice.
- Carry, “How to File Form 8606 for Nondeductible IRAs and Backdoor Roths” – carry.com/learn/form-8606-nondeductible-ira-backdoor-roth – Form 8606 filing requirements and the $50 penalty.
non-tax deductible – Meaning taxed amount
So the money in the traditional ira is essentially double taxed when make tge conversion? It’s taxed dollars in the traditional and then you get taxed when you make the contribution to the Roth account?
Is the waiting 30 days a hard and fast rule, or can it be literally a few days, while the funds clear ?
I just did this and only waited 3 days