The reason people go through the trouble of a backdoor Roth IRA comes down to one feature: qualified withdrawals from a Roth IRA in retirement are entirely free of federal income tax, including all the investment growth. A Traditional IRA, by comparison, taxes withdrawals as ordinary income. For high earners blocked from contributing to a Roth IRA directly – the 2026 income phase-out is $153,000-$168,000 for single filers and $242,000-$252,000 for married couples filing jointly, per IRS Notice 2025-67 – the backdoor route is how they still get money into that tax-free bucket.

The process: contribute to a Traditional IRA (up to $7,500 for 2026, $8,600 if 50+), then convert it to a Roth IRA. Since Traditional IRA contributions and Roth conversions both lack income limits, this combination is fully available regardless of how much you earn.

“Tax-free for life” depends on doing it correctly. If you contribute nondeductibly and convert before the money grows, you generally owe little or no tax at conversion, since you’re moving already-taxed dollars. From that point forward, the money grows and can eventually be withdrawn completely tax-free, as long as you meet the Roth IRA’s five-year holding rule and are 59½ or older. Watch for the pro-rata rule (IRC Section 408(d)(2)) if you have other pre-tax IRA money, and file Form 8606 every year to document the process.

FAQ

Is the growth inside a Roth IRA really never taxed? Correct – once inside a Roth IRA and once you meet the qualified distribution rules, neither your contributions nor any growth are taxed on withdrawal.