Written by Retirement Advisor Published April 20, 2026 · Last updated August 12, 2026
The backdoor Roth IRA has exactly two moving parts, but each has real IRS rules attached. Part one is the contribution: for 2026, you can put up to $7,500 into a Traditional IRA ($8,600 if you’re 50+), regardless of your income, per IRS Notice 2025-67. This is different from a Roth IRA contribution, which phases out at $153,000-$168,000 (single) or $242,000-$252,000 (married filing jointly) in 2026.
Part two is the conversion: you move that Traditional IRA balance into a Roth IRA. Conversions have had no income limit since 2010, when the Tax Increase Prevention and Reconciliation Act removed the prior $100,000 income cap on conversions. This is the specific legal change that made the backdoor Roth IRA possible as a repeatable annual strategy.
The rule that catches people off guard is the pro-rata rule under IRC Section 408(d)(2): the IRS looks at all your Traditional, SEP, and SIMPLE IRA balances together, not just the account you just contributed to, when figuring how much of a conversion is taxable pre-tax money versus already-taxed basis. If you have an old 401(k) rolled into a Traditional IRA, expect a real tax bill on part of your conversion. File Form 8606 every year you contribute nondeductibly or convert, to keep an accurate record with the IRS of what’s already been taxed.
FAQ
Can I avoid the pro-rata rule? Some people roll existing pre-tax IRA balances into an employer 401(k) first (if the plan accepts incoming rollovers), which removes that money from the pro-rata calculation.
Guess I'm pro-rata screwed at this point…..This stuff is wayyy too complicated. I rolled old 401ks into "rollover IRAs" long before anyone ever heard of a Roth IRA…..let alone a Backdoor conversion. I have every account type there is, and several with both pretax and after tax contributions in them.
Any thoughts folks on completing IRA Form 8606 when a recharacterization was needed before a backdoor conversion? – In 2025, I started funding my Roth IRA for the year, but then realized I was going to earn about the 2025 Roth IRA limits, so I recharacterized the contributions and associated earnings to a new Traditional IRA (never had a pre-tax IRA account). Then I maxed out the Traditional IRA account, which now contains the annual limit for 2025 and the earrings, and converted everything over to my existing Roth IRA by the end of the year. Sadly, my cash and former- Roth investments made some dividends so I earned $3 which was not converted the same year.
How should someone who is direct depositing money into brokerage with every paycheck handle this? That’s 26 deposits a year. Immediately place into trad IRA then convert to Roth? Or leave it all sitting as cash then do the trad IRA then Roth all at once at the end of the year? Waiting to do it all at once risks growth potential. But having to do a bunch of conversions each year is also a pain.
you genuinely have the very best account on the entire world wide web! thank you so much for helping us by sharing your knowledge is such clear and thorough manner
Hi Erin, thank you for the vlog! I don't remember if I filled out form 8606 a couple of decades ago. If I did not fill it out, is there a way to update the record?
Guess I'm pro-rata screwed at this point…..This stuff is wayyy too complicated. I rolled old 401ks into "rollover IRAs" long before anyone ever heard of a Roth IRA…..let alone a Backdoor conversion. I have every account type there is, and several with both pretax and after tax contributions in them.
Do rollover IRAs count? You mentioned several other IRAs but not the rollover IRA.
Any thoughts folks on completing IRA Form 8606 when a recharacterization was needed before a backdoor conversion? – In 2025, I started funding my Roth IRA for the year, but then realized I was going to earn about the 2025 Roth IRA limits, so I recharacterized the contributions and associated earnings to a new Traditional IRA (never had a pre-tax IRA account). Then I maxed out the Traditional IRA account, which now contains the annual limit for 2025 and the earrings, and converted everything over to my existing Roth IRA by the end of the year. Sadly, my cash and former- Roth investments made some dividends so I earned $3 which was not converted the same year.
How should someone who is direct depositing money into brokerage with every paycheck handle this? That’s 26 deposits a year. Immediately place into trad IRA then convert to Roth? Or leave it all sitting as cash then do the trad IRA then Roth all at once at the end of the year? Waiting to do it all at once risks growth potential. But having to do a bunch of conversions each year is also a pain.
you genuinely have the very best account on the entire world wide web! thank you so much for helping us by sharing your knowledge is such clear and thorough manner
❤❤❤
Hi Erin, thank you for the vlog! I don't remember if I filled out form 8606 a couple of decades ago. If I did not fill it out, is there a way to update the record?