Make a non-deductible traditional IRA contribution
Contribute up to $7,000 ($8,000 if 50+) to a traditional IRA without taking a deduction. Since you are over the income limit for a Roth IRA direct contribution, this is a non-deductible (after-tax) traditional IRA contribution. Track it on IRS Form 8606.
Convert the traditional IRA to Roth immediately
As soon as the contribution clears (often the next business day), convert the entire traditional IRA balance to a Roth IRA. Because the contribution was after-tax and no growth occurred, the conversion is essentially tax-free — you already paid tax on those dollars, and there are no earnings to tax.
File IRS Form 8606
Report the non-deductible contribution on Form 8606 with your tax return each year. This establishes your basis in the traditional IRA and prevents you from being taxed again on those dollars when you convert. Do not skip this step — it is your documentation that the contribution was after-tax.
⚠️ The pro-rata rule — the critical constraint
The pro-rata rule is the most important concept in backdoor Roth planning. The IRS treats all of your traditional IRA balances as one pool when calculating the taxable portion of a conversion. If you have $93,000 in a pre-tax traditional IRA and make a $7,000 non-deductible contribution, your IRA pool is now $100,000 — of which only 7% is after-tax. Converting $7,000 to Roth means only 7% ($490) is tax-free; the remaining 93% ($6,510) is taxable.
Solution: For the backdoor Roth to work cleanly with no tax, you must have zero balance in all traditional IRAs on December 31 of the year you convert. The most common solution: roll your existing traditional IRA into your current employer's 401(k) plan before making the backdoor contribution.
The mega backdoor Roth — up to $43,500 additional via 401(k)
If your employer's 401(k) plan allows after-tax contributions and either in-service distributions or in-plan Roth conversions, you can move significantly more money into Roth each year. After maxing your standard $23,000 employee contribution, you can make after-tax contributions up to the total plan limit ($69,000 in 2024) and immediately convert them to Roth — effectively adding up to $46,000 in after-tax money to Roth annually in addition to the standard $7,000 backdoor Roth IRA contribution.
Roth conversion vs. backdoor Roth — what is the difference?
Backdoor Roth: A new annual contribution ($7,000 max) converted to Roth. Used by high earners who exceed the direct Roth contribution income limit. Limited to the annual IRA contribution limit.
Roth conversion: Moving existing traditional IRA or 401(k) balances — of any size — into a Roth IRA. No income limit. The entire balance can be converted over time. Taxable in the year of conversion. The primary strategy for those with large existing traditional IRA balances — and the foundation of the self-completing Roth strategies.
Do the backdoor Roth every year — it compounds
A $7,000 backdoor Roth contribution done annually for 20 years, assuming 7% average growth, grows to approximately $287,000 tax-free. Each year you skip is a year of tax-free compounding forfeited permanently. Make it an automatic January habit — contribute and convert in the first week of the new year, before any earnings accumulate that would complicate the conversion math.