What Is a Backdoor Roth IRA? A Guide for High-Income Tech Professionals
High earners can’t contribute directly to a Roth IRA but a Backdoor Roth IRA may help. Learn how this powerful strategy works for tech professionals.

If you're a high-earning tech professional, you’ve probably hit a frustrating wall: you make too much to contribute directly to a Roth IRA. Yet, the Roth’s promise of tax-free growth and withdrawals is hard to ignore, especially when you’re trying to optimize for long-term wealth and minimize taxes in retirement.
Fortunately, there’s a perfectly legal workaround known as the Backdoor Roth IRA. It’s not shady or complex, but there are critical steps (and pitfalls) to know before you start.
What is a Roth IRA?
Roth IRAs are a popular form of an individual retirement account that is funded with after-tax dollars. Unlike the Traditional IRA, contributions to Roth IRAs are not tax-deductible. But Roth IRAs offer several advantages including tax-free growth, tax-free withdrawals, no Required Minimum Distributions (RMDs), and no taxes on withdrawals for heirs. Roth IRAs can be appealing, especially if you expect to be in a higher tax bracket during retirement years.
The Income Limit Problem
While the Roth IRA is a clear favorite for many investors, there is a problem for those with high income. There is a phaseout range for being able to make a partial contribution and a ceiling at which no direct contribution is available.
For example, if you are Married Filing Jointly, you can make a full contribution of $7,000 ($8,000 age 50+) in 2025 up to a modified adjusted gross income (MAGI) of $236,000. Between $236,000 - $246,000, a partial contribution is allowed. For MAGI above $246,000 no direct Roth IRA contribution is allowed.

Based on the contribution phaseout range, it would appear on the surface that the Roth IRA is out of reach for the high-earning tech professional. But…there is good news!
Enter the Backdoor Roth IRA
If you desire to save more for retirement, but your income is too high to make a direct or “front door” contribution to a Roth IRA, you may consider taking the “backdoor” (workaround) approach to funding a Roth IRA.
The ultimate goal is to get money into a Roth IRA, but it does involve a few additional steps. You will first make a non-deductible (no upfront tax deduction) contribution to a Traditional IRA. Later, you will convert the funds in the Traditional IRA into a Roth IRA. Once the money is settled in a Roth IRA, it can be invested to take advantage of tax-free growth and eventually tax-free distributions if certain requirements are met.
Step-By-Step: How It Works
- Open a new Traditional IRA.
- Make a non-deductible contribution of $7,000 ($8,000 age 50+) for 2025.
- Leave the funds in cash after the contribution but prior to the conversion. Do not invest because any earnings are then taxable.
- Open a Roth IRA (unless established).
- Convert the Traditional IRA to the Roth IRA.
- Invest the money within the Roth IRA and watch it grow tax-free!
- File IRS Form 8606 to report the non-deductible contribution. See below for more information about tax forms and reporting.

Pitfall Alert: The Pro Rata Rule
There is a potential pitfall if you have existing balances within a Traditional IRA, Rollover IRA, SEP IRA or SIMPLE IRA. If you have any of the mentioned IRAs containing deductible contributions plus earnings and/or earnings from non-deductible contributions, these dollars are taxed as ordinary income in the event of a Roth conversion. You are unable to pick and choose which contributions or earnings get converted to the Roth IRA.
The IRS applies the aggregation rule, meaning these are treated as one IRA for taxation purposes. The IRS will look at the value of all these accounts as of December 31 of the year you do the Roth conversion. If you have existing balances at year end and you made a Roth conversion during the year, the pro rata rule will apply.
Note, the following accounts are not included for pro rata rule purposes: Roth IRA, 401(k), 403(b), 457(b) accounts, Solo 401(k), and Inherited IRAs.
How It Works (Simplified Example)
Let’s say:
You contribute $7,000 (after-tax and non-deductible) to a Traditional IRA.
You already have $43,000 in a rollover IRA from an old 401(k).
Total IRA assets = $50,000
You convert the $7,000 to a Roth.
Taxable Portion = $7,000 × ($43,000 ÷ $50,000) = $6,020 is taxable
So, only $980 of your conversion is tax-free, even though you just contributed $7,000 with after-tax money.
Pro Tip: To avoid the pro rata issue, you can clear out and roll over existing pre-tax IRA balances into a 401(k) (if the plan allows it), leaving just the non-deductible amount in your Traditional IRA before doing the conversion. Then make the Roth conversion with no taxable event. Just make sure you do not have other existing IRA balances on December 31 in the year of conversion.
Who Is Eligible to Do a Backdoor Roth IRA? What About My Spouse?
Any person with earned income can make a non-deductible contribution to a Traditional IRA as long as their earned income is greater than or equal to their contribution amount.
If you are married, both you and your spouse can contribute the maximum amount to separate IRAs and then execute Backdoor Roth IRA conversions separately. Together you could contribute and convert a maximum $14,000 ($16,000 age 50+) per year via the backdoor strategy. Keep in mind that IRAs are individual accounts, so each spouse needs their own IRAs, both Traditional and Roth.
Note, a non-working or lower-earning spouse can still take advantage of the backdoor strategy via a Spousal IRA as long as the joint earned income is at least the amount of the total contributions. Again, just be aware of the pro rata rule so there is not a tax bill on the conversion.
Why to Do a Backdoor Roth IRA
- Future tax rates. I have no idea where future income tax rates will be. But because our nation has a huge pile of debt, it is feasible to consider that tax rates will increase over time. The government will need to raise more revenue. If you keep your money in Traditional IRAs, which are taxed as ordinary income, this could result in much higher tax bills when you are pulling your money out during your retirement years.
- Tax-free growth and withdrawals. What could be better than this?
- No RMDs. No forced withdrawals allows you more control and flexibility.
Why Not to Do a Backdoor Roth IRA
- Pro rata tax risk. If you have other pre-tax IRAs, a conversion could trigger an unwanted tax bill.
- Complexity. The conversion does require additional tax forms and careful timing to avoid costly mistakes.
- 5-Year rule. Each conversion must adhere to a 5-year period before withdrawals can begin. This requires careful recordkeeping and planning.
Other Considerations
Tax forms

Tax Brackets
Backdoor Roth conversions typically do not generate taxable income if the contributions are non-deductible, the pro rata rule is not triggered, and no earnings were created by investing the money within the Traditional IRA. However, standard Roth conversions are a taxable event. The amount converted could push you into a higher tax bracket, or trigger phase out deductions like the Net Investment Income Tax (NIIT), Medicare surtaxes, or other deductions and credits,
5-Year Rule
Each Backdoor Roth conversion is subject to a 5-year running clock. If you withdraw converted amounts within 5 years of the conversion and you are under age 59.5, there is a 10% early withdrawal penalty.
Deadlines
You must make your Traditional IRA contribution by the tax filing deadline, typically April 15 of the following year.
There is no IRS deadline for the Roth conversion itself. You can convert anytime after making the contribution, even in a different calendar year. However, most people convert soon after the contribution.
Closing
The Backdoor Roth IRA is a powerful tool for tech professionals who want to keep building tax-advantaged retirement savings, even after they’ve hit income limits. It’s not without its caveats, but when executed correctly, it can be a meaningful way to get money into a Roth IRA account.
If you are not sure whether the Backdoor Roth is a reasonable strategy for you, or you’re worried about triggering the pro rata rule, let’s talk.
Get your Free Assessment.
The foregoing content reflects the opinions of TwoTenPlanning and is subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as financial, legal, tax, or investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that the statements, opinions or forecasts provided herein will prove to be correct. Past performance may not be indicative of future results. All investing involves risk, including the potential for loss of principal. There is no guarantee or assurance that diversification, strategies based on Nobel prize-winning research, or any investment plan or strategy will be successful. Past performance may not be indicative of future results. Discuss your specific tax issues with a qualified tax professional. Converting from a Traditional IRA to a Roth IRA is a taxable event. ChatGPT utilized in the creation and development of this article.
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