Why people use a backdoor Roth
A backdoor Roth is meant to be simple: put money in a traditional IRA without taking a deduction, then convert it to a Roth IRA. For many people it is, and the conversion costs nothing in tax. For others a rule called pro-rata turns the conversion into a taxable event.
Roth IRA contributions are limited by income. For 2026, the amount you can contribute directly starts to shrink at $153,000 of modified AGI for a single filer and $242,000 for a married couple filing jointly, and reaches zero at $168,000 and $252,000. The IRA contribution limit is $7,500, or $8,600 with the catch-up for people age 50 and over. If your income is above the range, you cannot contribute to a Roth IRA directly. IRS Publication 590-A lists the income limits under Roth contributions, and describes conversions in a separate section titled “Converting From Any Traditional IRA Into a Roth IRA.” The backdoor method relies on that distinction.
The pro-rata rule
When you take money out of a traditional IRA, or convert it, the IRS does not let you pick the after-tax dollars first. It treats all of your traditional IRAs as one pot with two parts: basis (money you already paid tax on) and pre-tax money. Each dollar that leaves is part basis and part pre-tax, in the same proportion as the pot as a whole. If the pot is only the $7,500 you just contributed, the conversion is tax-free. If you also have other pre-tax IRA money, part of the conversion is taxable even though the money you converted was after-tax.
What counts in the pot
The Form 8606 instructions state that traditional IRAs generally include traditional SEP IRAs and traditional SIMPLE IRAs. All are added together and measured on December 31 of the year of the conversion, plus any outstanding rollovers. Roth IRAs are not counted. Money inside an employer plan such as a 401(k) is not counted either. Because the date that matters is December 31, the question is where the money is at year-end.
Form 8606, line by line
Line 1 is your nondeductible contributions for the year. Line 2 is your basis from earlier years, which comes from line 14 of last year’s form. Line 3 adds them. Line 4 is any part of line 1 made after December 31, subtracted on line 5. Line 6 is the December 31 value of all traditional, SEP and SIMPLE IRAs plus outstanding rollovers. Line 7 is distributions, line 8 is the amount converted, and line 9 adds lines 6, 7 and 8.
Line 10 divides line 5 by line 9 as a decimal rounded to at least three places, and it is never more than 1.000. Line 11 multiplies the conversion by line 10, and that is the tax-free part. Line 14 is the basis that carries forward. In Part II, line 18 subtracts the tax-free part from the conversion and gives the taxable amount, which goes on Form 1040 line 4b.
Three examples with real numbers
The trap. You contribute $7,500 nondeductible and convert $7,500. On December 31 you have $50,000 left in a rollover IRA. Line 9 is $57,500, and line 10 is $7,500 divided by $57,500, which is 0.130. The tax-free part of the conversion is $975, so $6,525 is taxable. The remaining $6,525 of basis stays behind and carries into next year.
A bigger pot. With $92,500 left, line 9 is $100,000 and line 10 is 0.075. The tax-free part is $562.50 and $6,937.50 is taxable, which is about $1,665 of federal income tax for someone in the 24% bracket.
No other IRA money. With nothing else in traditional, SEP or SIMPLE IRAs on December 31, line 10 is 1.000, the tax-free part equals the conversion and line 18 is $0. Growth between the contribution and the conversion is the only taxable piece.
Backdoor Roth pro-rata calculatorFill in Form 8606 lines 1 to 18 with your own numbers.A way people avoid the trap
Because employer plan balances are not counted, some people move pre-tax IRA money into a 401(k) or similar plan before December 31. Publication 590-A explains that a rollover from a traditional IRA to an eligible employer plan is treated as only otherwise-taxable amounts if the amount you leave in your IRAs is at least equal to your basis. In practice that means pre-tax money can move into the plan, and after-tax basis stays in the IRA. In the second example, rolling the $92,500 into a plan that accepts it takes line 6 to zero and the taxable conversion to $0, saving about $1,665 at a 24% bracket. Plans are not required to accept roll-ins, so the plan administrator decides. Timing, fees and investment choices are the plan’s, and this is a description and not advice.
Can I contribute to a Roth directly?
If your modified AGI is below the range, yes, up to the limit. Inside the range, the IRS Maximum Roth IRA Contribution Worksheet reduces the limit in proportion and rounds up to the next $10, with a $200 minimum. For example, a single filer with modified AGI of $157,000 in 2026 is $4,000 into a $15,000 range. The ratio is 0.733, so $7,500 times 0.733 is $5,497.50, which rounds up to $5,500. The second tab of the calculator runs this worksheet.
Other things to know
Form 8606 is how the IRS tracks your basis, so keep each year’s form. The conversion is reported to you by your custodian on year-end tax forms, but Form 8606 is what reports the taxable part. A Roth distribution is qualified only after a five-year period that begins with the first year for which you made a Roth contribution or conversion, and it must also meet a condition such as reaching 59½. Separate rules can apply to converted amounts if you are under 59½, which Publication 590-B explains.
The taxable conversion adds to your income, so it can affect the taxable share of your Social Security and the Medicare surcharge you pay two years later. The Social Security taxable benefits calculator and the IRMAA calculator show those links.
What this guide does not cover
Deductible contributions, qualified disaster distributions, inherited IRAs, Roth distributions on Part III of Form 8606 and the mega backdoor inside an employer plan are outside this guide. Tax law can change, and this guide follows the 2025 Form 8606 instructions, Publication 590-A and IRS Notice 2025-67. Check for new legislation before you act, and ask a qualified tax professional about your own situation.
Common questions
Do 401(k) balances count in the pro-rata rule?
Does a Roth IRA balance count?
Which date does the rule use?
Do I need to file Form 8606 every year?
Sources
Reviewed on 18 Oct 2026 against the published sources below. Laws and prices change, so check the current position before you rely on a figure.
- IRS Form 8606 (2025) and Instructions for Form 8606, Parts I and II and the Maximum Roth IRA Contribution Worksheet
- IRS Publication 590-A (2025), Contributions to Individual Retirement Arrangements
- IRS news release IR-2025-111 and Notice 2025-67: 2026 retirement plan limits (13 November 2025)
Try the calculator
Keep reading
This guide is general information, not legal, financial or religious advice. Figures are estimates worked out from the sources above and may differ from what applies to you. See the disclaimer. Found a mistake? Tell us.