What Is a Backdoor Roth IRA and How Does It Work?
A Backdoor Roth is a strategy that generally involves making a nondeductible Traditional IRA contribution and converting it to a Roth IRA. The pro-rata rule can make part of the conversion taxable when you have other pre-tax IRA balances.
The basic steps
- Confirm you have earned compensation and an IRA contribution available.
- Make a nondeductible Traditional IRA contribution.
- Report the nondeductible contribution correctly.
- Convert the contribution to a Roth IRA.
The pro-rata rule
The IRS generally looks across your Traditional, SEP, and SIMPLE IRA balances when determining the taxable portion of a conversion. You cannot simply choose to convert only the after-tax dollars.
Why professional review matters
Timing, existing balances, form reporting, and employer-plan rollovers can change the result. This is an explanation, not an instruction to execute a transaction.
Frequently asked questions
Is a Backdoor Roth legal?
The strategy uses provisions of the tax code, but the reporting and tax treatment must be handled correctly.
What is the pro-rata rule?
It generally treats Traditional, SEP, and SIMPLE IRA balances together when calculating the taxable share of a Roth conversion.
Sources
Gleefund explains general retirement-account concepts and provides estimates. It does not provide financial, tax, or legal advice. See our disclaimer and methodology. Check the current IRS rules before acting.
Figures current as of 2026-09-25. Found an error? Contact us.