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Backdoor Roth: legal, but not automatic

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A backdoor Roth is a contribution-and-conversion sequence. The pro-rata rule and Form 8606 determine whether it stays clean.

THE IDEA

No enacted law prohibits the backdoor Roth strategy in 2026. The earlier Build Back Better conversion restrictions were never enacted, and the One Big Beautiful Bill Act did not restrict it.

Three details decide the tax resultThe pro-rata rule looks across all pre-tax IRAs using the December 31 balance; Form 8606 is required; and any earnings before conversion are taxable.

This is a tax-reporting sequence, not a separate kind of account. The clean version runs in three steps: 1) Contribute — make a non-deductible Traditional IRA contribution (2026 limit: $7,500, or $8,600 at age 50+); 2) Convert — move that balance to a Roth IRA promptly, so little or no taxable earnings accrue before the conversion; 3) Report — file IRS Form 8606 with your tax return, reporting both the after-tax basis and the conversion.

Clear the decks firstIf you hold pre-tax Traditional, SEP, or SIMPLE IRA balances, the pro-rata rule taxes most of the conversion. The standard workaround is a reverse rollover: move those pre-tax balances into your employer's 401(k) or 403(b) first, leaving only after-tax basis in your IRAs. Confirm the plan accepts incoming rollovers before you start.

Your next steps

  1. Inventory every pre-tax IRA before acting.
  2. Understand the December 31 pro-rata snapshot.
  3. Plan for Form 8606 and taxable conversion earnings.

Check your understanding

Select each question to reveal the answer.

Planning questions

  1. Do you have any pre-tax Traditional, SEP, or SIMPLE IRA balances that could trigger the pro-rata rule?
  2. Who will confirm your Form 8606 reporting and conversion sequence before you act?

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