Backdoor Roth Offers Savings Strategy for High-Income Earners

Most people are familiar with Roth IRAs as a great savings tool that allows for tax free money in retirement.  Many high-income taxpayers will find that they cannot make a direct contribution to a Roth IRA due to income limitations. However, it’s still possible for these high-income earners to create a Roth IRA through an IRA conversion, also known as the “backdoor” method.

In 2026, your Modified Adjusted Gross Income (MAGI) must be under $153,000 for single filers or under $242,000 for married couples filing jointly to make the full Roth IRA contribution of $7,500 (or $8,600 if you’re age 50 or older). If your income falls within the phaseout range, your allowable contribution may be reduced. You have until the tax filing deadline in 2027 to make 2026 IRA contributions. For 2026, Roth IRA contribution eligibility phases out for single filers with MAGI between $153,000 and $168,000 and for married couples filing jointly with MAGI between $242,000 and $252,000.

Once you hit these income limits you can’t contribute to a Roth IRA directly, however you can use the backdoor Roth contribution strategy!

Here’s how it works:

  1. Contribute to a Traditional IRA: Since there are no income limits for contributing to a Traditional IRA, you put money into this account first. Typically, this contribution is non-deductible if your income is high. The maximum contribution limit for traditional and Roth IRAs in 2026 is $7,500 per year for those under 50 years old, and $8,600 for those 50 and older. The total amount contributed to all IRAs in a year cannot exceed taxable compensation for the year.
  2. Convert to a Roth IRA: After the contribution, you convert the funds from the Traditional IRA to a Roth IRA. There’s no income limit for converting, so anyone can do this.
  3. Tax Impact: If the contribution was non-deductible (which is often the case at higher incomes), you won’t owe a lot of tax on the conversion. However, if the money grew or if you have other pre-tax IRAs, you might owe tax on the earnings or a portion of the conversion.

Essentially, it’s a two-step process to sidestep the income limits on Roth IRA contributions.

I recommend speaking to your financial advisor about completing this type of contribution. There are nuances to it that you should be aware of such as having a balance in your IRA of deductible contributions or making sure this is a good strategy for your financial plan. This strategy isn’t for everyone but can be a great way to fund your retirement with more tax-free dollars.

You can also refer to our helpful resource to determine if you are in a position to use this strategy:

Can I make a backdoor Roth IRA Contribution?

At Copper Leaf Financial we combine comprehensive financial planning with careful, tax-aware strategies to give clients the confidence to map out their financial goals. Our team includes Certified Financial Planner® professionals who understand how taxes impact your decisions about retirement, estate planning, investments and insurance. Contact us today to learn more.

By Breanna Sykes, CFP®, Senior Wealth Advisor, Copper Leaf Financial