Backdoor Roth
A two-step workaround for getting Roth IRA contributions when your income exceeds the direct-Roth phaseout (low-$150Ks MAGI single / low-$240Ks married for the 2026 vintage; figures rotate annually): contribute non-deductible to a Traditional IRA, then immediately convert that to Roth. The door opened when TIPRA (2005) repealed the income limit on Roth conversions effective 2010, and Congress acknowledged the strategy in the TCJA conference report. (IRS Notice 2014-54 is a different door — it governs splitting after-tax 401(k) money into a Roth IRA, the \u2018mega backdoor\u2019.) The pro-rata rule is the gotcha — if you have any other pre-tax IRA balances, the conversion is partly taxable.
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Adjusted Cost Basis · Annuity · APTC · Capital Gains Distribution · Capitalized Interest · Cost Basis
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