Do You Need a Backdoor to Contribute to Your IRA?
Saving for retirement is essential, but income limits can make it tricky, especially for Roth IRAs. Here’s what you need to know:
Roth IRA Contribution Limits
For 2026, if your Modified Adjusted Gross Income (MAGI) is too high, you may not qualify for a direct Roth IRA contribution:
Single: Full contribution allowed if MAGI < $153,000
Married Filing Jointly: Full contribution allowed if MAGI < $242,000
If your MAGI is above these limits, a Backdoor Roth IRA may be your solution. This strategy involves contributing to a non-deductible Traditional IRA and then converting it to a Roth IRA. There are no income limits on conversions, but watch out for the pro-rata rule, which can create tax implications if you have other pre-tax IRA balances. It is best to consult with your financial advisor or tax professional to make sure you understand how this works for your particular situation.
Traditional IRA Deductibility
Anyone with earned income can contribute to a Traditional IRA, but whether your contribution is deductible depends on your income and whether you or your spouse are covered by an employer-sponsored plan:
Single, covered by an employer sponsored plan: May take a full deduction if your MAGI is < $79,000
Married, both covered by an employer sponsored plan: May take a full deduction if your MAGI is <$126,000
Married, only one spouse covered by an employer sponsored plan: May take a full deduction if your MAGI is < $236,000
Married or Single, not covered by an employer sponsored plan: May take a full deduction regardless of MAGI
Bottom Line:
If your income exceeds Roth limits, consider a Backdoor Roth IRA to keep building tax-free retirement savings. And if you’re unsure about deductibility or conversion taxes, consult your financial advisor to ensure your strategy aligns with your goals.
References:
https://www.investopedia.com/terms/b/backdoor-roth-ira.asp
https://www.investopedia.com/articles/retirement/05/aftertaxassets.asp
https://www.irs.gov/retirement-plans/rollovers-of-after-tax-contributions-in-retirement-plans
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