Retirement Planning Education, with Andy Panko #190 - All about "backdoor" Roth contributions
Feb 5, 2026
A deep dive into how after-tax IRA contributions are converted into Roth accounts and the two-step mechanics involved. Clear explanations of MAGI limits, contribution caps, and timing rules. A close look at the pro rata rule, year-end balances, and pitfalls when moving funds between IRAs and 401(k) plans.
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Roth MAGI Is A Specific Calculation
- MAGI for Roth eligibility is AGI with specific additions/subtractions, not a universal MAGI.
- Most listeners only need to add back IRA deductions and ignore rare items like foreign housing for this MAGI.
Conversions Are Allowed But Taxable If Pre-Tax
- Anyone can perform a Roth conversion regardless of age or income, but conversions of pre-tax money trigger taxable income.
- Plan conversions to avoid unexpectedly large tax bills in the conversion year.
Execute Backdoor Roth Quickly
- To perform a backdoor Roth, make a non-deductible traditional IRA contribution and convert it promptly to a Roth.
- Converting quickly minimizes earnings that could trigger taxes on the converted amount.