Backdoor Roth in 2026: how the pro-rata rule taxes your conversion

By DecisionSheet · Updated October 27, 2026 · 2026 tax figures

A backdoor Roth IRA is a two-step workaround for people who earn too much to contribute to a Roth IRA directly: put money into a traditional IRA without deducting it, then convert it to a Roth IRA. Done cleanly, the conversion owes no tax, because the money was already taxed. The catch is the pro-rata rule, which can make most of the conversion taxable if you have any other traditional IRA money. DecisionSheet's backdoor Roth calculator fills in Form 8606 for you and prices the result on the 2026 brackets. This page works through five cases.

Who needs the backdoor in 2026

The 2026 IRA limit is $7,500, or $8,600 if you are 50 or older by December 31 (a $1,100 catch-up), across all your traditional and Roth IRAs together (IRS Notice 2025-67). A direct Roth IRA contribution phases out:

Filing status	Phase-out of a direct Roth contribution
Single, head of household	$153,000 to $168,000
Married filing jointly	$242,000 to $252,000

The income is modified AGI, and a Roth conversion is left out of it (26 U.S.C. §408A(c)(3)). Above the top of the range, the backdoor is the way in.

The traditional IRA contribution is usually nondeductible at these incomes. If you are covered by a workplace plan, the deduction phases out from $81,000 to $91,000 single, or $129,000 to $149,000 on a joint return; if only your spouse is covered, from $242,000 to $252,000. A nondeductible contribution is reported on Form 8606, and its amount becomes your basis: after-tax money that comes out tax-free.

The pro-rata rule

For this purpose the tax code treats all your traditional, SEP and SIMPLE IRAs as one account, valued on December 31 of the year of the conversion (26 U.S.C. §408(d)(2)). You cannot convert "just the after-tax dollars". Every conversion carries a slice of basis in proportion to the whole:

Tax-free share = your basis ÷ (all those IRAs on December 31 + the amount converted).
Taxable part = the amount converted × (1 − that share).

Three things follow:

The date that counts is December 31, not the day you convert. A conversion in February is still caught by a rollover IRA you open in November.
Roth IRAs and 401(k)s are not counted. Roth IRAs are kept apart (§408A(d)(4)(A)), and a workplace plan is not an IRA.
Each spouse's IRAs are separate. "If married, file a separate form for each spouse" (Form 8606). Your spouse's rollover IRA does not touch your conversion.

The example: a single filer with an old rollover IRA

Income. $210,000 of salary, single, so no direct Roth contribution.
The backdoor. A $7,500 nondeductible contribution in 2026, converted in full to a Roth IRA.
The catch. A $100,000 rollover IRA from a previous job, still there on December 31.

Calculator summary tiles for a single filer converting $7,500 with $100,000 in a rollover IRA: taxable part $6,977 (93.0%), tax it adds $1,674, basis carried forward $6,977, and a roll-in saving of $1,674.

The basis is $7,500, spread over $107,500: the $100,000 left on December 31 plus the $7,500 converted. Only 7.0% of the conversion is tax-free, $523.26. The other $6,976.74 (93.0%) is taxable, as if it had been pre-tax money all along. Open this scenario.

Form 8606 lines for the same filer: line 3 $7,500, line 6 $100,000, line 9 $107,500, line 10 0.070, line 11 $523, line 14 $6,977, line 18 $6,977.

Their taxable income without the conversion is $193,900 ($210,000 less the $16,100 standard deduction), in the 24% bracket, and the conversion keeps it there. So it costs $1,674 of federal tax, 24% of the taxable part.

The basis is not lost. The $6,976.74 that did not come out this year stays on Form 8606 line 14 and becomes next year's line 2. It is the same amount as the taxable part, because the whole contribution was converted: each taxable dollar that went to the Roth left a dollar of basis behind.

It takes very little to cause this. With just $10,000 in another IRA, a $7,500 conversion is 57% taxable ($4,286). The first dollars of other IRA money do the most damage:

Chart of the taxable part of a $7,500 conversion as the other IRA balance on December 31 rises from $0 to $200,000: it climbs steeply at first and flattens toward $7,500.

The fix: roll it into a 401(k) by December 31

Many workplace plans accept roll-ins of pre-tax IRA money; ask the plan administrator. Only pre-tax money can go, which is exactly what you want: the basis stays in the IRA (§408(d)(3)(A)(ii)). If the $100,000 moves to a 401(k) and the move is complete by December 31, 2026, line 6 is $0, all of the basis lines up against the conversion, and the $7,500 conversion is tax-free. That saves $1,674 this year. Open it.

Three-column table: as entered, $6,977 taxable and $1,674 of tax; rolled into a 401(k), $0 and $0; converting all $107,500, $100,000 taxable and $32,500 of tax.

The other way to empty the IRA is to convert it all. That gets the same clean slate, but the $100,000 of pre-tax money is taxed now: converting $107,500 costs $32,500 (30.2% of it), climbing through the 32% bracket into 35%. It can still be worth doing in a low-income year, a trade the Roth conversion guide works through. A SEP or SIMPLE IRA counts the same as a rollover IRA, and may not have a 401(k) to go to.

Earnings before the conversion

If the money earns anything between the contribution and the conversion, the earnings are pre-tax. With nothing else in an IRA, converting $7,560 taxes only the $60 of earnings, $14.40 at 24%. Open it. This is why many people convert within days, from a money market fund, but a few dollars of earnings is a small price, not a mistake.

A couple, one spouse with a SEP IRA

A married couple filing jointly with $320,000 of income, both over 50. Each can put $8,600 in a traditional IRA and convert it. One spouse has a $50,000 SEP IRA from consulting; the other has no other IRA.

The spouse with no other IRA converts tax-free, whatever the other spouse holds.
The spouse with the SEP IRA has $8,600 of basis spread over $58,600, so $7,338 (85.3%) is taxable: $1,761 at 24% on their joint return. Open it.

Enter one spouse at a time: the IRA figures are that spouse's own, and the income is the household's.

The next year: clearing the leftover basis

Back to the single filer. Say the rollover IRA moved to the 401(k) in 2027, too late for 2026, and they come into the year with $6,977 of basis on line 2. A new $7,500 contribution plus that basis, converted together ($14,477) with nothing else left in an IRA, is entirely tax-free and leaves nothing on line 14. Open it. The calculator applies 2026 brackets, but in this case there is no tax to figure.

Filing it

Form 8606 goes with your return every year you make a nondeductible contribution, and every year you convert or withdraw while you have basis. Line 18, the taxable part of the conversion, goes on Form 1040 line 4b. Missing the form can cost $50, and overstating nondeductible contributions $100, unless you can show reasonable cause (Form 8606 instructions).
Keep every year's form. Line 14 is your record of basis, and next year's line 2 depends on it.
A contribution for 2026 made in early 2027 goes on the 2026 Form 8606 too (line 4), with its conversion on the 2027 form. The calculator assumes the contribution and the conversion both fall in 2026.
Five-year rule. A taxable part converted and then withdrawn within five years, before 59½, can owe the 10% early withdrawal tax (§408A(d)(3)(F)). A tax-free conversion of basis has no taxable part for it to reach.

Assumptions and limits

The form is Form 8606 for a year with a conversion and no other IRA withdrawals (lines 4, 7 and 12 are $0). The tax-free share is used unrounded; the form asks for "at least 3 places".
The tax is federal income tax only, on the 2026 brackets and standard deduction, with the age-65 addition and the senior deduction for anyone who enters them. All other income is ordinary income, there are no Social Security benefits, and credits, the alternative minimum tax and the net investment income tax are not modeled. State tax is a flat rate on the taxable part; every example here sets it to zero.
Married filing separately is not modeled; its direct Roth contribution phases out from $0 to $10,000.
This is a model of tax rules, not tax advice.

Method and sources

The model is calculateBackdoorRoth in the backdoor Roth calculator. It fills in Form 8606 Part I and Part II from the inputs, then computes the 2026 return without and with line 18, on the same model as the Roth conversion calculator, and takes the difference. The "roll into 401(k)" and "convert it all" columns are the same computation with line 6 at $0. Every figure on this page comes from runs of the model on the inputs in the scenario links, and the calculator was checked against an independent model of the same rules.

IRS Notice 2025-67: the 2026 IRA limit and catch-up, the Roth IRA phase-outs and the deduction phase-outs.
Form 8606 (2025) and its instructions: the lines, the separate form for each spouse and the penalties.
26 U.S.C. §408: §408(d)(2), all IRAs as one contract valued at year end, and §408(d)(3)(A)(ii), only pre-tax money rolls into a workplace plan.
26 U.S.C. §408A: the Roth income limit, which leaves conversions out, Roth IRAs kept apart, and the five-year rule.
Rev. Proc. 2025-32: the 2026 brackets and standard deduction.

Open this scenario in the calculator

All figures on this page come from the Backdoor Roth Pro-Rata calculator. Change any input there and the numbers update.