The Step-by-Step Process for Converting Non-Deductible IRA Contributions to a Roth

By Felix Thorpe · Retirement Accounts WriterPublished October 8, 2026

How a backdoor Roth conversion actually works

A backdoor Roth is a two-step process: you contribute money to a traditional IRA that you cannot deduct from your taxes, then you convert that account to a Roth IRA. The conversion itself is a taxable event, but because you already paid tax on the contribution, you owe tax only on any earnings that accumulated between the deposit and the conversion. If you move the money quickly—usually within days—there is little to no earnings, so your tax bill stays minimal.

The IRS allows this maneuver because the rules do not prohibit it. You are not circumventing income limits on Roth contributions; you are using a legal pathway that happens to exist. The catch is that the process requires careful timing and accurate record-keeping, because the IRS will look at your total IRA balance across all accounts when calculating how much of the conversion is taxable.

Key Takeaways

Contribute money to a traditional IRA that you cannot deduct, then convert it to a Roth within days to minimize taxable earnings.
The IRS taxes the conversion based on your total IRA balance, including SEP-IRAs and SIMPLE IRAs, not just the account you are converting.
You must report the non-deductible contribution on Form 8606 when you file taxes, or the IRS will tax the same money twice.
If you have existing traditional IRA balances, a backdoor Roth may trigger a large tax bill because the IRS treats all your IRAs as one pool.
The conversion itself happens through your IRA custodian (your bank or brokerage), not through the IRS.

Step 1: Confirm you have no existing traditional IRA balances

Before you contribute anything, check whether you already own a traditional IRA, SEP-IRA, or SIMPLE IRA. This is the most important step, because the IRS applies what is called the pro-rata rule to all your IRAs combined. If you have $50,000 in a traditional IRA and you contribute $7,000 to a new traditional IRA and convert it, the IRS treats the conversion as if you converted $7,000 from a pool of $57,000—meaning roughly 87% of your conversion is taxable.

Log into any IRA accounts you hold. If you have moved jobs, check whether your old employer's 401(k) is still in your name. If you have a SEP-IRA or SIMPLE IRA from self-employment, that counts too. Write down the total balance in each account as of the date you plan to contribute. You will need these numbers when you file taxes.

If you do have existing traditional IRA balances and you want to do a backdoor Roth, you have one option: roll the traditional IRA into your current employer's 401(k) plan, if the plan allows it. This removes the balance from the IRA calculation and lets you proceed with the backdoor conversion without a large tax bill. Not all 401(k) plans allow incoming rollovers, so contact your plan administrator first.

Step 2: Contribute to a traditional IRA

Open a traditional IRA at your bank or brokerage if you do not already have one. You can use the same institution where you hold other accounts, or a different one—it does not matter for the IRS, though keeping everything in one place makes record-keeping easier.

Contribute the amount you want to convert. For 2024, you can contribute up to $7,000 to an IRA if you are under 50, or $8,000 if you are 50 or older. You do not need to contribute the full limit; you can contribute any amount up to the limit. Make sure the contribution is made in cash (or a check that clears), not a transfer of securities, because you want the money sitting in the account before you convert it.

Do not deduct this contribution on your tax return. If your employer offers a 401(k) or you are self-employed, you may not be able to deduct a traditional IRA contribution anyway because of income limits, so this is often automatic. If you are not covered by an employer plan, you would normally be able to deduct the contribution—but for a backdoor Roth, you intentionally skip the deduction.

Step 3: Wait a few days, then convert to Roth

Once the contribution has cleared and is sitting in your traditional IRA, contact your IRA custodian and request a conversion to a Roth IRA. You can convert the entire balance or just part of it, though for a backdoor Roth you typically convert everything you just contributed.

The custodian will ask you to specify which IRA you are converting from and whether you want to convert to an existing Roth IRA or open a new one. If you already have a Roth, you can convert into it. If not, the custodian will open one for you. The conversion itself takes a few business days to process.

Some custodians allow you to request the conversion online; others require a phone call or a form. Check your custodian's website or call their IRA department to find out the process. There is no fee to convert, though some custodians may charge a small fee to open a new Roth IRA if you do not already have one.

Step 4: Report the contribution and conversion on your tax return

When you file your tax return for the year you made the contribution and conversion, you must report both on Form 8606 (Nondeductible IRAs). This form tells the IRS that you contributed money you did not deduct and then converted it.

On Form 8606, you will report the amount of the non-deductible contribution, the total value of all your IRAs on December 31 of that year, and the amount you converted. The form calculates how much of the conversion is taxable based on the pro-rata rule. If you had no other IRA balances and the money sat in the account for only a few days, the taxable amount should be close to zero.

File Form 8606 even if you owe no tax on the conversion. If you do not file it, the IRS will assume the entire conversion is taxable, and you will owe tax on money you already paid tax on when you contributed it. This is the most common mistake people make with backdoor Roths.

What happens if you have existing IRA balances

If you have a traditional IRA with a balance and you want to do a backdoor Roth, you have three choices: roll the traditional IRA into a 401(k), pay the tax on the pro-rata portion of the conversion, or skip the backdoor Roth entirely.

Rolling into a 401(k) is the cleanest option if your employer plan allows it. Contact your plan administrator and ask whether the plan accepts "incoming rollovers" from IRAs. If it does, you can roll your entire traditional IRA balance into the 401(k), which removes it from the IRA calculation. Then you can do the backdoor Roth without triggering the pro-rata rule.

If your 401(k) does not accept rollovers or you do not have access to one, you can still do a backdoor Roth, but you will owe tax on a portion of the conversion. Use Form 8606 to calculate the exact amount. For example, if you have $40,000 in a traditional IRA and you contribute and convert $7,000, the pro-rata rule means 85% of the conversion ($5,950) is taxable. You would owe tax on $5,950 at your marginal rate.

Timing and documentation to keep

There is no rule that says you must convert within a specific number of days after contributing. However, the longer you wait, the more earnings accumulate in the account, and the more of the conversion becomes taxable. Most people convert within a week to minimize this effect.

Keep records of the contribution and conversion for at least three years after you file the tax return reporting them. Save the confirmation from your custodian showing the contribution date and amount, and a separate confirmation showing the conversion date and amount. If the IRS ever questions the transaction, these documents prove you did it correctly.

Also keep a copy of Form 8606 for your records. The IRS uses this form to track your non-deductible contributions over time, so if you do multiple backdoor Roths in different years, the cumulative history matters.

Frequently Asked Questions

Can I do a backdoor Roth if I have a 401(k) at work?

Yes. A 401(k) does not count toward the pro-rata rule—only IRAs do. You can have a 401(k) and still do a backdoor Roth as long as you have no traditional IRA, SEP-IRA, or SIMPLE IRA balances. If you do have an IRA, you can roll it into the 401(k) first, then proceed with the backdoor Roth.

What if I convert the money but forget to file Form 8606?

The IRS will treat the entire conversion as taxable income, meaning you will owe tax on the contribution twice—once when you file Form 8606 late, and once on the original return. File an amended return (Form 1040-X) as soon as you realize the mistake, attach Form 8606, and claim a refund for the overpaid tax.

Do I have to convert all the money I contributed, or can I convert just part of it?

You can convert any amount you want. However, if you have other IRA balances, the pro-rata rule applies to whatever you convert, not just the amount you contributed. For simplicity, most people convert the entire contribution at once.

How long does the conversion take?

The conversion request itself takes a few business days to process through your custodian. Once it is complete, the money is in your Roth IRA and you can invest it. There is no waiting period before you can access the money or invest it.

Can I do a backdoor Roth every year?

Yes. You can do a backdoor Roth in any year you are under the income limit for direct Roth contributions. There is no limit on how many times you can do it, as long as you report each one on Form 8606 in the year you do the conversion.