Trying to get more money into a Roth IRA but blocked by income limits? You’ve probably heard of the backdoor Roth—but is it safe?

Backdoor Roth IRA conversions have become a popular strategy for high-income earners who want tax-free growth and retirement flexibility. But if you don’t understand the rules—especially the pro-rata rule—you could be in for a surprise tax bill.

At Polaris Tax & Accounting, we help high-income professionals and business owners make strategic retirement moves that reduce risk and increase wealth. Here’s what you need to know about using the backdoor Roth strategy.

What Is a Backdoor Roth IRA?

A backdoor Roth IRA is a two-step process:

  1. You make a non-deductible contribution to a Traditional IRA
  2. Then you convert that contribution into a Roth IRA

Since the original contribution wasn’t deductible, the idea is that the conversion should be tax-free. But that’s only true if you have no other pre-tax IRA balances (including SEP and SIMPLE IRAs).

The Hidden Tax Trap: The Pro-Rata Rule

The IRS considers all your traditional IRAs when figuring out how much of the conversion is taxable. This is known as the pro-rata rule.

If you have $90,000 in pre-tax IRA money and contribute $6,000 after-tax, your Roth conversion will be mostly taxable. Why? Because the IRS blends all accounts to determine what portion of the conversion is subject to tax.

Key takeaway: The more pre-tax money you have in IRAs, the less effective the backdoor Roth strategy becomes—unless you clean it up first.

How to Make It Work

To avoid the pro-rata trap, consider these strategies:

  • Consolidate your IRAs into a 401(k) that accepts roll-ins (401(k) balances aren’t counted in the pro-rata calculation)
  • Convert pre-tax IRAs first to clean the slate—if you’re prepared to pay the tax now
  • Use only newly created IRAs with no other balances before converting

Who Should Use the Backdoor Roth?

This strategy is best for:

  • High-income earners above Roth contribution limits ($236,000 for MFJ in 2025)
  • Individuals with no existing traditional IRA balances
  • Those willing to do extra planning to manage tax exposure

Bottom Line

Used properly, a backdoor Roth IRA can give you:

  • Tax-free growth for life
  • No required minimum distributions
  • Better estate planning options

Used incorrectly, it can trigger an unexpected tax bill and complicate your IRA picture. That’s why we recommend talking to a tax advisor before initiating the conversion.

📍 Polaris Tax & Accounting works with high-income professionals in Plantation and across the U.S. to make backdoor Roth strategies work the right way.

👉  Schedule a consultation today to evaluate whether this fits your overall tax plan.