The benefits of a Roth IRA are unmistakable—tax-free growth, tax-free withdrawals, and the potential to save you or your beneficiaries thousands of dollars over time. Unfortunately, income and contribution limits can make it difficult for higher-earning households to put meaningful amounts into a Roth IRA. In 2026, married filers earning over $252,000 (or $168,000 for single filers) cannot contribute directly to a Roth IRA.
However, through a backdoor Roth conversion, you can still get money into a Roth—even at higher income levels.
What Is a Backdoor Roth Conversion?
A backdoor Roth conversion is a straightforward two-step strategy:
- Roll all your money from traditional IRAs (SIMPLE or SEP) into your Employer 401k
This is because if not you can only roll over money pro-rata, and you will need to pay taxes on a portion of the rollover if you do not do this early enough
- Contribute post-tax dollars to a traditional IRA
Anyone can do this regardless of income. In 2026, you can contribute up to $7,500 (or $8,600 if age 50+). - Convert those dollars to a Roth IRA
Since the contribution was made with after-tax money, the conversion is typically tax-efficient. Once in the Roth, the money grows tax-free and can be withdrawn tax-free in retirement.
This allows high-income earners to fund a Roth IRA even when direct contributions aren’t allowed.
Why This Strategy Matters
- Estate Planning Benefits
If your beneficiaries are likely to inherit a substantial traditional IRA, they’ll be subject to the 10-year withdrawal rule. If they’re in their peak earning years, those required withdrawals will stack on top of wages—resulting in potentially significant taxes.
Roth IRA assets, by contrast, can be withdrawn by beneficiaries tax-free, providing a cleaner, more efficient inheritance.
- Maximizing Growth Potential
If you invest aggressively for long-term growth, Roth dollars are especially powerful. Whatever your $7,500 grows to—$15,000, $50,000, or more—can be withdrawn tax-free if held in a Roth IRA. High-growth investing pairs well with Roth strategies.
- Avoiding Medicare Premium Surprises
Traditional IRA withdrawals and Roth conversions both increase taxable income—something many savers overlook. Higher income can trigger IRMAA surcharges, increasing your Medicare premiums. It’s important to coordinate IRA strategy with Medicare planning to avoid unnecessary costs. (Learn more about this here.)
In Short
Backdoor Roth conversions can be a powerful way for higher-income individuals to build tax-free retirement wealth, reduce future tax burdens for beneficiaries, and strategically position assets for long-term growth. When used thoughtfully, this approach can play a meaningful role in your retirement and legacy planning.
OneAscent Financial Services, LLC (“OAFS”), d/b/a The Cornerstone Financial Group, is a registered investment adviser with the United States Securities and Exchange Commission. OAFS does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by OAFS or any unaffiliated third party. OAFS is neither an attorney nor accountant, and no portion of the presented content should be interpreted as legal, accounting, or tax advice. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly.
Bibliography:
Internal Revenue Service. (2025d, November 13). 401(k) limit increases to $24,500 for 2026, IRA limit increases to $7,500. Internal Revenue Service. https://www.irs.gov/newsroom/401k-limit-increases-to-24500-for-2026-ira-limit-increases-to-7500
OneAscent Financial Services, LLC (“OAFS”), d/b/a The Cornerstone Financial Group, is a registered investment adviser with the United States Securities and Exchange Commission. OAFS does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by OAFS or any unaffiliated third party. OAFS is neither an attorney nor accountant, and no portion of the presented content should be interpreted as legal, accounting, or tax advice. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly.