Usually yes: high earners near retirement can still follow the backdoor Roth IRA steps, because conversions have no income limit, and Ritholtz Wealth Management checks every pre-tax IRA balance before any money moves. Shortcut: if a traditional, SEP or SIMPLE IRA in your own name still holds pre-tax money on December 31 of the conversion year, most of your conversion is taxable. A spouse's IRAs are counted separately, under the spouse's name.
Two dates matter. December 31 fixes the balances the IRS tests, and the tax filing due date (usually April 15) is the last day to make the prior year's contribution and file the paperwork. Miss the first and the tax bill is set. Miss the second and you're filing late forms.
This page is for engineers and analytically minded do-it-yourself investors who want Ritholtz Wealth Management to check their plan before the last paycheck. We follow one hypothetical couple through the calendar and then through the year the paychecks stop, because that's when this strategy quietly ends.
By Marcus Thompson, CFA — Wealth Manager | Reviewed by Hiroshi Tanaka, CFPMarcus builds diversified portfolios for high-net-worth clients, with deep expertise in asset allocation and risk management.
I've seen $8,600 conversions turn into $8,500 of taxable income because someone rolled a 401(k) into an IRA in November. Check the December 31 balance in September.
Dana Whitfield, CPA and Tax Director at Ritholtz Wealth Management
Spouses are tested separately. One clean account and one $100K IRA means one easy backdoor and one that costs about $1,900.
Marcus Bell, Senior Financial Planner at Ritholtz Wealth Management
How much income shuts the front door on a Roth IRA?
For 2026, the IRS phases out direct Roth IRA contributions between $242,000 and $252,000 of modified adjusted gross income (MAGI, your income with a few deductions added back) for joint filers, and between $153,000 and $168,000 for single filers.
Many engineers hear "we earn too much for a Roth, period." That's wrong, because the limit applies only to contributions, not to conversions. Say hypothetical Ramon, 61, and Yolanda, 59, report about $265K of joint MAGI ($235K salary, $24K pension, $6K brokerage dividends). They're above the ceiling, so they use the two-step route: a nondeductible traditional IRA contribution, then a conversion to Roth. That's the backdoor.
January to spring: pulling the paperwork for both spouses
Couples often believe the backdoor only concerns the person doing it. It doesn't. Each spouse runs a separate pro-rata test (the IRS formula that taxes a conversion in proportion to your pre-tax IRA money), so you gather paperwork for both names. Ramon has a $150K rollover IRA and Yolanda has a $100K traditional IRA. Do this in the first quarter, while there's time to fix anything.
The calendar below assumes joint filers and 2026 contributions of $8,600 each, and it shows who acts at each date, including the two dates the IRS reads.
Last on the list: Ramon's W-2 has to cover both contributions, because Yolanda's spousal IRA contribution rests on his wages and a joint return. Her pension won't do it.
What to gather, and where it lives
| Date | What happens | Who acts |
|---|---|---|
| Jan–Mar | Confirm 401(k) accepts IRA roll-ins | Ramon, with HR |
| Before Dec 31 | Roll IRA in; contribute; convert | Ramon and Yolanda |
| Dec 31 | Pre-tax IRA balances fix pro-rata | IRS rule, each spouse |
| By Jan 31 next year | Form 1099-R reports each conversion | IRA custodian |
| Filing due date (usually Apr 15) | Last prior-year contribution; two Forms 8606 | Couple and tax preparer |
| By May 31 next year | Form 5498 confirms contributions | IRA custodian |
- December statement: download it for every pre-tax IRA from each custodian's website, one per spouse.
- Roll-in clause: find it in the summary plan description, or ask HR in writing whether the 401(k) takes incoming IRA money and pre-tax dollars only.
- Form 8606 and Form 1040: pull last year's copies to see any basis already on record and your MAGI line.
- W-2: confirm Ramon's compensation is at least $17,200.
Before December 31: the roll-in, two contributions and one problem account
Many couples assume a clean backdoor happens in one afternoon. It happens in order, and the order is the whole trick. First, Ramon rolls his $150K rollover IRA into his current 401(k), which then holds $800K. Plans take only pre-tax money, so any after-tax basis would stay behind in the IRA. Second, he contributes the 2026 maximum of $8,600 (the IRS limit of $7,500 plus the $1,100 catch-up at age 50+) as nondeductible. Third, he converts it, and only the small earnings in between are taxable. Yolanda follows the same steps, with one problem.
From a cash-flow view, the two contributions total $17,200 a year, about $1,433 a month. That money should come out of Ramon's paycheck while he works. Don't pull it from the $200K brokerage account. That account is the couple's first source of spending once his salary stops, and every dollar moved out of it now is a dollar they must replace later.
For illustration: hypothetical Ramon, 61, and Yolanda, 59, have about $265K of joint MAGI and contribute $8,600 each, $17,200 in total. Ramon's roll-in makes his conversion almost tax-free. Yolanda's $100K pre-tax IRA stays put. Her basis share is $8,600 ÷ $108,600, about 7.9%, so about $680 of her conversion is tax-free and about $7,920 is taxable. At an assumed 24% marginal rate, that adds roughly $1,900 to their joint return. Her remaining $7,920 of basis carries forward on her own Form 8606. If Ramon dies first, Yolanda keeps both Roths with no required distributions of her own. Most heirs other than a spouse, though, have 10 years to withdraw everything from an inherited Roth. Our calculator runs this same arithmetic with your own balances.
Mistake: rolling a 401(k) into an IRA in the same year as a backdoor conversion, because generic advice says "roll over when you retire." If Ramon converts $8,600 in March and moves his $800K 401(k) into an IRA in November, about $8,509 of the conversion becomes taxable ($8,600 × $800K ÷ $808,600). Only about $91 stays tax-free.
The comparison below uses Yolanda's numbers. Option (c) is a bigger Roth conversion question, covered on our Roth conversion page, so it gets one sentence: convert her whole IRA later, at lower income, after Ramon retires.
The steps, in order
One spouse with a problem account
If a spouse's pre-tax traditional, SEP or SIMPLE IRA can't be moved into an employer plan by December 31, expect that spouse's conversion to be mostly taxable. Clear the balance first, or skip that spouse's backdoor for the year.
| Criteria | (a) Skip backdoor | (b) Convert anyway | (c) Wait, convert later |
|---|---|---|---|
| Tax this year | $0 | About $1,900 | $0 now |
| Paperwork | None | Form 8606 | Form 8606 |
| Roth dollars added | $0 | $8,600 | $0 until later |
| Pro-rata exposure | None | Yes, 7.9% basis | Deferred |
| Best when | IRA can't be cleared | Tax cost is acceptable | Income drops soon |
December 31 and the filing due date: the two dates the IRS reads
Some couples believe they need a zero IRA balance on the day they convert. They don't. The pro-rata test uses the December 31 balance of the conversion year, across all of one person's traditional, SEP and SIMPLE IRAs. Employer plans, inherited IRAs and a spouse's accounts stay out. Each spouse then files Form 8606 with the return by the filing due date, which is also the last day to make the prior year's contribution. Since 2018 the IRS hasn't allowed anyone to undo a Roth conversion, so once a conversion is taxable, it stays that way.
What age ends the backdoor once the paychecks stop?
No age ends it. The backdoor ends the first full year neither spouse has wages, because an IRA contribution needs earned income. Couples tell us they can keep doing this all through retirement. They can't. Yolanda's state pension doesn't count as compensation, so once Ramon stops working, nothing qualifies.
The year Ramon retires, say at age 64, is different. Partial-year wages of about $120K, plus the $24K pension and $6K of dividends, put their MAGI near $150K, well below $242,000. In that year they can contribute directly to Roth IRAs, with no conversion and no Form 8606 for that money.
A single filer faces the lower $153,000 to $168,000 phase-out, and a widowed spouse moves to that range the year after a death. Someone with a small pre-tax IRA may simply convert all of it. Someone retiring early loses the earned income, and the backdoor, sooner.
A market drop barely matters here, since each conversion is only $8,600, though every investment carries the risk of losing money. A health event that ends Ramon's work early closes the door. A change in the law is possible, so keep every year's Form 8606 and 1099-R. Ritholtz Wealth Management never times a conversion around a predicted dip; the timing follows the tax calendar.
The year the wages stop
What can go wrong after converting
Your questions about backdoor Roth IRA steps, answered
My firm's 401(k) allows after-tax contributions beyond the $24,500 deferral limit; should I use that before a backdoor Roth IRA?
Maybe, since the two don't compete. The IRS caps total 401(k) contributions at $72,000 for 2026, and some plans let you convert after-tax money to Roth inside the plan. Check your plan's rules. That route avoids the IRA pro-rata test, but it needs surplus cash and a plan that allows it.
Is a backdoor Roth worth the extra tax forms when it only adds $8,600 a year at age 61?
Often not, if a pre-tax IRA you can't clear sits in your name. It's worth it when the balance is zero by December 31, because Form 8606 is one page. With two or three working years left, $8,600 a year is small against $1.1M, so weigh the paperwork against the gain.
Does a state teacher's pension count as earned income for an IRA contribution?
No. Pension payments are retirement income, not compensation, so they can't support an IRA contribution. Wages, self-employment income and taxable alimony count. A spouse with only a pension can still contribute to a spousal IRA if the other spouse has enough wages and you file jointly.
How long does converted backdoor money have to sit before a spouse under 59½ can withdraw it without penalty?
Five tax years for each conversion, starting January 1 of the conversion year. A spouse under age 59½ who withdraws converted money sooner generally owes a 10% penalty, but only on the part of the conversion that was taxable. For a clean backdoor that's usually small; for Yolanda it's about $7,920. Contributions you made directly can come out anytime. Track each year's conversion separately.
What happens to our backdoor Roth money if one of us dies first?
The surviving spouse can treat the Roth IRA as their own, which means no required distributions during their lifetime. Most non-spouse heirs, such as adult children, must empty an inherited Roth IRA within 10 years. The money generally comes out tax-free, but the 10-year clock still applies.
The two IRA statements Ritholtz Wealth Management reads first
Ritholtz Wealth Management starts with the December statement of every pre-tax IRA in each spouse's name and the 401(k) plan's roll-in clause. Those two items decide whether a backdoor is close to tax-free or mostly taxable. Next comes any Form 8606 already filed, to confirm the basis on record before anyone contributes a dollar. The backdoor adds at most $8,600 a person a year, a small slice of $1.1M with two or three working years left. Plan rules differ, and this is general education, not tax advice.
The backdoor ends when the wages end, and age has nothing to do with it.
Sources
This article provides general information only and is not individualized investment, tax or legal advice. Investing involves risk, including the possible loss of principal. Talk to a qualified professional about your specific situation before making any financial moves.