Yes, you may still be able to fund a Roth IRA strategy even if your income is too high to make a direct Roth IRA contribution.
This approach is commonly called a backdoor Roth IRA. It generally involves making a contribution to a traditional IRA and then converting those funds to a Roth IRA.
For higher-income earners, this strategy may offer a way to build Roth assets for retirement. However, it should be reviewed carefully. Backdoor Roth conversions can create tax consequences, especially if you already have traditional IRA, SEP IRA, or SIMPLE IRA balances.
At True North Wealth Management, we help clients evaluate Roth strategies as part of a broader retirement, tax, and estate planning conversation.
Why Roth IRAs Are Appealing
A Roth IRA can be a valuable piece of a retirement income strategy.
Unlike traditional IRAs, Roth IRAs are funded with after-tax dollars. Qualified withdrawals can be tax-free. This feature may provide flexibility in retirement when managing taxable income, Social Security taxation, Medicare premiums, required minimum distributions, and estate planning goals.
Roth IRAs also do not require original account owners to take required minimum distributions during their lifetime. That can make Roth assets especially useful for long-term planning and legacy strategies.
To qualify for tax-free and penalty-free withdrawals of earnings, Roth IRA distributions generally must satisfy a five-year holding requirement and occur after age 59½. Tax-free and penalty-free withdrawals may also be available in certain other circumstances, such as death or disability.
The Income Limits for Direct Roth IRA Contributions
Roth IRA contributions are subject to income limits.
For 2026, the IRS increased the Roth IRA contribution phaseout range to $153,000 to $168,000 for single filers and heads of household. The range for married couples filing jointly is $242,000 to $252,000. The phaseout range for married individuals filing separately remains $0 to $10,000.
If your income is above the applicable limit, you may not be eligible to contribute directly to a Roth IRA. That is where a backdoor Roth IRA strategy may be considered.
2026 IRA Contribution Limits
For 2026, the total amount you can contribute across traditional IRAs and Roth IRAs is generally $7,500, or $8,600 if you are age 50 or older, assuming you have enough taxable compensation. The IRA contribution limit does not apply to rollover contributions or qualified reservist repayments.
That combined limit applies across your IRAs. For example, if you contribute to both a traditional IRA and a Roth IRA in the same year, your total contribution generally cannot exceed the annual IRA contribution limit.
How a Backdoor Roth IRA Works
A backdoor Roth IRA strategy usually involves two main steps.
First, you make a contribution to a traditional IRA. Depending on your income, filing status, and whether you or your spouse are covered by a workplace retirement plan, that contribution may or may not be deductible.
Second, you convert the traditional IRA funds to a Roth IRA. The converted amount becomes part of your Roth IRA. However, the conversion may be taxable depending on whether the contribution was deductible and whether you already have pre-tax IRA assets.
The process may sound simple, but the tax rules can be more complicated than expected.
Watch the Pro Rata Rule
One of the most important issues in a backdoor Roth IRA strategy is the pro rata rule.
The IRS does not allow you to isolate only after-tax dollars for conversion if you have other pre-tax IRA money. Instead, when calculating the taxable portion of a Roth conversion, the IRS generally looks at all of your traditional IRAs, SEP IRAs, and SIMPLE IRAs together.
That means existing pre-tax IRA balances can cause part, or most, of the conversion to be taxable.
For example, someone with no existing traditional IRA, SEP IRA, or SIMPLE IRA money may have a much cleaner backdoor Roth process. In contrast, someone with a large rollover IRA from a previous employer plan may face complications.
This is one reason professional tax guidance is important before moving forward.
Timing Can Matter
Some people complete the traditional IRA contribution and Roth conversion close together to limit potential earnings before conversion. Others may need to wait depending on account setup, custodian rules, or tax considerations.
Any growth that occurs in the traditional IRA before conversion may be taxable when converted.
Timing may also matter if you are considering rolling pre-tax IRA assets into an employer retirement plan to reduce pro rata rule complications. Not all plans accept rollovers, and this approach should be reviewed carefully.
Traditional IRA vs. Roth IRA Rules
Traditional IRAs and Roth IRAs have different tax treatment.
Traditional IRA withdrawals are generally taxed as ordinary income, and withdrawals before age 59½ may be subject to a 10% federal penalty unless an exception applies. Traditional IRAs are generally subject to required minimum distributions beginning at the applicable RMD age.
Roth IRAs are funded with after-tax dollars and may provide tax-free qualified withdrawals. Original Roth IRA owners are not required to take minimum distributions during their lifetime.
These differences can make Roth assets useful, but that does not mean a Roth conversion is always the right choice.
When a Backdoor Roth IRA May Be Worth Considering
A backdoor Roth IRA strategy may be worth discussing if:
You earn too much to contribute directly to a Roth IRA
You want tax diversification in retirement
You have limited or no existing pre-tax IRA balances
You expect future tax rates to be higher
You want assets that are not subject to lifetime RMDs
You are planning for long-term retirement flexibility or legacy goals
However, the strategy may be less attractive if the pro rata rule creates a large taxable conversion, if you need the money soon, or if the tax cost outweighs the long-term benefit.
Roth Strategies Should Fit the Bigger Plan
A Roth IRA can provide flexibility, but retirement planning is rarely about one account.
The right strategy should consider:
Current and future tax brackets
Employer retirement plan options
Existing IRA balances
Roth 401(k) availability
Retirement income needs
Estate planning goals
Cash flow
Required minimum distributions
Charitable giving plans
Time horizon
Tax filing status
At TNWM, we help clients evaluate Roth strategies in context, not in isolation.
Talk Before You Convert
A backdoor Roth IRA can be a useful strategy for some higher-income earners, but it is not one-size-fits-all. Existing IRA balances, tax rules, contribution limits, timing, and long-term goals all matter.
If your income is too high for a direct Roth IRA contribution and you want to explore whether a backdoor Roth strategy makes sense, schedule a conversation with True North Wealth Management.
A thoughtful review can help you understand your options, avoid unnecessary tax surprises, and build a retirement strategy that supports your long-term goals.
Important Disclosures:
This material is for informational purposes only and is not intended as tax, legal, accounting, or individualized investment advice. Roth IRA contribution limits, income thresholds, tax laws, and conversion rules may change. Roth conversions may create taxable income. Please consult qualified tax, legal, and financial professionals regarding your individual situation before implementing a backdoor Roth IRA or Roth conversion strategy.
1. IRS.gov, November 13, 2025
The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite and customized by True North Wealth Management LLC to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.