About Roth Ira Income Limits? 4 ways you can still contribute

The Roth IRA is one of the best available investment vehicles, which is a reason why they limit your contribution based on your changed custom gross income.

Normally, if you are among the income limits, a single filer can contribute $ 7,000 for 2025 ($ 8,000 if you are 50 and older). If you earn more than $ 150,000, but less than $ 165,000, the contribution limit is lowered as you increase that income spectrum. If you earn more than $ 165,000 – you are not allowed to contribute to a Roth IRA. (For the jointly married archiving, the income phasing is $ 230,000 to $ 240,000)

But there are still ways to get money in a Roth IRA if you exceed the income limits.

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Roth 401 (K)

Although it is not technically a Roth IRA, it still benefits from the tax treatment of a Roth IRA but in 401 (K) form. If your employer offers it, it is a great way to get a supercharged Roth IRA because there are no income limits and the contribution limit is $ 23,500 in funds after taxes. That age 50 and older can contribute an extra $ 7,500, while that age can contribute 60-63 to $ 11,250 more.

This limit is shared with your traditional 401 (K), so make sure you plant this accordingly.

Roth -conversion

A Roth conversion is when you turn a deferred account, such as a traditional IRA, in a Roth IRA. You can convert everything or simply part of it and you owe income tax on the amount that you convert. This includes your original contributions plus any appreciation or dividends that have been built up. If you have contributed dollars to a traditional IRA after taxes, they will not be charged with conversion.

If you convert a combination of dollars before taxes and after taxes, the Pro Rata rule says that you pay taxes based on the percentage of dollars before taxes and after taxes in all your IRA accounts. You cannot “choose” to only convert the dollars after taxes.

Another thing to remember is that the conversion has its own five -year holding period (for calculating fines if you take the funds before 59.5) that starts on January 1 of the year that you make the conversion.

🤔 Remember that when you include funds from a Roth IRA, the IRS assumes that you first make contributions, then conversions (in order of the oldest to the youngest), then income.

Backdoor Roth conversion

A Backdoor Roth conversion is a special name for a Roth conversion where you have contributed dollars to a traditional IRA, but never took the tax deduction, so that they contribute after taxes. It is titled backdoor because, apart from a few extra logistics steps, you have essentially contributed to a Roth Ira.

You can convert the traditional IRA into a Roth IRA at any time, but if you invest your money while you are in the traditional IRA, a profit will be subject to income tax.

Okay, so why the extra name? Because there is a bit of Irs ambiguity here.

There is what is known as a “step-transaction rule”Where the IRS can treat a series of transactions as a single transaction. It is quite clear that the multiple steps you take, the income limits of a Roth IRA. Until now the IRS has not given guidance about this and can therefore talk to a tax professional to fully understand your risks.

Do you also remember the pro rata rule above? If you have traditional IRAs with money before taxes, you must pay income tax, even if you convert another traditional IRA that exists exclusively for contributions after taxes.

Mega-Backdoor Roth conversion

Mega!

It is called Mega-Backdoor because it is just like the Roth conversion, except that it depends on your employer and your 401 (K)-which offers a much higher megalimite (it is $ 70,000 for 2025). :

The basic yeast is that you contribute after taxes to your 401 (K) or similar plan and then convert it into a Roth IRA or Roth 401 (K). Contributions Before taxes you limit to $ 23,500 per year, but if your employer allows after taxes, that increases the limit to $ 70,000.

This of course means that your employer must allow that contributions after taxes in a 401 (K). If they don’t do that, sorry, you are unlucky for a mega-backdoor. This is different from a contribution after taxes to a Roth 401 (K), because it is subjected to the limit of $ 23,500, so that it is still reasonably good.

Then you have to find out if they allow you:

• Rollover funds in a Roth Ira while you still work there
• Perform an in-plan-rollover in a Roth 401 (K)

If so, you can do the mega-backdoor.

1. Max your contributions before taxes to get the employer
2. Contribute dollars after tax to the $ 70,000 limit
3. Convert in a Roth as you would do other conversions in plan in a Roth 401 (K) is the easiest, but if you can’t do that, you transfer the money before taxes to a traditional IRA and the money after taxes to a Roth Ira

Consult a tax professional

Everyone’s tax situation is different and there are many moving parts of these kinds of decisions, so I recommend talking to a tax professional to find out what the best step for you is.

The purpose of this article is to help you understand the options if you earn more than the income limits and still want to take a predecessor of a Roth IR.