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Earn Too Much for a Roth? There’s a Legal Backdoor
The IRS says you make too much to fund a Roth IRA. Here’s the perfectly legal way to do it anyway, and the one rule that trips people up.
A few years ago, a friend told me he’d stopped contributing to his Roth IRA. Not because he ran out of money. Because he made too much of it.
He’d gotten a raise, crossed some invisible income line, and a form on his brokerage site quietly told him he was no longer “eligible.” So he just gave up on it. For three years, he left one of the best wealth-building tools in the country sitting on the shelf, gathering dust, all because he thought a closed door meant a locked one.
It didn’t. There was a side entrance the whole time. The IRS knows about it. Congress knows about it. And it has a slightly sneaky name: the backdoor Roth.
The wall most high earners hit
Here’s the setup. A Roth IRA is the account a lot of us would marry if we could. You put in money you’ve already paid taxes on, it grows for decades, and when you pull it out in retirement, you owe nothing. Not on the contributions, not on the gains. Tax-free is a rare word in the financial world, and the Roth gets to use it.
