What Is a Backdoor Roth IRA?- The backdoor Roth IRA offers several advantages for account owners and heirs. A recent article from Kiplinger, “Backdoor Roth IRAs: Help Your Kids Keep More of Their Inheritance,” explains how a backdoor Roth IRA works and why it may be a good fit for your estate plan.
The Roth IRA is unlike most tax-deferred accounts. Taxes are paid when contributions are made, so owners and beneficiaries can take tax-free withdrawals. There are also no RMD (Required Minimum Distributions) requirements for heirs, allowing funds to grow over longer periods than in traditional inherited IRA accounts. What is a “backdoor” Roth IRA?
Income limits preclude high-income earners from contributing directly to a Roth IRA by the “front door.” In 2025, a single filer with Modified Adjusted Gross Income (MAGI) of more than $165,000 or a married couple filing jointly with a MAGI of more than $246,000 may not contribute to a Roth IRA.
Hence, the “back door” Roth IRA. It allows wealthy savers to dodge IRS income restrictions and pass assets in the Roth IRA to named beneficiaries. Because Roth IRAs are not subject to Required Minimum Distributions (RMDs), the original account owner can keep the money growing tax-free for longer and build a nest egg for heirs.
Opening a backdoor Roth IRA requires a few more steps than a traditional IRA.
Start by opening a traditional IRA and funding it with non-deductible after-tax dollars.
Next, convert the IRA to a Roth IRA as soon as possible. You didn’t get a deduction on the contributions to the traditional IRA, so there won’t be taxes on the conversion amount, although you will be subject to taxes on any gains. To prove the initial IRA was opened with after-tax dollars, you’ll need to submit Tax Form 8606. Talk with your estate planning attorney about how to make sure the Form is prepared and submitted properly.
You may need to pay taxes on a portion of a backdoor Roth conversion if you also own an IRA with pre-tax contributions. This is because the IRS treats all IRAs as one pool of assets. This is called the “pro-rata” rule, and it adds complexity to the equation. Therefore, speak with an estate planning attorney to ensure that contributions and taxes are in compliance.
Contributions to the backdoor Roth IRA are subject to the same limits as other IRAs. In 2025, the maximum is $7,000 for savers under 50 and $8,000 for savers 50 and older.
The benefits to your heirs are substantial: beneficiaries have a tax-free growth account. An heir in their prime earning years will have access to the assets without worrying about withdrawals that could increase their income tax bracket. The account can grow long past the rule requiring most non-spouse beneficiaries to withdraw the entire amount within ten years of the original owner’s death.
Talk with your estate planning attorney about using a backdoor Roth IRA to pass wealth to heirs while minimizing taxes. If you have assets, you don’t need in a traditional IRA, it’s a conversation worth having.
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What Is a Backdoor Roth IRA?
Reference: Kiplinger (Oct. 25, 2025) “Backdoor Roth IRAs: Help Your Kids Keep More of Their Inheritance”
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