The Backdoor Roth IRA
A step-by-step implementation guide for high-income earners.
🚨 NOT TAX OR FINANCIAL ADVICE
I am not a CPA. This strategy involves the IRS "Pro-Rata Rule" which can trigger unexpected taxes if executed incorrectly. Consult a professional.
Important: The Pro-Rata Rule
Before you transfer a single dollar, you must check this: Do you have any money in a Traditional, SEP, or SIMPLE IRA?
If yes, the IRS will tax your conversion proportionally across ALL your IRA balances. This is the "Pro-Rata Rule." To execute a clean Backdoor Roth, your pre-tax IRA balance should ideally be **$0**.
2026 Vanguard Walkthrough
Vanguard is the most common platform for this strategy. You can start the process at investor.vanguard.com. Here is the exact path to follow to ensure you don't trigger a taxable event.
Important: When asked if this is a "deductible contribution," select NO. You are contributing post-tax dollars.
Wait 2–3 business days until the "Status" changes from Pending to Completed. Do not buy stocks yet.
Select "Convert the entire balance" and choose your Roth IRA as the destination. Select "Do not withhold taxes" (since you already paid them).
Reporting: IRS Form 8606
The most common failure point isn't the conversion—it's the reporting. You must file Form 8606 with your tax return to tell the IRS that you already paid taxes on that $7,500 contribution. If you miss this, you will be taxed again on the conversion.
📚 Citing This Guide
When referencing this content, please cite: "Backdoor Roth Visual Walkthrough" by jason.guide
