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Beat the Income Limits: How to Use the Backdoor Roth IRA
Are you a high-income earner looking to invest in a Roth IRA but blocked by IRS income limits? The Backdoor Roth IRA is a smart, legal workaround—and when paired with a Self-Directed IRA from IRA Financial, you gain control over your retirement investments like never before.
Why Choose Us as Your Backdoor Roth IRA Provider?
IRA Financial is well-known for helping clients navigate complex retirement strategies like the Backdoor Roth IRA and Mega Backdoor Roth 401(k). With deep knowledge of IRS rules and compliance, we can help reduce the risk of costly mistakes during conversion —something many investors overlook when using traditional facilitators.
No Hidden Fees
No commissions or surprise charges.
Checkbook Control
Invest directly, without the need for custodian approval.
24,000+ Clients
Proudly serving over 24,000 clients across all 50 states.
Expert Support
Live chat available 8AM–6PM Central Time.
Dedicated Focus
100% Self-Directed IRA solutions.
Industry Expertise
Led by Self-Directed IRA specialists.
Backdoor Roth IRA
- Best value self-directed solution
- Invest in almost anything you want
- Enjoy tax-free withdrawals during retirement
- No transaction or asset value fees
Pricing Details
$0
setup fee
$495
annually
How to Start a Backdoor Roth IRA Plan
Opening a Backdoor Roth IRA with IRA Financial is straightforward. Follow these steps to set up your plan and start investing.
The Advantages of a Backdoor Roth IRA
The Backdoor Roth IRA is a strategy that allows high-earning individuals to take advantage of the benefits of the Roth IRA retirement account. By making after-tax contributions to a traditional IRA and then converting them immediately to Roth, you can grow your retirement investments entirely tax free. With a self-directed plan, you also gain access to alternative investments like real estate, crypto, and private equity.
Bypass Income Limits
Bypass Income Limits
The Backdoor IRA strategy allows one to circumvent the income restrictions for making direct Roth IRA contributions.
Massive tax-free growth potential
Massive tax-free growth potential
Contributions and earnings grow without tax while they are invested inside the Roth IRA. Qualified distributions from a Roth are tax free during retirement.
No mandatory withdrawals
No mandatory withdrawals
Allow your retirement savings to grow unhindered since there are no required minimum distributions (RMDs) with an after-tax Roth account.
Broader investment choices
Broader investment choices
Diversify beyond conventional investments like stocks and bonds into alternative assets, including real estate, private equity, cryptocurrency, precious metals, and more, enhancing your potential for wealth accumulation.
Direct investment control
Direct investment control
Make direct investment decisions without needing brokerage or custodian approval. With full checkbook control via a Checkbook IRA, you have ultimate authority to manage your Roth IRA investments efficiently and independently.
Creditor protection
Creditor protection
Funds within your Self-Directed IRA receive strong federal creditor protection under ERISA, providing greater security for your retirement savings compared to many other investment accounts.
Our Backdoor Roth IRA vs Other Providers
Many Backdoor Roth IRA providers charge asset-based fees, limit your investment choices to traditional assets, or require custodian approval for each transaction. Our flat-fee, self-directed plan offers full investment flexibility and direct access through checkbook control—so you can act quickly and invest on your terms.
| IRA Financial | Other Providers | |
|---|---|---|
| Flat Annual Fee | Yes | No |
| $0 Account & Transaction Fees | Yes | No |
| $0 Admin & Processing Fees | Yes | No |
| Expert-Guided Investments | Yes | No |
| Guaranteed IRS Audit Protection | Yes | Yes |
| Annual Tax Consulting | Yes | No |
| Annual Reporting & Filing Service | Yes | No |
Book a Consultation
Schedule a free consultation with a member of our team to explore how opening a self-directed retirement account can unlock your ability to invest tax-free in a variety of alternative assets.
See What Our Clients Have to Say
What Alternative Assets Can You Invest in with a Backdoor Roth IRA Plan?
A Self-Directed IRA with Backdoor Roth capability allows you to invest beyond traditional assets like stocks and mutual funds. Gain access to alternative investments such as real estate, private equity, cryptocurrency, precious metals, tax liens, and more—offering greater potential for diversification and long-term growth.
Real Estate
Residential, commercial, raw land, and rental properties.
Cryptocurrency
Bitcoin, Ethereum, and other digital assets.
Precious Metals
Gold, silver, and other IRS-approved metals.
Tax Liens & Deeds
Acquire property liens for potential returns.
Private Equity
Invest in startups, private companies, and venture capital.
Private Placements
Invest in a non-public company through the sale of securities.
Backdoor Roth IRA FAQs
Below are answers to common Backdoor Roth IRA questions covering eligibility, contributions, investment flexibility, and tax advantages.
What is a Roth IRA?
A Roth IRA is a type of retirement account that is funded with after-tax money, meaning there is no immediate tax break like a traditional plan. However, qualified distributions, which occur once the IRA owner reaches the age of 59 ½, and any Roth IRA has been open for at least five years, are tax free. Roth plans are best for younger savers, who can take advantage of the tax-free growth, and those who will be in a higher tax bracket as they near retirement.
What are the contribution limits of a Roth IRA?
For 2025, one can contribute up to $7,000 in an IRA, whether it’s a traditional plan, Roth, or a self-directed account. For those who are at least age 50, they can contribute an additional $1,000 catch-up contribution, bringing the annual limit to $8,000.
What are the income restrictions to contribute to a Roth IRA?
Direct contributions to a Roth IRA are limited based on your earned income and your tax filing status.
Single Filers
- Full Contribution: Income below $150,000.
- Partial Contribution: Income between $150,000 and $165,000.
- No Contribution: Income $165,000 or higher.
Married Filing Jointly
- Full Contribution: income below $236,000.
- Partial Contribution: income between $236,000 and $246,000.
- No Contribution: income $246,000 or higher.
Married Filing Separately
- Full Contribution: income less than $10,000.
- No Contribution: income $10,000 or more
Once you exceed these limits, you must utilize the Backdoor Roth IRA.
How Does the Backdoor Roth IRA strategy work?
The Backdoor Roth IRA involves making after-tax contributions, and converting them to Roth. These are the steps involved:
- Open both a traditional and Roth IRA
- Make an after-tax contribution to the traditional IRA
- Work with your IRA custodian to complete a conversion to move the funds from the traditional IRA to the Roth IRA
- The conversion would be reported on IRS Form 1099-R as a zero-tax conversion
Since the funds have already been taxed, no taxes are due on the conversion, unless you have other pretax IRA funds.
What is the pro-rata rule?
If you only contribute non-deductible funds and have no other pretax IRA money, there is not a taxable event. However, if you have other pretax IRA funds, the pro-rata rule will apply. The IRS rules require you to calculate taxes based on the ratio of after-tax to pretax funds across all your IRAs.
For example, if you have $5,000 in pretax funds in your IRA, and $5,000 in after-tax funds, and you convert the entire amount, half the amount would be taxable.
Can you perform a Backdoor Roth IRA every year?
Yes! If you wish to further increase your tax-free retirement funds, you may elect to perform a Backdoor Roth IRA annually. Just make sure you stay under the IRA contribution limits.
What can I invest in with a Self-Directed Backdoor Roth IRA?
With a Self-Directed Backdoor Roth IRA you can invest it:
- Real Estate – Buy rental properties, raw land, or commercial real estate.
- Cryptocurrency – Invest in Bitcoin, Ethereum, and other digital assets
- Private Equity – Fund startups, private businesses, or venture capital
- Tax Liens & Deeds – Purchase tax lien certificates for potential returns.
- Precious Metals – Buy IRS-approved gold, silver, and platinum.
Prohibited investments include collectibles, life insurance, and transactions involving disqualified persons (e.g., yourself or immediate family).
Ready to plan for your future?
Take control of your retirement by investing in alternative assets like real estate, cryptocurrency, businesses, and more. Start creating wealth today by opening an account.
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