Roth IRA Income Limits Explained (And What to Do If You're Over)

Roth IRAs have income limits on direct contributions, and the way they work confuses people — partly because it isn't a simple on/off switch.

How the phase-out works

Eligibility is based on modified adjusted gross income (MAGI), not salary and not taxable income. There are three zones: below a threshold you can contribute the full amount; within a band above it your allowable contribution is progressively reduced; above the band you can't contribute directly at all.

I'm deliberately not printing the specific dollar figures here, and I'd encourage scepticism of any article that does without a date attached. The thresholds are adjusted annually, and I found published figures for the current year that disagreed with each other by tens of thousands of dollars. Get them from the IRS's own annual announcement or Publication 590-A, and check the tax year matches.

A few things people miss: MAGI includes bonuses, capital gains, and dividends, so a good investment year can push you into the phase-out unexpectedly. And the married-filing-separately thresholds are extremely restrictive.

If you're near the edge

Pre-tax contributions reduce MAGI. Maximising a pre-tax 401(k), or contributing to an HSA if you're eligible, can move some people back below a threshold. Worth modelling before assuming you're excluded.

If you're clearly over

The common route is the backdoor Roth: contribute to a traditional IRA on a non-deductible basis — there's no income limit on that — then convert to a Roth. There's no income limit on conversions either. Vanguard describes the mechanism plainly enough.

And here's the trap

The pro-rata rule. If you hold any pre-tax money in a traditional, SEP, or SIMPLE IRA, the IRS doesn't let you convert just the after-tax portion. It treats every conversion as proportionally drawn from all your IRA balances combined — so part of the conversion becomes taxable, sometimes substantially.

This catches people who rolled an old 401(k) into an IRA years ago and forgot. One common sequencing fix is rolling those pre-tax balances into a current employer's 401(k) first, which removes them from the pro-rata calculation.

This is genuinely the point to involve a tax professional rather than a blog. Getting the order wrong produces a real bill.

A simpler alternative

Roth 401(k)s have no income limits at all. If your employer offers one, it sidesteps the whole question.

References

• 401(k) limit increases to $24,500 for 2026, IRA limit increases to $7,500 — Internal Revenue Service
• Roth IRA income and contribution limits — Vanguard
• Retirement topics — Catch-up contributions — Internal Revenue Service

This article is for general education only and is not tax or investment advice. Roth IRA income phase-out ranges are deliberately not stated because published sources disagreed; obtain current figures from IRS.gov or IRS Publication 590-A. The backdoor Roth involves tax consequences that depend on your full IRA balances — consult a qualified tax professional before acting.