How to Calculate MAGI for a Roth IRA (2026), With a High-Income Worked Example

By Kevin Luu, Co-Founder and Chief Learning Officer. Reviewed on September 30, 2026.

To calculate MAGI for a Roth IRA, start with the adjusted gross income (AGI) on your Form 1040, subtract any taxable income from converting a traditional IRA to a Roth IRA, and add back a short list of items: a traditional IRA deduction, the student loan interest deduction, foreign earned income and housing exclusions or the foreign housing deduction, excludable savings bond interest and excluded employer adoption benefits. For 2026, a married couple filing jointly can make a full Roth IRA contribution with MAGI under $242,000, a reduced one between $242,000 and $252,000, and none at $252,000 or more.

For a two-income household earning $600,000 to $1.2 million in salary, bonus and RSUs, the math usually ends at step one: AGI alone is several hundred thousand dollars over the line. The useful question is not how to shave MAGI down. It is how to get money into Roth accounts anyway, cleanly, every year.

How to calculate Roth IRA MAGI, line by line

The IRS method is Worksheet 2-1 in Publication 590-A. It has only a few steps:

1. Start with AGI. This is the AGI line on Form 1040 (line 11a on the 2025 form). For W-2 families it is mostly Box 1 wages from every W-2, plus interest, dividends and capital gains.
2. Subtract Roth conversion income. Remove any taxable amount from converting a traditional IRA to a Roth IRA, and any taxable rollover from a 401(k) or other qualified plan to a Roth IRA. This is why a backdoor Roth conversion does not push you further over the limit.
3. Add back a traditional IRA deduction, if you took one.
4. Add back the student loan interest deduction, if you took one.
5. Add back the foreign earned income exclusion, foreign housing exclusion and foreign housing deduction from Form 2555. This matters mainly in a year spent working abroad.
6. Add back excludable savings bond interest (Form 8815) and excluded employer-provided adoption benefits (Form 8839).

The total is your MAGI for Roth IRA purposes. Tax-exempt municipal bond interest, tax credits and your itemized or standard deduction are not part of this calculation. The deduction question comes up often enough that we answer it separately in Is the Standard Deduction Included in MAGI?, and if you want to find the starting number on your return, see which line of Form 1040 to use.

Roth IRA income limits for 2026 and 2025

Sources: IRS Notice 2025-67 for 2026 and Publication 590-A (2025) for 2025. The contribution limit itself is $7,500 for 2026 ($7,000 for 2025), plus a $1,100 catch-up at age 50 or older for 2026. Filing separately does not get a high-earning couple under the limit: if you lived together at any point in the year, the range is $0 to $10,000 and is not adjusted for inflation.

Inside the range, the limit shrinks in proportion. For 2026, a joint filer with MAGI of $247,000 is halfway through the $10,000 range, so the $7,500 limit is cut by half to $3,750 (Worksheet 2-2 rounds the result up to the nearest $10 and never below $200 if any contribution is allowed). You have until the due date of the return, not including extensions, to contribute for a year. For 2026 that is generally April 15, 2027.

Worked example: a $900,000 Bay Area household with RSUs

Maya is a biotech scientist in South San Francisco. Arjun is a hospital-employed physician. They file jointly, have two children aged 4 and 7, and live in California. All numbers are 2026 and are assumptions for illustration.

Their MAGI is $609,500 above the top of the joint range. Even if they had found every pre-tax deduction available, they would need to cut $619,500 to reach $242,000. The RSU vests alone ($240,000) are close to the full limit. So neither of them can contribute to a Roth IRA directly for 2026.

They can still each put $7,500 into a Roth IRA through the backdoor: a nondeductible contribution to a traditional IRA, reported on Form 8606, then a conversion to Roth. Because both work, taxable compensation is not an issue. Because both are covered by a workplace plan and their income is far above the 2026 deduction phase-out ($129,000 to $149,000 for a covered spouse filing jointly), the traditional IRA contribution is nondeductible, which is exactly what the backdoor needs.

What raises or lowers Roth MAGI for a W-2 family

For families near the line, which is rare at this income but happens in a sabbatical year or a year with a long unpaid leave, pre-tax deferrals are the main lever. We cover the options in how to reduce modified adjusted gross income.

The pro-rata rule: the old rollover IRA that makes a backdoor Roth taxable

The backdoor only works cleanly if you have no other pre-tax money in IRAs. When you convert, Form 8606 treats all your traditional, SEP and SIMPLE IRAs as one pool: their combined value on December 31 of the year of the conversion, plus the amount converted during the year. The nontaxable share of the conversion is your after-tax basis divided by that whole pool.

Suppose Arjun still has a $180,000 pre-tax rollover IRA from a former employer’s plan. He contributes $7,500 nondeductible and converts $7,520. If the rollover IRA is still worth $180,000 on December 31, his basis is $7,500 out of a $187,520 pool ($180,000 plus the $7,520 converted), so only about 4%, roughly $300, of the conversion is nontaxable. About $7,220 is taxable. Assuming federal taxable income above $768,700 (the 2026 joint 37% bracket) and California taxable income in the 10.3% bracket (2025 schedule, the latest published), that is about $3,415 of tax on a $7,500 contribution. The remaining basis is not lost; it carries forward on Form 8606, but the conversion no longer does what they wanted.

The usual fix is to roll the pre-tax IRA into the current employer’s 401(k) or 403(b) before December 31, if the plan accepts roll-ins. Check this before the conversion, not after, and remember that a conversion made after 2017 cannot be undone by recharacterization.

The larger Roth lever: after-tax 401(k) money (the mega backdoor)

A backdoor Roth IRA moves $7,500 per spouse for 2026. For many families in tech and biotech, the bigger opportunity is inside the 401(k). The 2026 limit on total additions to a 401(k) is $72,000, counting your deferrals, employer contributions and after-tax contributions. If Maya’s plan allows after-tax contributions and in-plan Roth conversions or in-service withdrawals, and her employer contributes $12,250 (an assumption), her room is $72,000 minus $24,500 minus $12,250, or $35,250. None of this is tested against MAGI. Roth 401(k) deferrals also have no income limit.

One 2026 change to know: if your FICA wages from the plan sponsor exceeded $150,000 in 2025, catch-up contributions at age 50 or older must go in as Roth. The details depend on the plan document, which is where our retirement and employee benefits work usually starts.

California versus Washington: how the conversion is taxed

The Roth IRA income limit is a federal test, so the MAGI math above is the same in both states. What differs is the tax on any taxable part of a conversion.

• California: taxable conversion income is ordinary income on your California return, at rates up to 13.3% (2025, including the 1% Behavioral Health Services Tax on taxable income over $1,000,000). With a clean backdoor, the taxable part is only the small growth between contribution and conversion, so the state cost is minor. With a pro-rata problem, it is not.
• Washington: there is no individual income tax for 2026, so a conversion is taxed only federally. Washington’s capital gains tax exempts retirement accounts. For households with AGI over $1,000,000, a new 9.9% Washington income tax begins January 1, 2028; how it will treat IRA conversions awaits Department of Revenue guidance, so larger conversions planned for 2028 or later deserve a second look.

Roth MAGI is not your only MAGI

“MAGI” means something different in each part of the tax code. The net investment income tax, the phase-down of the 2026 SALT deduction cap (which falls toward $10,000 once MAGI passes $505,000 for joint filers) and the child tax credit phase-out each use their own definition. The IRS is explicit that you subtract conversion income only when figuring MAGI for Roth IRA purposes, not for other AGI-based phase-outs. So a large Roth conversion that does not affect your Roth eligibility can still raise the income measured for these other rules. At $600,000 and up, most of these thresholds are already behind you, but it is worth checking in a lower-income year when a big conversion looks attractive.

Common mistakes we see at this income

• Contributing directly in January based on last year’s pay. A refresh grant vesting or a strong year-end bonus can push MAGI over the limit after the fact. An excess Roth IRA contribution carries a 6% excise tax for each year it stays in the account. It can be fixed by withdrawing the contribution and its earnings by the return due date (including extensions) or by recharacterizing it as a traditional IRA contribution.
• Forgetting Form 8606. Each spouse files their own Form 8606 for each year with a nondeductible contribution or a conversion. Without it, your basis is hard to prove later, and the same dollars can be taxed twice.
• Checking only one spouse’s IRAs. The pro-rata rule is applied per person, so each spouse’s own traditional, rollover, SEP and SIMPLE IRA balances decide whether that spouse’s conversion is taxable. Check both before either of you converts.
• Assuming filing separately helps. For couples who lived together, the separate-return range ends at $10,000.

What to write down for your kids

A backdoor Roth is a small, repeated decision that looks strange to anyone who does not know why it was made. Keep a one-page note with each year’s Form 8606, which accounts hold after-tax basis, and why you chose Roth dollars over a taxable account. Children who inherit Roth IRAs years from now will need those records, and they will learn more from the reasoning than from the balance. As Kevin Luu puts it: “Your kids don’t need to inherit your portfolio. They need to inherit your decision-making process.”

FAQ

Does RSU income count toward MAGI for a Roth IRA?

Yes. When RSUs vest, the value of the shares delivered is wages and appears in Box 1 of your W-2, so it flows into AGI and into Roth IRA MAGI. Shares sold later add any gain or loss on top. In years with large vests, this alone can push a household far past the 2026 joint limit of $252,000.

Can our child have a Roth IRA if we are over the income limit?

Yes. The limit is tested on the account owner’s own MAGI, not the parents’. A child can contribute the lesser of $7,500 for 2026 or their own taxable compensation from real work. Allowance, gifts and investment income do not count as compensation. A parent can open the account as custodian for a minor.

Can we still do a backdoor Roth for 2026 if we contribute in early 2027?

Yes. You can make a 2026 IRA contribution until the due date of your 2026 return, not including extensions, which is generally April 15, 2027. The conversion is reported in the year it happens, so a contribution made in 2027 for 2026 and converted in 2027 shows up across two years of Form 8606.

Next step

Pull last year’s Form 1040 and every IRA statement for both spouses, and check two things: whether your MAGI is anywhere near $242,000, and whether either of you has a pre-tax IRA balance on December 31. If you want a second set of eyes, our tax management team starts with the Tax & Wealth Assessment.

This article is general education, and the right move depends on your family’s full picture.

Written by

Kevin Luu

Co-Founder and Chief Learning Officer, Bright Advisers

Kevin has advised high-income W-2 tech and biotech families since 2015, and leads the education-first Age Five Family Office from Brea, California.

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