What Is Maxing Out a Roth IRA? 2026 Limits and the Backdoor Route for High Earners

By Kevin Luu, Co-Founder and Chief Learning Officer. Reviewed on 2026-09-30.

Maxing out a Roth IRA means putting in the full annual limit: for 2026, $7,500 per person, or $8,600 if you are 50 or older. For a married couple, that is $15,000 a year across two accounts. The catch for most households earning $750,000 or more is that a direct Roth contribution is not allowed at your income, so “maxing out” in practice means a backdoor Roth: a nondeductible traditional IRA contribution followed by a conversion to Roth.

This page covers the 2026 numbers, how the backdoor works, the one mistake that turns it into a tax bill, and what $15,000 a year is actually worth for a California or Washington family with young kids.

The 2026 Roth IRA limits and why high earners are phased out

The IRS sets the numbers each year. For 2026 (IRS Notice 2025-67):

For 2025 the limit was $7,000. The window for 2025 contributions has closed: IRA contributions for a year can be made until the due date of that year’s return, not including extensions (IRS Publication 590-A). So 2026 contributions can be made any time until the 2026 return deadline in April 2027.

A physician couple with $900,000 of W-2 income is far above the $252,000 ceiling, so the direct Roth limit for them is zero. The IRA limit itself still applies, and there is no income limit on converting a traditional IRA to a Roth. That gap is what the backdoor Roth uses. We cover its history in when the backdoor Roth IRA started.

How a backdoor Roth works, step by step

1. Contribute $7,500 to a traditional IRA as a nondeductible contribution. At your income, with a workplace plan, the contribution is not deductible anyway (the 2026 deduction phase-out for a covered spouse filing jointly ends at $149,000 of MAGI).
2. Convert the traditional IRA to your Roth IRA. Many families convert within days, so there are few or no earnings to tax.
3. File Form 8606 with your return. This form records your nondeductible basis. The IRS charges a $50 penalty for failing to file it when you made a nondeductible contribution, unless there is reasonable cause (Form 8606 instructions).
4. Repeat for your spouse. Each spouse has their own IRA and their own $7,500 limit. A spouse with little or no pay can still contribute based on the couple’s joint compensation when you file jointly (Publication 590-A).

The pro-rata rule: the mistake that creates a surprise tax bill

When you convert, the IRS does not let you pick only the after-tax dollars. It looks at the total value of all your traditional, SEP and SIMPLE IRAs as of December 31 of the conversion year, plus the amount you converted during the year, and treats the conversion as a proportional mix of pre-tax and after-tax money (Form 8606, lines 6 to 9).

Example: a Genentech scientist has a $192,500 rollover IRA from a previous employer and adds a $7,500 nondeductible contribution, for $200,000 in total. Only 3.75% of any conversion is after-tax. Convert $7,500 and about $7,219 of it is taxable income, at a 35% or 37% federal rate plus California tax.

The common fix is to roll the pre-tax IRA into the current employer’s 401(k) before December 31, if the plan accepts incoming rollovers. That brings the IRA balance to zero for the pro-rata test. The rule is applied per person, so one spouse’s rollover IRA does not affect the other spouse’s backdoor.

Worked example: what $15,000 a year becomes

Assumptions (illustrative only): a married couple in the Bay Area, both on W-2 pay, household income $900,000, children aged 3 and 6. Both spouses do a $7,500 backdoor Roth each year for 20 years. Money is invested at a hypothetical 6% annual return, contributions at year end.

In the first row, the roughly $252,000 of growth is never taxed if withdrawals are qualified. If the same growth were realized in a taxable brokerage account by a California couple in the top brackets, the combined rate could reach 37.1%: for 2026, the 20% federal long-term gains rate and the 3.8% Net Investment Income Tax, plus California’s top 13.3% rate, which for 2025 applies to joint taxable income above $1,485,906. That is roughly $93,000 of tax on the gain, before counting the yearly drag of taxed dividends. This is a simplified illustration; actual results depend on returns, timing and your full return.

At a $900,000 income, $15,000 is under 2% of pay. The Roth IRA is not the main event for this family. It is a small, permanent, tax-free bucket that is worth filling every year because each year’s room is lost if you skip it.

California versus Washington

California. California generally conforms to federal Roth IRA rules (FTB Publication 1005). That matters more here than almost anywhere: California has no lower rate for capital gains, so gains in a taxable account are taxed as ordinary income, up to 13.3% (the 2025 top rate) (FTB). One exception parents should know: California does not follow the federal rule allowing 529 plan rollovers to a Roth IRA. Such a rollover is taxable for California and subject to an additional 2.5% tax (FTB 3805P instructions).

Washington. Washington has no tax on wages today, but it taxes long-term capital gains at 7%, and 9.9% on gains above $1,000,000, after a standard deduction ($278,000 for 2025, the latest published). Retirement accounts are exempt (WA DOR). From January 1, 2028, Washington is adding a 9.9% income tax for individuals and joint filers with adjusted gross income over $1,000,000 (WA DOR); how that applies to retirement account income is pending state guidance.

Is maxing out a Roth IRA worth it at your income?

For most CA and WA families in this range, yes, as one piece of a larger order of operations. A common sequence:

1. 401(k) elective deferral: $24,500 for 2026 per spouse.
2. Backdoor Roth IRA: $7,500 per spouse.
3. Mega backdoor Roth, if your plan allows after-tax contributions with in-plan conversion. For 2026 the total 401(k) limit (employee plus employer contributions, not counting catch-ups) is $72,000. With a $24,500 deferral and a hypothetical $12,000 employer match, that leaves $35,500 of after-tax room. See mega backdoor Roth vs brokerage.
4. Then 529s, dependent care FSA and a taxable account for goals before 59½.

Two points often get missed. First, Roth IRA contributions (not earnings) can come out at any time without tax, while converted amounts have their own five-year clock for the 10% early withdrawal penalty (IRS Publication 590-B); we cover this in when you can withdraw from a Roth IRA. Second, Roth IRAs have no required minimum distributions during the owner’s lifetime, which makes them one of the better accounts to leave to children.

Common mistakes we see

• Contributing directly to a Roth IRA, then learning at tax time that income was too high. That is an excess contribution, which is taxed each year until it is fixed.
• Forgetting a rollover IRA, SEP IRA or old SIMPLE IRA when doing the backdoor.
• Skipping Form 8606, which leaves no record of basis.
• Leaving the converted money in cash instead of investing it.
• Waiting until April every year. Doing it in January gives the money more time invested.

What to document for your kids

A Roth IRA is often the first account a child can understand: you paid tax once, and the growth is theirs to keep. Write a short note on why you fund it every January, what you are saving it for, and who handles the paperwork. When a child starts earning money from a real job, a custodial Roth IRA lets them start the same habit, limited to their earned income. As Kevin Luu puts it: “Your kids don’t need to inherit your portfolio. They need to inherit your decision-making process.”

FAQ

Can both spouses max out a Roth IRA if only one works?

Yes, if you file jointly. The limit is based on the couple’s combined taxable compensation, so a non-working spouse can have their own IRA and contribute $7,500 for 2026. At a high income, that spouse would also use the backdoor route: a nondeductible traditional IRA contribution, then a conversion, reported on the spouse’s own Form 8606.

Is the backdoor Roth legal?

The two steps are each allowed under the tax code: a nondeductible IRA contribution, and a conversion with no income limit. The IRS instructs taxpayers to report both on Form 8606. The practical risks are the pro-rata rule and paperwork errors, not the strategy itself. Keep contribution and conversion confirmations with your tax file each year.

Next step: before your next contribution, check whether either spouse has a balance in any traditional, SEP or SIMPLE IRA. If so, deal with it before December 31. If you want a second opinion on the full order of savings for your family, our retirement and employee benefits and tax management work starts with the Tax & Wealth Assessment.

This is general education, not individual tax advice. 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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