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Roth Conversion vs. Backdoor Roth

Roth Conversion vs. Backdoor Roth: What’s the Difference? Many women we work with want to build more retirement savings in accounts that grow tax-free. Roth IRAs are a great way to do that—but depending on your income and situation, there are different ways to get money into a Roth. Two common strategies are a Roth conversion and a backdoor Roth contribution. While they sound similar, they serve different purposes. What Is a Roth Conversion? A Roth conversion happens when you take money that is already sitting in a Traditional IRA or 401(k) and move it into a Roth IRA. When you do this, you will owe income tax on the amount you convert. The trade-off is that once the money is in the Roth, it grows tax-free, and you won’t pay taxes on it in retirement.

Why consider it?

  • If you expect to be in a higher tax bracket later, it may be smart to pay taxes now.
  • It reduces the size of future required minimum distributions (RMDs), which the IRS forces you to take from Traditional accounts.
  • It allows you to leave tax-free money to your heirs.
A Roth conversion does create an upfront tax bill, so it is often done gradually over several years instead of all at once.

What Is a Backdoor Roth Contribution?


The backdoor Roth is a way for people who earn too much to contribute directly to a Roth IRA. Here is how it works:
  1. You make a contribution to a Traditional IRA.
  2. You then convert that contribution into a Roth IRA.
If you do not already have large pre-tax IRA balances, this usually results in little to no tax owed. But if you do have pre-tax IRA money, it gets more complicated because of IRS rules that blend all your IRA accounts together.
This option is best for high earners who want to keep adding new money into a Roth account each year, even though their income is above the limit for direct contributions.

How to Know Which Is Right for You


Here’s the simple way to think about it:
  • A Roth conversion is about moving existing retirement money into a Roth.
  • A backdoor Roth is about adding new contributions when your income is too high to contribute directly.
For many women, especially professionals and business owners, these strategies can help create more flexibility in retirement, but timing matters. A Roth conversion can make sense in a year when your income is lower, while a backdoor Roth may be something you do regularly each year.

A Real-Life Example


Take Sally, a 48-year-old business owner. She had several slow years when her income dipped, so we helped her do partial Roth conversions during that time. By converting gradually, she paid taxes at a lower rate and built up a significant tax-free balance for retirement. Rachel is a physician with a high, steady income. Because she makes too much to contribute directly to a Roth IRA, she uses the backdoor Roth strategy every year. This keeps her retirement savings growing in a tax-free bucket, even though she’s over the income limits. Both women are building tax-free savings, but in different ways that match their unique situations.


Key Takeaways

  • Roth conversions move existing pre-tax retirement money into a Roth IRA.
  • Backdoor Roths add new contributions when income is too high for direct Roth contributions.
  • Timing and taxes matter—there is no one-size-fits-all approach.

At Dorsey Wealth Management, our clients have annual tax planning meetings where we review income, taxes, and retirement goals to determine whether a Roth conversion, a backdoor Roth, or a combination of both makes the most sense.

About Angela

Angela Dorsey is the founder and financial advisor at Dorsey Wealth Management, a fee-only financial planning firm based in Torrance, California, helping women prepare for retirement. Angela earned a BS in computer science from Loyola Marymount University, an MBA from UCLA Anderson School of Management, and spent 20 years as a Senior Compensation Specialist in large corporations before becoming a CERTIFIED FINANCIAL PLANNER™ professional and a Registered Investment Advisor (RIA). That background gave her the tools to couple with her passion for empowering women to make the best financial decisions possible. Angela lives in Torrance, California, with her husband. She enjoys spending time at the beach or surrounded by nature. To learn more about Angela, connect with her on LinkedIn.