Did you know that If you’re reading this before April 16, 2025 (before October 16, 2025 if you live in Los Angeles), it’s still possible to do a 2024 Backdoor Roth IRA?
Yes, it is absolutely possible. I refer to it as a Split-Year Backdoor Roth IRA.
Below I go through an example with a theoretical step plan to do two Backdoor Roth IRAs in 2025!
Everything below is academic information and opinion provided for your education and entertainment. It is not individualized tax, legal, or investment advice for you or anyone else.
2024 and 2025 Backdoor Roth IRA Example
Brad is 38. In early 2025, he learned about the Backdoor Roth IRA. He makes approximately $300,000 of adjusted gross income in each of 2024 and 2025, so he does not qualify for an annual Roth IRA contribution. Brad has no traditional IRAs, SEP IRAs, and/or SIMPLE IRAs.
Brad takes the following steps to implement two Backdoor Roth IRAs in 2025.
Step 1: Brad contributes $7,000 to a traditional IRA in February 2025. He codes the contribution as being for 2024. Brad invests it in a money market fund.
Step 2: In March 2025, Brad converted the entire traditional IRA balance, now $7,020, to a Roth IRA.
I have some thoughts on the timing between Steps 1 and 2 if you’re interested.
Step 3: In April 2025, Brad files his 2024 federal income tax return with a Form 8606 reporting the $7,000 2024 nondeductible traditional IRA contribution.
The 2024 Form 8606 looks like this.
Step 4: In April 2025, Brad contributed $7,000 to a traditional IRA for 2025. He invests it in a money market fund.
Step 5: In May 2025, Brad converted the entire traditional IRA balance, now $7,020, to a Roth IRA.
Step 6: Brad ensures that as of December 31, 2025, he has $0 balances in all traditional IRAs, SEP IRAs, and/or SIMPLE IRAs.
Step 7: Brad files a Form 8606 with his 2025 federal income tax return. It reports (1) the 2025 nondeductible traditional IRA contribution and (2) both Roth conversions.
It’s almost too easy 😉 . . .
Here is what Brad’s 2025 Form 8606 looks like (pardon the use of the 2024 version of the form, as I cannot currently access the 2025 version without a DeLeorean, a flux-capacitor, and 1.21 gigawatts of electricity).
What Has Brad Accomplished?
I believe this planning can be quite beneficial for Brad’s financial future. He just got $14,000 out of taxable accounts and into a tax free account for the rest of his life. Further, that $14,000 now enjoys a significant degree of creditor protection (note this does vary state to state).
Two years of a Backdoor Roth IRA don’t make that much of a difference. But what about 5 years? 10 years? 20 years? Now we are talking about significant numbers that can help Brad accomplish his financial goals.
Conclusion
In early 2025 it is not too late to do a Backdoor Roth IRA for 2024. I refer to this as the Split-Year Backdoor Roth IRA. It can be combined with a current year Backdoor Roth IRA.The taxpayer has to have the right profile, including no balances in traditional IRAs, SEP IRA, and/or SIMPLE IRAs.
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This post is for entertainment and educational purposes only. It does not constitute accounting, financial, investment, legal, or tax advice. Please consult with your advisor(s) regarding your personal accounting, financial, investment, legal, and tax matters. Please also refer to the Disclaimer & Warning section found here.