Backdoor Roth Contributions in 2026: The April 15 Window Colorado High Earners Miss Every Year

You earn too much for a Roth IRA. Your income topped out Roth limits, and the IRS says your money doesn't belong there. That's the frustration dozens of Colorado executives, business owners, and dual-income households bring to our office every March. But there's a legal workaround that most never try: the backdoor Roth.

Can I still do a backdoor Roth for 2025 in 2026?

Yes, if you act before April 15, 2026. The IRS allows you to make IRA contributions for prior tax years up until the tax filing deadline. That means if you missed 2025, you're not locked out. You can still contribute $7,000 to a traditional IRA for 2025 (or $8,000 if you're 50 or older) and then immediately convert it to Roth.   

Here is the catch most people miss: Because the steps happen in different calendar years, the tax reporting is split. You will report the non-deductible contribution on your 2025 tax return, but you won't report the conversion until you file your 2026 taxes next year.   

The window to make that 2025 contribution closes on April 15. Many Colorado high earners don't realize March is prime season to execute this, when the deadline becomes real and you can finally assess your full-year 2025 income picture.

What's this pro-rata rule and why does it matter?

The pro-rata rule is where most backdoor Roth plans fall apart. When you convert a non-deductible traditional IRA contribution to Roth, the IRS doesn't just look at that one account. It aggregates every traditional IRA, SEP IRA, SIMPLE IRA, and rollover IRA you own across all institutions, calculates the percentage of pre-tax balances, and taxes your conversion accordingly.

Example: You contribute $7,000 non-deductible to a traditional IRA and convert it immediately. But if you have a $90,000 SEP IRA from a prior consulting business, the IRS treats them as one pool. Your $7,000 is 7% of a $97,000 total, so 93% of your conversion is taxable. Most people miss this entirely.

The fix: if you have existing traditional IRA balances, you may need to roll them into a 401(k) first (if your plan allows it) to clear out the pre-tax balance before converting. It's doable but requires planning.

Do I really need to file extra forms?

Yes. Form 8606 is non-negotiable. This form reports non-deductible contributions and conversions to the IRS. If you skip it, the conversion looks fully taxable, and the IRS can come after you.  

Because you are executing a "late" backdoor Roth in early 2026 for the 2025 tax year, your paperwork will span two years:

• On your 2025 Tax Return: You must file Form 8606 to document that your original $7,000 contribution was after-tax.
• On your 2026 Tax Return: Your custodian will issue a 1099-R early next year for the conversion step. You will use that to file Form 8606 again to document the tax-free conversion.   

Keep records of your original contribution, the account balance on the conversion date, and the conversion amount.

What if I have existing traditional IRA balances?

This is critical. If you have any pre-tax balances in traditional IRAs, SEP IRAs, SIMPLE IRAs, or rollover IRAs, the pro-rata rule applies to your entire IRA universe. You cannot cherry-pick and convert only the $7,000 non-deductible piece.

Your options:

• Roll existing traditional IRA balances into your employer's 401(k), if the plan allows. This removes them from the calculation.
• Convert them all to Roth (a larger taxable event, but it clears the playing field).
• Explore a mega backdoor Roth strategy if your 401(k) plan allows after-tax contributions and in-plan conversions.

Why does the April 15 deadline matter for Colorado executives?

Colorado high earners, especially those in cyclical industries (mining, energy, tech), often have variable income. Q1 is the sweet spot to act: your 2025 income picture is clearer, you know whether you'll hit Roth limits, and the April 15 deadline is close enough to force a decision.

If you earn above the 2025 Roth phase-out ($150,000 to $165,000 single; $236,000 to $246,000 married filing jointly), now is the time to act. Waiting until summer means you're locked out for another year.

Mega backdoor Roth: a separate strategy for those with higher after-tax capacity

If your 401(k) plan allows after-tax contributions and in-plan Roth conversions, you can move significantly more than the standard $7,000 annual limit. These after-tax contributions can be converted to Roth immediately, bypassing the pro-rata rule. The after-tax opportunity typically ranges from $40,000 to $65,000 annually depending on your salary and plan design. It's powerful for high earners and business owners but requires specific plan language. Check with your benefits team to see if you're eligible.

The backdoor Roth isn't complex, but it does have rules. The pro-rata rule catches most people off guard. Missing the April 15 deadline locks you out for a year. And filing Form 8606 is mandatory.

If you're a Colorado high earner and this sounds like it could work for your plan, what's holding you back from exploring it?

These are general strategies and may not be right for your specific situation. Backdoor Roth conversions are a taxable event, and the pro-rata rule can create significant tax liability. If you'd like to discuss how these apply to your plan, schedule a complimentary call. Connect with a Mountain Legacy Advisor today.