Definition
A two-step route into a Roth IRA for people whose income is too high to contribute directly: contribute to a traditional IRA without deducting it, then convert that money to Roth. Direct Roth contributions are limited by income; conversions are not.
Why it matters
It legally restores Roth access, and decades of tax-free growth, to high earners. The catch is the pro-rata rule: existing pre-tax IRA balances make part of every conversion taxable, so the math needs checking first.
Example
A high earner contributes $5,000 to a traditional IRA, takes no deduction, and converts it to a Roth IRA a short time later. With no other pre-tax IRA money, tax is owed only on the few dollars it earned in between.
Put it into practice
Related terms
This definition is educational, not financial, legal, or tax advice. U.S. rules and limits change; verify time-sensitive details with official sources. See our disclaimer.