How to do a backdoor Roth IRA with Carry

A Roth IRA has income limits that restrict contributions if your income is too high.

  • 2023 Roth IRA income limit: You cannot contribute if your income is over $153,000.

  • 2024 Roth IRA income limit: You cannot contribute if your income is over $161,000.

If your income exceeds the income limits, you can still get money into your Roth IRA by doing a backdoor Roth IRA. This involves making contributions to a traditional IRA first (since it has no contribution restrictions based on income levels), and then immediately rolling over the funds into your Roth IRA. Since the Roth IRA’s income limits only applies to contributions, and not rollovers, this backdoor conversion allows high income earners to put money into their Roth IRAs, regardless of their income levels.

Here’s how it works in Carry.

Step 1: Go to your Carry Traditional IRA

First, make a contribution into your Traditional IRA if you don’t have any funds in your account already. The contribution limit for 2024 is $7,000 if you’re under 50 years old, and $8,000 if you’ll reach at least 50 years of age by December 31 of the tax year.

Once funds are in your account, click Transfer or Withdraw to initiate the transfer to your Roth IRA.

Then, choose the Convert to Roth IRA option.

Step 2: Determine how much you want to transfer to your Roth IRA

While IRAs have a limit on how much you can contribute, there is no limit on how much you can transfer into the account from other plans. Note that assets cannot be transferred; you must sell your positions in any securities in your Traditional IRA and then move over the cash.

A traditional IRA is funded with pre-tax income and a Roth IRA is funded with after-tax income. Therefore, a backdoor Roth IRA transfer from your traditional IRA to your Roth IRA is a taxable event. The amount you transfer over is required to be added to your gross income for the tax year you make the transfer.


Make sure to account for the pro-rata rule when determining your taxable amount from the conversion.

While a traditional IRA doesn’t have income limits that prevent high earners from contributing, it instead has a tax-deduction limit. If your modified adjusted gross income (MAGI) is over $83,000 for 2023 or $87,000 for 2024, you’re still allowed to contribute to your traditional IRA but you won’t receive any tax deductions. In other words, your contribution would be a post-tax contribution. If you had pre-tax funds in your traditional IRA, you would now have both post-tax and pre-tax money in the account, which would trigger the pro-rata rule when you do a backdoor Roth conversion.

The pro-rata rule applies whenever you have both post-tax and pre-tax income in your traditional IRA. You’re not allowed to choose only the post-tax portion when doing a Roth conversion. Instead, the pro-rata rule is used to determine the ratio that should be used to determine how much should be a pre-tax conversion and how much should be a post-tax conversion.

For example, if you have $100,000 in your non-Roth IRAs with a split of 90% pre-tax funds and 10% post-tax funds, this gives you a ratio of 9:1. In this case, your backdoor conversion would consist of 90% pre-tax funds and only 10% post-tax funds, and you would need to pay taxes on the amount of pre-tax funds being rolled over.

To avoid complicated tax situations when you file your taxes, it’s a good idea to ensure you have no other pre-tax IRA dollars across all your non-Roth IRAs. A clean solution for this is to rollover all your non-Roth IRA funds to your Carry Solo 401k first, which is fast and is not a taxable event. Once your non-Roth IRAs have a balance of zero, you can use it to make contributions into your traditional IRA and immediately rollover the funds to your Roth IRA, avoiding any occurrences where you have both pre-tax and post-tax funds in your accounts.

Step 3: Submit the transfer

Once you’re ready to transfer the funds, click Continue with Conversion to review your transfer, then submit your request.

Once you’re done, you’ll see the confirmation screen. It will take around 1-2 business to process the transfer, and the funds should settle in your account in around 5 business days.

Click here to learn more about how backdoor Roth IRAs work.