How to Convert a Non-Deductible IRA to a Roth IRA


If you have a non-deductible IRA, you can convert it to a Roth IRA and enjoy the added benefits of the Roth, including tax-free withdrawals and no required minimum distributions (RMDs).

However, the rules you must follow depend on whether you have only non-deductible IRAs or both non-deductible and deductible IRAs.

Key learning points

  • Non-deductible IRAs work just like other traditional IRAs, except you don’t get a tax deduction for your contributions.
  • Because your contributions are already taxed, you don’t have to pay taxes on them when you convert your non-deductible IRA to a Roth IRA.
  • However, your account earnings are taxable at the time of conversion.
  • If you have both non-deductible and deductible IRAs, you’ll need to add them all together and prorate the amounts to determine how much of your conversion is taxable and how much is tax-free.

Non-Deductible vs. Deductible IRAs

Non-deductible and deductible IRAs are both traditional individual retirement accounts (IRAs), with one key difference: With a non-deductible IRA, you don’t get a tax deduction for the money you contribute, but your account is tax-deferred until you withdraw money. At that point, your withdrawals will be taxed as income.

People who contribute to a non-deductible IRA often do so because their income is too high to contribute to a Roth IRA or to deduct their contributions to a traditional IRA.

The deductible traditional IRA is the most common type. It offers a tax deduction at the time you make your contributions, subject to certain income limits. Similar to a non-deductible IRA, your contributions are tax-deferred and only taxed when you withdraw the money.

Both nondeductible and deductible IRAs are subject to required minimum distributions beginning at age 73. The age has bumped up a few times but is set at 73 as of January 1, 2023.


At one time, taxpayers with incomes over $100,000 were not eligible for Roth IRA conversions. However, Congress removed that restriction as of 2010 and now everyone is eligible.

If all of your IRAs are non-deductible IRAs

If your IRA savings are made up entirely of non-deductible IRAs, you can convert them to a Roth IRA with relative ease. You don’t have to pay taxes on your contributions to the account (which have already been taxed), but you do owe taxes on the income from the account.

For example, Susan Smith is in the 24% tax bracket this year and she only has one IRA worth $100,000. The IRA consists of $60,000 in nondeductible contributions and $40,000 in income. If she decides to convert the entire IRA to a Roth, she will only have to pay taxes on the income portion ($40,000). At a 24% tax rate, it would cost her $9,600 in taxes to convert the entire $100,000 into a Roth.

If you have both non-deductible and deductible IRAs

If you have both types of traditional IRA, it’s more complicated to make a conversion. Unfortunately, you can’t easily convert your non-deductible IRAs. Instead, you should treat all of your IRAs (of both types) as if they were one big IRA. Next, you’ll need to prorate the amount of money you’re converting based on the proportion of nondeductible versus deductible funds in your total IRA.

IRS Form 8606, which you use to report the transaction, walks you through the steps. Calculators are also available online.

Say Sam Smith has IRAs totaling $200,000 and wants to convert $100,000 of that into a Roth IRA. His “base” (the amount he’s already paid taxes on through his non-deductible IRA contributions over the years) is $20,000.

Sam’s $20,000 base represents 10% of his total IRA balance ($200,000). So 10% of the $100,000 he turns into a Roth would be tax free, while the remaining 90% would be taxable.

If Sam is in the 24% tax bracket, the conversion would cost him $21,600. Actually, it would cost him at least that amount. Depending on Sam’s other income and how close he is to the top of the 24% bracket, some of it could fall into the next highest bracket and be taxed at 32%.

Therefore, anyone considering converting a significant amount should consider their current tax bracket and possibly spread the conversion over several years to minimize the tax burden.

How to complete the conversion

You have several options to perform the conversion. The simplest — and usually the safest — is to instruct the financial institution where your IRAs are currently held to transfer the money to a Roth account with that financial institution or another.

This is known as a trustee-to-trustee or same-trustee transfer. If you change trustees, your current trustee can write you a check in the name of the new trustee for you to deposit.

Are there limits to how much money you can turn into a Roth IRA?

No, you can convert all or part of the money in your traditional IRAs into a Roth IRA. However, keep in mind that if you plan to convert a large amount, spreading your conversions over several years may reduce your tax bill.

When Are Roth IRA Withdrawals Tax Free?

Withdrawals of Roth IRA income are tax-free if you’ve had a Roth account for at least five years and are 59½ or older or qualify for an exemption. You can withdraw your investment tax-free at any time.

What is a backdoor Roth IRA?

A backdoor Roth IRA refers to a two-step maneuver that high-income earners can use to get around the income limits on Roth IRAs. First, they contribute to a traditional IRA (which has no income limits), then they convert that IRA into a Roth.

It comes down to

If you have a non-deductible IRA, you can convert it to a Roth IRA. You don’t have to pay taxes on your contributions to the account, but the income from the account is taxable at the time of conversion. If you have both non-deductible and deductible IRAs, you’ll need to prorate the taxable and non-taxable portions to determine how much of your conversion is subject to taxes.