I Discovered Backdoor Roth IRAs Too Late: Can I Still Make Them Work Before Retirement?

Among the investment strategies that those living in the FIRE world pursue, IRAs are a popular option. Thanks to their tax-free growth, many in this community love the idea of this option over a more traditional brokerage account, of which IRAs may show more significant returns. 

One Redditor posting in r/ChubbyFIRE is surprisingly just now learning about a “backdoor” Roth IRA and has some questions. The biggest concern is that at 48, this Redditor and their spouse might be too late to take advantage of these tax-advantaged accounts. 

This is a great question, and the easy answer is that it’s never too late to try and spread your money around, even if you want to retire in the next few years. 

The Situation 

At 48, the original poster and his wife plan to escape the corporate rat race in the next five years or so. With a current net worth of around $2.8 million, they are hoping to hit a target of $4.5 – $5 million before finally calling it quits. 

With a household income of around $600,000 annually, they put away a comfortable $250,000 yearly in pre-taxable and taxable accounts. However, the big question stems from the fact that they were unfamiliar with the idea of a backdoor Roth account until they learned about it on Reddit, of all places. 

While they initially thought they made too much to take advantage of this, they are now wondering whether it is too late to make Roth contributions if they plan to retire in the next few years. If they can take advantage, this leads to the next question of how much they can contribute at their income level and how they would make backdoor (or “mega backdoor”) contributions. 

What Is A Back Door IRA? 

If you’re unfamiliar with the term “backdoor” IRA, that’s okay, as you are not the only one, as this Redditor indicates. To tie this back to Redditor’s post, a backdoor Roth IRA is an investment strategy that allows someone with a higher income level to contribute to this type of account in an underhanded fashion. 

Simply stated, this individual would convert a traditional IRA to a Roth IRA, allowing them to take advantage of tax-free growth and the withdrawal benefits of a Roth IRA. As with regular Roth IRA contributions, you would contribute using after-tax dollars, which are not tax-deductible. 

While there are traditionally income limits to what can be done with a Roth IRA, it’s clear that the backdoor loophole enables plenty of higher-earning individuals to find an opportunity to take full advantage. 

What Is Possible For This Redditor? 

A quick search of the comments shows widespread agreement that this Redditor can take advantage of backdoor Roth IRA accounts. At the maximum amount, they can contribute up to $7,000 in 2025, although if this couple were already over 50, they could contribute an extra $1,000 for a total of $8,000 to an IRA. 

Knowing this is possible, several Reddit commenters immediately reminded this individual to ensure this money is invested once the account is converted to a Roth IRA. Otherwise, it would just be sitting in cash and not making any additional income that would contribute to the Redditor’s $5 million FIRE target goal. 

By all accounts, this conversion won’t take more than a day, so this Redditor can start now and hopefully be done by next week. Before going down this path, it’s also important to remember that they must have enough liquid money in taxable accounts to cover their living expenses and any taxes on Roth conversions. 

With no kids or car payments and only $3,000 in expenses between mortgage, HOA, and insurance, there is no question that there is enough disposable income here to make a $7,000 contribution easy enough. Of course, they could hold off and just do Roth conversions after retirement and in this case, the only taxes that would be paid would be based solely on any retirement income and not on the current $600,000 in earnings.

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