Savant Wealth Management | Backdoor Roth IRA for Veterans

A backdoor Roth IRA still works when second-career income passes the limit, and Savant Wealth Management checks every pre-tax IRA balance first, since those balances set the tax cost of converting. The question usually lands in January, when the W-2 from a second-career job pushes joint income past $252,000. That is the top of the 2026 married-filing-jointly phase-out, and above it a direct Roth IRA contribution is no longer allowed.

Maybe you retired from the service with a pension, kept a Thrift Savings Plan balance and started a new job that pays well. Now the paycheck blocks the Roth IRA you assumed you'd keep funding. This article takes the backdoor one decision at a time, in order of due date: place yourself, count your IRAs, move the old money, then contribute and convert.

Quick summary

Add up your MAGI, including military retired pay, any FERS pension and your spouse's wages, before assuming a direct Roth IRA contribution is open.
Count every traditional, SEP and SIMPLE IRA balance for the spouse converting, using the December 31 figure, not the March one.
Ask the plan administrator whether the TSP or workplace plan takes IRA roll-ins, and start the request by early autumn.
Price any pro-rata tax against the next IRMAA tier before converting, and file Form 8606 with that year's return.

When does a second-career salary close the Roth IRA?

For 2026, the IRS phases out direct Roth IRA contributions at $153,000 to $168,000 of MAGI for single filers and $242,000 to $252,000 for married couples filing jointly. Military retired pay, FERS pensions and wages all count toward that MAGI, and so do a spouse's earnings. One more catch: you need earned income to contribute at all, and pensions don't qualify.

Step 1: count every pre-tax IRA by December 31

Gather the year-end balance of every traditional, SEP and SIMPLE IRA held by the person converting. The pro-rata rule looks at each person separately, so a spouse's IRA does not count against you. Many veterans assume the backdoor is tax-free by design. It isn't. It is tax-free only when the pre-tax IRA balance on December 31 of the conversion year is near $0.

Troy and Olga, a hypothetical couple, are 66 and 63. Troy is a Marine Corps retiree, and Olga is a retired nurse and former FERS employee who still picks up per diem shifts. They hold $900,000 across Troy's $520,000 TSP, Troy's $180,000 IRA and Olga's $200,000 IRA. Their joint MAGI is $260,000, including Olga's $30,000 from per diem nursing.

Olga contributes $8,600 nondeductible and converts it in March, but her $200,000 rollover IRA is still there on December 31. The IRS adds all her pre-tax IRA money together. Tax-free share: $8,600 ÷ ($200,000 + $8,600) = 4.12%. Taxable share: $8,600 × 95.88% ≈ $8,246. Their MAGI becomes $260,000 + $8,246 = $268,246, which leaves only $5,754 of room under the $274,000 IRMAA tier.

Now run it the other way. If Olga first rolls the $200,000 into her employer's 403(b) by December 31, the taxable share is about $0 and the MAGI stays at $260,000. Troy can do a spousal backdoor only after rolling his $180,000 IRA into the TSP.

Waiting has a price too. Each year they hold off loses that year's $8,600 of contribution room for good. That is $17,200 after 2 years and $43,000 after 5, and the room can't be made up later.

The slip at this step is counting the balance in March, when the conversion happens. The rule reads December 31, so a rollover finished in January comes too late.

Step 2: move the old IRA into a workplace plan

Decide whether a plan will take your pre-tax IRA money. The TSP accepts roll-ins of pre-tax IRA money from separated participants such as Troy, and many 403(b) and 401(k) plans do the same. After-tax basis can't go in, so only the pre-tax part moves. Gather your latest IRA statements and your last Form 8606, if you filed one.

Put these questions to the plan administrator or your CPA before you request anything:

One honest limit: a backdoor Roth needs earned income, so a household living only on pensions can't use it. The pro-rata math here also does not cover after-tax money inside a 401(k), which follows different rules. And once rolled-in money sits in a plan, it's invested like the rest of the account, so all investing carries risk, and you can lose money, including what you put in.

The slip at this step is requesting the rollover in December. Custodian paperwork can take weeks, and a check that lands January 3 does nothing for this year's count. Start by early autumn.

Does the plan accept roll-ins from an IRA?
How long does the transfer take?
Which fund will the money land in?
Are there plan fees on rolled-in money?
How is my Form 8606 basis carried forward?

Step 3: contribute, convert, then file Form 8606

Find the row that matches your pre-tax IRA balance first. The table sorts a married couple filing jointly by what they hold and what they can do about it.

Work the steps in this order:

A clean conversion adds almost nothing to MAGI. A pro-rata conversion adds the taxable share, and Medicare uses MAGI from 2 years earlier to set IRMAA, so Troy's Part B premium feels it later. You can make contributions for a tax year until the following year's tax filing due date. Converting in the same year you contribute keeps the paperwork in one return.

Converting in March and rolling the old IRA into the 403(b) the following January is a mistake of order: the December 31 balance still counts, which turned $8,246 of a hypothetical $8,600 conversion into taxable income.

Quick test: if you or the spouse doing the conversion will hold any pre-tax IRA balance on December 31, either roll it into a workplace plan before that date or price the pro-rata tax before converting. Before Savant Wealth Management suggests a backdoor, it estimates the tax cost of the conversion against the next IRMAA tier for your household.

If-then decision table for a backdoor Roth IRA, 2026 limits, married filing jointly
If	Then
MAGI under $242,000	Contribute to the Roth IRA directly
MAGI over $252,000, pre-tax IRA $0	Contribute, then convert the same year
Pre-tax IRA balance, plan accepts roll-ins	Roll it in by December 31, then convert
Pre-tax IRA balance, no plan option	Expect pro-rata tax; price it first
Only one spouse has earned income	Spousal IRA, joint total within that pay

Confirm the pre-tax IRA balance will be $0 by December 31
Contribute up to $8,600 nondeductible (age 50 or older, 2026)
Convert the contribution to Roth
Report both on Form 8606 with that year's return

Talk it over at the kitchen table

The spouse with the second-career paycheck usually raises it first, because the W-2 shows the limit. Cover three things: whose IRAs exist, who earns the compensation that funds a spousal IRA (joint contributions can't exceed it), and who files the Form 8606 each year. Write the answers on one page and keep it with the tax return.

Common questions on a backdoor Roth IRA

Is a backdoor Roth IRA a loophole the IRS could shut down?

Congress writes the rules, so a change is possible, and nobody can promise this strategy lasts. Past proposals to limit it have not become law. Rule changes often apply only to future conversions, so build your plan on current IRS rules, price each conversion on its own, and don't count on the strategy being available every year.

Can I undo a Roth conversion if I regret it later?

No. Since 2018, the IRS no longer lets you recharacterize a Roth conversion back to a traditional IRA. Once the money is converted, the tax cost stands for that year. That's why you price the conversion first, check the December 31 balance and confirm the IRMAA margin before the first dollar moves.

My per diem hospital job offers a 403(b) that accepts rollovers, should I move my old IRA into it before a backdoor Roth?

Usually yes, if the plan accepts roll-ins from an IRA. Moving the pre-tax money into the 403(b) by December 31 clears your IRA balance, so a backdoor conversion is mostly tax-free. Ask the administrator about fees, the fund the money lands in and the transfer time. Only pre-tax money can move in.

Can my husband do a backdoor Roth if I'm the only one still earning a paycheck?

Yes, through a spousal IRA, as long as you file jointly and your joint earned income covers both contributions. His IRA balance is tested on his own, so any pre-tax IRA he holds on December 31 triggers pro-rata. Savant Wealth Management checks both spouses' balances separately before suggesting a conversion.

Does the taxable part of a backdoor conversion raise my Medicare premium?

It can. The taxable share of a conversion counts in your MAGI, and Medicare uses MAGI from 2 years earlier to set IRMAA. A clean conversion adds almost nothing, but a pro-rata conversion can push a couple over a tier line, such as $274,000 joint, and raise the Part B premium 2 years later.

When is a call with Savant Wealth Management worth it?

You can make the contribution and the conversion yourself in an hour. The order of the rollover, the year-end balance and the IRMAA margin are worth a conversation with Savant Wealth Management before the first dollar moves. You get the fee schedule in writing ahead of the intro call, so you know the cost before you talk.

Primary sources

This content is general information and education. It is not individualized investment advice, tax advice or legal guidance. Investing involves risk, including the possible loss of principal. Before making financial decisions, talk to a professional who understands your full situation.