Backdoor Roth contributions

A backdoor Roth contribution is used by taxpayers
whose MAGI is too high for a direct Roth IRA
contribution because the MAGI limit does not apply
to Roth conversions. When this occurs, taxpayers can
still make a nondeductible traditional IRA contribution
by April 15 of the following tax year to be treated as a
contribution on Dec. 31 for the current tax year, then
convert it immediately to a Roth IRA. However, the
catch is that some of the amount could be taxable when
they make the conversion. The idea with a backdoor
Roth contribution is that none of the conversion will
be taxable since it generally stems from nondeductible
traditional IRA contributions.