2025 Backdoor Roth IRA Example
A married couple, both age 40, with MAGI over $246,000, can’t contribute directly to Roth IRAs, but they can still take advantage of the Backdoor Roth IRA strategy. Since neither spouse has pre-tax IRA funds, the pro-rata rule doesn't apply and the strategy makes sense.
How it works:
• Each spouse contributes to a Traditional IRA (non-deductible), then immediately converts it to a Roth IRA.
• Contributions are after-tax, so there’s little or no tax owed on the conversion—only any minimal growth between deposit and conversion would be taxed.
• Future growth is tax-deferred, and withdrawals are tax-free if Roth rules are met.
Potential outcomes:
• If each spouse contributes $7,000 once at age 40 and it grows at 8% annually, by age 65 each would have ~$48,000 ($7,000 contributed, ~$41,000 growth—all tax-free in a Roth IRA).
• If they repeat $7,000 contributions every year until age 65, each could have ~$560,000, or $1.12 million combined—tax-free retirement income.
Disciplined investing can make a big difference, no matter when you start. It’s never too late.
This illustration is for educational purposes only and does not constitute a recommendation. The Backdoor Roth IRA strategy may not be appropriate for everyone. Please consult a financial professional to determine what’s suitable for your individual circumstances. See thrivent.com/social for disclosures.
