Once your income crosses the Roth IRA phase-out, the standard retirement playbook stops working. Direct Roth IRA contributions are off the table, and the traditional IRA deduction is usually gone too. What remains is a set of legal workarounds that can move tens of thousands of dollars per year into tax-free or tax-deferred accounts: the backdoor Roth IRA, the mega backdoor Roth inside your 401(k), Solo 401(k) employer contributions, and, for profitable business owners, defined benefit plans. This guide lays out how each one works, who qualifies, and how to sequence them in 2026.

Why do high earners need a different retirement playbook?

For 2026, the IRS phases out direct Roth IRA contributions between $153,000 and $168,000 of modified adjusted gross income for single filers, and between $242,000 and $252,000 for married couples filing jointly. (IRS IR-2025-111) The deduction for traditional IRA contributions phases out at even lower incomes if you or your spouse is covered by a workplace plan: $81,000 to $91,000 for single filers and $129,000 to $149,000 for joint filers in 2026. (IRS IR-2025-111)

That leaves high earners in an awkward middle: too much income to contribute to a Roth IRA directly or deduct a traditional IRA contribution, but still fully exposed to taxes on every dollar of investment growth in a taxable brokerage account. The strategies below exist to close that gap.

How does a backdoor Roth IRA work?

The backdoor Roth IRA is a two-step maneuver. Step one: make a non-deductible contribution to a traditional IRA ($7,500 for 2026 if you are under 50, $8,600 if you are 50 or older). Step two: convert that traditional IRA balance to a Roth IRA. Unlike direct Roth contributions, Roth conversions have no income cap.

Report the non-deductible contribution on Form 8606, which tracks your after-tax basis so you are not taxed twice. (IRS Instructions for Form 8606) If the contribution sits in the traditional IRA only briefly before conversion, there is little or no growth to tax, so the conversion itself is nearly tax-free.

The trap to watch is the pro-rata rule. The IRS treats all of your traditional, SEP, and SIMPLE IRAs as one combined account when you convert. If you hold $93,000 of pre-tax IRA money and add a $7,500 non-deductible contribution, then convert $7,500, only about 7.5% of the conversion is tax-free; the rest is taxable ordinary income. The standard fix is to roll pre-tax IRA balances into your employer's 401(k) before year end, leaving the IRA holding only after-tax money. (IRS Instructions for Form 8606)

What is the mega backdoor Roth, and who can use it?

The mega backdoor Roth uses a different door: your 401(k). The 2026 elective deferral limit is $24,500, but the total annual additions limit under Section 415(c) is $72,000. (IRS Notice 2025-67) The gap between those two numbers is where the mega backdoor lives. If your plan allows after-tax (non-Roth) contributions, you can contribute beyond $24,500 up to the $72,000 total, then convert the after-tax portion to Roth.

Two plan features must both be present: (1) the plan must accept after-tax contributions, and (2) it must allow in-plan Roth conversions or in-service distributions. The IRS confirmed the mechanics in detail: Notice 2014-54 permits splitting a distribution so after-tax amounts go to a Roth IRA while pre-tax amounts go to a traditional IRA (IRS Notice 2014-54), and Notice 2013-74 confirms that in-plan Roth rollovers can cover amounts that are not otherwise distributable, with no withholding on a direct rollover. (IRS Notice 2013-74)

Illustrative example: say you earn $300,000, contribute the full $24,500 elective deferral, and your employer adds a $12,000 match. Total additions are $36,500, leaving $35,500 of headroom under the $72,000 cap. If your plan allows after-tax contributions and in-plan Roth conversions, that $35,500 can go in after-tax and convert to Roth, all in the same year.

One 2026 wrinkle: under SECURE 2.0, catch-up contributions must be Roth if your prior-year wages exceeded $150,000. (IRS Notice 2025-67) That does not block the mega backdoor, but it changes how catch-ups are designated for high earners.

How do business owners stack Solo 401(k) contributions?

If you are self-employed with no employees (other than a spouse), a Solo 401(k) lets you contribute in two capacities. As the employee, you make elective deferrals up to $24,500 for 2026. As the employer, you add profit-sharing contributions up to 25% of your compensation. Total contributions per participant cannot exceed the $72,000 Section 415(c) limit. (IRS, One-Participant 401(k) Plans; IRS Notice 2025-67)

Illustrative example: a consultant with $200,000 of net self-employment income could contribute $24,500 as the employee plus about $37,200 as the employer (20% of net self-employment income after half the self-employment tax), for about $61,700 total, all within the $72,000 cap. A Solo 401(k) can also be drafted to allow after-tax contributions and in-plan Roth conversions, which opens the mega backdoor to the self-employed. And if you also hold a W-2 job with a 401(k), the $24,500 elective deferral limit applies to you as a person across all plans, not per plan. (IRS, One-Participant 401(k) Plans)

When does a defined benefit plan make sense?

Defined benefit (pension) plans are the heavy artillery for profitable, established businesses, typically with owners age 40 and up who can commit to steady annual funding. For 2026, the maximum annual benefit a defined benefit plan can pay is $290,000. (IRS Notice 2025-67) Because contributions are actuarially calculated to fund that future benefit, annual deductible contributions can run far higher than defined contribution limits, often into six figures for owners in their 50s and 60s.

The common "stack" is a defined benefit plan paired with a 401(k): the DB plan carries the large deductible contribution while the 401(k) adds the $24,500 elective deferral plus profit sharing. This requires actuarial design, annual funding commitments, and coordination of the combined deduction limits, so it is a strategy to build with professional help, not a DIY form. For the right business, it is the single largest legal deduction available in the retirement toolkit.

What is the inherited IRA 10-year rule?

The SECURE Act ended the lifetime "stretch IRA" for most non-spouse beneficiaries. If the account owner died in 2020 or later, a designated beneficiary who is not an eligible designated beneficiary must empty the entire inherited account by the end of the 10th year following the year of death. (IRS, Retirement Topics: Beneficiary) Eligible designated beneficiaries (a surviving spouse, a minor child, a disabled or chronically ill individual, or someone not more than 10 years younger than the deceased) can still stretch distributions over life expectancy.

This changes the math on Roth conversions during your lifetime. Every dollar you convert from pre-tax to Roth today is a dollar your heirs will not have to withdraw as taxable income inside their 10-year window. Inherited Roth IRAs follow the same 10-year payout schedule, but withdrawals of contributions are tax-free, and earnings are generally tax-free too as long as the Roth account is at least five years old. (IRS, Retirement Topics: Beneficiary)

How should you sequence these strategies?

Order matters. Fund in this sequence, stopping when you run out of cash flow or eligibility:

The pattern is simple: fill tax-advantaged space in order of tax benefit per dollar of effort, and never leave free employer money or Roth space on the table while parking cash in a taxable account.

Pending review by Brian Thomas, EA. Updated September 25, 2026.

This article is free educational content, not tax advice for your specific situation. If you want a plan built around your actual numbers, that is what our paid tax planning engagements do.