How does a backdoor Roth IRA work step by step?

A backdoor Roth lets high earners fund a Roth IRA despite income limits. Step one: contribute up to $7,000 ($8,000 if 50+) to a Traditional IRA as a nondeductible contribution – you get no deduction, but that's expected. Step two: shortly after, convert that Traditional IRA balance to a Roth IRA. Because you already paid tax on the money, the conversion of just your contribution is essentially tax-free. Step three: report everything on Form 8606 so the IRS sees the contribution was after-tax. The big catch is the pro-rata rule: if you hold other pre-tax IRA money, part of your conversion becomes taxable. Many people roll pre-tax IRAs into a 401(k) first to keep the backdoor clean. Model the tax at wealthserene.com/tools/roth-conversion.