Backdoor Roth IRA at Fidelity: Steps, Pro-Rata Rule, and Form 8606

A backdoor Roth IRA at Fidelity takes two steps: put after-tax money into a Traditional IRA, then convert it to a Roth IRA. Both accounts live under the same login, the whole thing can be done online in about fifteen minutes, and you’ll want a day or two between steps for funds to settle. For 2026, you can move up to $7,500 this way, or $8,600 if you’re 50 or older, no matter how much you earn.¹

When You Actually Need the Backdoor

Direct Roth contributions phase out at higher incomes. For 2026, single filers phase out between $153,000 and $168,000 of modified adjusted gross income and are shut out above $168,000. For married filing jointly, the range is $242,000 to $252,000, with no direct contributions allowed above $252,000.

The workaround exists because the IRS puts no income limit on contributing to a Traditional IRA (only on deducting it) and no income limit on converting a Traditional IRA to a Roth.¹ You make a non-deductible Traditional IRA contribution on purpose, then convert it. The result is functionally the same as a direct Roth contribution.

If your income is below the phase-out, you don’t need the backdoor. Contribute directly to the Roth and skip everything below.

Set Up Both Fidelity Accounts First

You need two accounts at Fidelity before any money moves: a Traditional IRA and a Roth IRA. Open whichever you don’t have through the “Open an Account” menu on Fidelity’s site, and link a bank account to fund the Traditional IRA. Keeping both accounts at the same broker keeps the conversion entirely online and avoids the delays of moving money between institutions.

Step 1: Fund the Traditional IRA

Transfer your contribution from your linked bank into the Fidelity Traditional IRA. The 2026 cap is $7,500, or $8,600 at 50 and older.¹ This contribution is non-deductible. You won’t claim a deduction for it; the whole point is to put in after-tax dollars so the conversion is tax-free (or close to it).

Once the money hits the Traditional IRA, leave it alone in the default settlement position. Don’t buy funds, stocks, or anything else. Any gains earned between contribution and conversion are taxable at conversion, so a few days of money-market interest is fine but weeks of market exposure is not.

You’ll formally record this contribution as non-deductible on Form 8606 with your tax return, which establishes your basis so the IRS knows this money was already taxed.²

Step 2: Convert to the Roth IRA

After the deposit settles (usually one to three business days), log in and look for “Start a Roth conversion,” which routes through Fidelity’s transfer portal.³ Pick your Traditional IRA as the source and your Roth IRA as the destination.

Two things to get right on this screen:

Convert the entire balance. Don’t leave a few dollars behind. A zero balance in the Traditional IRA simplifies next year’s paperwork and keeps the pro-rata rule out of your future.
Decline all tax withholding. Fidelity will ask whether you want federal or state taxes withheld. Say no to both. Any amount withheld comes out of your converted funds, reducing what lands in the Roth, and it can trigger a 10% early withdrawal penalty if you’re under 59½.⁴

The conversion typically posts within one to three business days. Once it’s in the Roth, you can invest it however you like.

The Pro-Rata Rule Can Blow This Up

This is where most backdoor Roth attempts get expensive. If you have any pre-tax money in Traditional IRAs, SEP IRAs, or SIMPLE IRAs anywhere (not just at Fidelity), the IRS treats all your non-Roth IRAs as one combined pool when working out how much of the conversion is taxable.⁵ The rule doesn’t care that the pre-tax money sits at a different brokerage.

An example. You have $93,000 of pre-tax money in a rollover IRA at another firm and contribute $7,000 of after-tax money to your Fidelity Traditional IRA. Your total IRA pool is $100,000, of which 7% is after-tax. If you convert $7,000, only $490 is tax-free. The other $6,510 is taxable as ordinary income.

The fix, when possible, is to get your pre-tax IRA balance to zero before December 31 of the conversion year, usually by rolling those pre-tax balances into your current employer’s 401(k) if the plan accepts rollovers in.⁶ Not every plan does. Check with your plan administrator before you start.

Timing and Deadlines

The contribution and the conversion follow different deadline rules, and getting them tangled costs you time or creates duplicate paperwork.

A Traditional IRA contribution for a given tax year can be made up until that year’s tax filing deadline, typically April 15 of the following year. A 2026 contribution can be made as late as April 15, 2027.⁷ The conversion, though, always counts in the calendar year it actually happens. Convert on January 5, 2027 and the conversion lands on your 2027 return, even if the underlying contribution was designated for 2026. That means two Form 8606 filings instead of one.

The clean way to do it: contribute and convert in the same calendar year, early in the year. January is popular for a reason. You lock in a full year of tax-free growth, and both halves of the transaction hit the same return.

Tax Reporting

Reporting the transaction correctly is the difference between owing nothing and getting a notice that treats the whole conversion as taxable income. Two forms matter.

Form 8606

Form 8606 is how you tell the IRS this was after-tax money. File it with your annual return even if the taxable portion of the conversion is zero.⁸

Part I records the non-deductible contribution and tracks your cumulative after-tax basis. Line 6 asks for the total year-end value of all your Traditional, SEP, and SIMPLE IRAs, which is where the pro-rata math happens. Part II reports the conversion and calculates the taxable portion.⁹ If you converted quickly with no pre-tax IRA balances, that taxable amount should be close to zero.

Skip the form and the penalty is $50, with another $100 for overstating non-deductible contributions. The bigger risk is losing the paper record of your basis, which can let the IRS treat the whole conversion as taxable.²

Form 1099-R from Fidelity

Fidelity sends a 1099-R in January of the year after your conversion, showing the amount converted. Box 7 usually shows code 2 if you’re under 59½ or code 7 if you’re older, with the IRA/SEP/SIMPLE box checked.¹⁰ Box 1 will show the full amount, and Box 2a often shows the same number as taxable because Fidelity doesn’t know your basis. That’s normal. Form 8606 is where you correct the record.

Mistakes to Avoid

Forgetting about old IRAs. That rollover from a job you left years ago still counts for pro-rata. Check every brokerage before you start.
Investing the contribution before converting. Buying funds and converting months later creates taxable gains. Leave the money in the settlement position.
Letting Fidelity withhold taxes on the conversion. The withheld amount is treated as a distribution, so less lands in the Roth and a penalty may apply.
Not filing Form 8606. Common, and the consequences go past the $50 fee. If you missed it in prior years, you can file late 8606s to reconstruct your basis.²
Contributing more than the annual limit. Excess amounts face a 6% excise tax every year they stay in the account. Fix an overcontribution by withdrawing it (plus earnings) before the filing deadline.¹¹

Doing It Again Next Year

The backdoor Roth is an annual routine, not a one-time move. Same two steps, same Form 8606, and keep the Traditional IRA at zero between conversions. Once you’ve done it once at Fidelity, the second year takes about five minutes.

1
Internal Revenue Service. Retirement Topics – IRA Contribution Limits
2
Internal Revenue Service. 2025 Instructions for Form 8606 – Nondeductible IRAs
3
Fidelity. Convert to a Roth IRA – Roth Conversion Rules and Deadlines
4
Internal Revenue Service. Topic No. 557, Additional Tax on Early Distributions From Traditional and Roth IRAs
5
Office of the Law Revision Counsel. 26 USC 408 – Individual Retirement Accounts
6
Internal Revenue Service. Rollovers of Retirement Plan and IRA Distributions
7
Internal Revenue Service. IRA Year-End Reminders
8
Internal Revenue Service. About Form 8606, Nondeductible IRAs
9
Internal Revenue Service. Instructions for Form 8606
10
Internal Revenue Service. Instructions for Forms 1099-R and 5498
11
Internal Revenue Service. Form 5329 – Additional Taxes on Qualified Plans Including IRAs and Other Tax-Favored Accounts