The rules, with the numbers filled in
Roth IRA worked examples
A rule is easier to follow when you can see what it does. Meet three fictional savers, walk through their numbers, then change one fact to see why the answer changes.
Prefer the rules first? Try the learning path. This library shows the arithmetic rather than replacing the guides or choosing an account for you.
Contribution room · 2026
Can both spouses contribute when only one earns pay?
Yes, under the joint-return spousal rule, enough qualifying compensation can support contributions to two individually owned IRAs. But two account limits do not let a couple count the same compensation twice.
Meet Maya and Jordan
- They file jointly for 2026 and are both under 50 at year-end.
- Maya has $60,000 of IRA-eligible wages; Jordan has no qualifying compensation. Their Roth modified adjusted gross income (MAGI) is $60,000.
- Maya has already made $3,000 of regular Traditional IRA contributions and $4,500 of regular Roth IRA contributions for 2026. Jordan has made none.
- There are no other regular IRA contributions or special contribution-limit adjustments.
MAGI is the income figure used to test direct Roth eligibility—not necessarily gross salary. Here, their assumed income is below the 2026 joint-return phase-out of $242,000–$252,000.
Check two different limits
- Maya has used her own annual room. $3,000 + $4,500 = $7,500. Traditional and Roth regular contributions share her limit; opening another IRA would not add room.
- Check the compensation left to support Jordan. $60,000 − $7,500 = $52,500.
- Compare that with Jordan’s own cap. The smaller of $52,500 and $7,500 is $7,500. With no other contributions and full Roth income eligibility, that is Jordan’s available direct Roth room.
The couple could contribute $15,000 across their accounts under these facts. That is a permitted ceiling, not a suggested household saving amount. This example does not calculate a Traditional IRA deduction or a tax credit.
Change the pay—not the account limits
If Maya’s qualifying compensation were instead $12,000, with joint Roth MAGI also $12,000 and her same $7,500 already contributed, only $4,500 would remain to support Jordan: $12,000 − $7,500. Jordan’s unused $7,500 cap would not override that lower compensation limit.
The takeaway: check each person’s annual room, then the couple’s compensation and Roth income eligibility. A joint return does not create a joint IRA.
Quick check: Does Maya’s $3,000 Traditional contribution count if she cannot deduct it?
Yes. A regular Traditional IRA contribution uses annual contribution room whether deductible or nondeductible. The deduction question is separate.
Rules: IRS Publication 590-A, “Kay Bailey Hutchison Spousal IRA Limit” and Roth contribution limits; Notice 2025-67, pages 4–5, 2026 amounts. Continue with our spousal IRA guide.
Saving over time · hypothetical illustration
What could steady saving from age 38 look like?
Starting later does not make the arithmetic stop working. It does make the time, contribution amount and return assumptions worth separating. The part Alex puts in is known in this illustration; the investment outcome is not.
Meet Alex
- Alex starts with $0 at age 38. The first $3,600 deposit comes one year later, followed by a deposit at each year-end: 27 deposits in all. We measure the balance immediately after the last deposit, at age 65.
- Each deposit is invested. There are no withdrawals, missed deposits, contribution increases or additional catch-up contributions.
- We assume Alex qualifies to contribute each year and has no other regular IRA contributions. Future limits and eligibility are not predicted.
- The 0%, 3% and 6% returns below are hypothetical, constant annual returns after fees. All results are future dollars, before any withdrawal taxes, with no inflation adjustment.
Same deposits, three different assumed returns
Alex contributes $3,600 × 27 = $97,200. The chart separates those deposits from the growth produced by each assumption.
$97,200 deposits + $0 growth
$97,200 deposits + $49,355 hypothetical growth
$97,200 deposits + $132,141 hypothetical growth
Rounded to the nearest dollar. These are three arithmetic illustrations, not a likely range or a minimum return. Real returns vary and can be negative; an account can finish below total deposits. Future dollars will buy less if prices rise.
Change the start date
If Alex waits five years and then makes the same $3,600 year-end deposits for 22 years, the steady 6% illustration ends at $156,212 at 65, with $79,200 contributed. The roughly $73,129 difference includes $18,000 of fewer deposits and less assumed compounding. It is not a guaranteed cost of waiting.
The takeaway: an ending balance mixes your deposits with an assumed investment result. Compare both—not just the biggest number.
Show the calculation and its boundaries
For a nonzero annual return r, the year-end deposit formula is $3,600 × ((1 + r)27 − 1) ÷ r. At 0%, it is simply $3,600 × 27. Equivalently, grow the previous balance for one year, then add $3,600, repeating 27 times. A monthly-deposit model can give a different result.
This does not answer whether Alex has enough to retire, which investments to buy, or whether Roth is preferable to Traditional. An IRA is an account, not a promised return. A balance at 65 is not itself a determination that every withdrawal is tax-free; the Roth qualified-distribution rules still apply.
For the underlying inputs, see the SEC’s Investor.gov compound-interest calculator. The numbers here use the stated year-end formula, not that calculator’s monthly-deposit convention. Explore other assumptions with our growth calculator; see withdrawal rules before interpreting a balance as spendable tax-free money.
Contribution versus conversion · 2026
Why can an old IRA make a backdoor Roth partly taxable?
A “backdoor Roth” generally means making a nondeductible Traditional IRA contribution, then converting money to Roth. Those are two separate transactions. Paying tax on the contribution money already does not necessarily make the entire conversion tax-free.
Meet Sam
- Sam is 40, files single, has $200,000 of qualifying compensation and $200,000 of Roth-contribution MAGI for 2026, and is covered by a workplace retirement plan.
- Sam contributes $7,500 to an ordinary Traditional IRA during 2026 for 2026, reports it as nondeductible and claims no deduction. Sam then converts exactly $7,500 during 2026. No tax is withheld.
- An older, entirely pretax Traditional IRA has $67,500 remaining on December 31, 2026. There is no prior after-tax IRA basis and no other own non-Roth IRA balance.
- There are no gains or losses, other regular IRA contributions, other distributions, rollovers, recharacterizations, repayments or special adjustments.
Sam’s assumed income is above the 2026 single-filer direct Roth cutoff of $168,000. The $7,500 contribution uses the ordinary under-50 IRA limit; the conversion is a separate transaction, not a second regular contribution.
Build the annual calculation—not just a snapshot of the new account
Basis is the after-tax IRA amount tracked so it is not taxed again. Sam has $7,500 of basis. Under these simplified facts, the annual denominator combines the counted December 31 IRA value with the amount converted.
- Counted annual total: $67,500 left in IRAs + $7,500 converted = $75,000.
- Nontaxable fraction: $7,500 basis ÷ $75,000 = 10%.
- Apply it to the conversion: 10% × $7,500 = $750 nontaxable. The other $6,750 is taxable conversion income.
$6,750 is not the tax bill. It is the amount included in income. Sam’s actual additional federal and state tax would need a separate calculation. The remaining $6,750 of unused basis carries forward in the non-Roth IRA records; it has not disappeared or moved into Roth.
Change the old IRA balance
If Sam had no old pretax IRA and the counted December 31 IRA value were $0, with every other fact unchanged, the denominator would be $7,500. The full $7,500 of basis would cover the $7,500 conversion.
| Under these facts | Old IRA remains | No old IRA |
|---|---|---|
| Counted December 31 IRA value | $67,500 | $0 |
| Amount converted | $7,500 | $7,500 |
| Nontaxable conversion | $750 | $7,500 |
| Taxable conversion income | $6,750 | $0 |
| Basis carried forward | $6,750 | $0 |
The takeaway: a new account does not isolate after-tax money from the same owner’s other non-Roth IRAs. The annual calculation—not the label on the account you convert—determines the split.
Which accounts belong in that calculation?
Generally, your own Traditional, traditional SEP and traditional SIMPLE IRAs are considered together. Roth IRAs, including Roth SEP and Roth SIMPLE IRAs, do not join that non-Roth pool. Neither do your spouse’s IRAs or money still held in a workplace plan. Properly separate inherited IRAs have separate accounting; a surviving spouse’s valid own-account treatment can change that boundary.
These examples assume no other transactions. Outstanding rollovers, additional distributions, contribution timing, inherited basis and special repayments can change Form 8606’s calculation. Do not replace those instructions with this simplified ratio.
Rules: Form 8606 (2025), Parts I–II; Form 8606 instructions, definitions, basis and lines 6–14; Publication 590-B, “IRA with basis”; Notice 2025-67, 2026 limits. For the full process and exceptions, read the backdoor Roth guide and pro-rata explanation.
Use the example as a question starter
Before comparing your situation, check what differs: tax year, filing status, ages, qualifying compensation, other contributions, account balances and transaction dates. Those details can matter more than how similar the story feels.
Keep personal account numbers and tax documents private. These examples do not collect your financial information or produce a personalized plan.
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