In this step-by-step guide, I will walk through the steps to set up a Backdoor Roth IRA with Fidelity. If you don’t know the benefits of a Roth IRA, check out my post on Roth IRA vs 401(k) first. After reading it, you’ll know that performing a Backdoor IRA conversion is only useful if your 2026 income is above $153K (single) or $242K (married filing jointly).
Before proceeding, I advise you to consult a professional tax/financial advisor, as there may be hidden consequences to performing a Backdoor IRA.
For example, read about the pro-rata rule and how all your IRAs are treated as one aggregate account, which may trigger some unintentional tax consequences. If you don’t have any tax-deferred money in any existing IRAs or if you don’t have any IRAs at all, setting up a Backdoor IRA should be relatively straightforward.
There are several ways to set up a Backdoor IRA. But for the sake of simplicity, I will focus only on converting a Traditional IRA to a Roth IRA using cash (instead of assets).
Go to Fidelity Traditional IRA and follow the step-by-step guide to open an account.
Since this may be your first time using Fidelity, you will need to link a funding bank account before setting up a deposit.
a) Go to https://digital.fidelity.com/ftgw/digital/bank-setup.
b) Select which transfer type you’d like to use. I usually use electronic funds transfer (EFT) since banks usually have $0 fees. However, there’s a 1-3 business day settlement period for your cash to settle in your Traditional IRA. Wire transfers are faster but banks may charge a fee.
c) Select your newly-created Traditional IRA account to link your bank account to.
d) Fill out the remaining fields as requested by Fidelity.
After linking your bank account, transfer your non-deductible contribution into your Traditional IRA. After you finish linking a bank account to your Traditional IRA, now it's time to make your first contribution.
a) Go to https://digital.fidelity.com/ftgw/digital/transfer/.
b) Select which account to move money from. If you just linked a new bank account in Step 2, you’ll likely want to select that bank account. If you’re an existing Fidelity customer, it’s also possible to select another investment account like an individual Fidelity brokerage account that contains cash.
c) Next, select your Traditional IRA as the account the money should be transferred to. As I mentioned previously, you’ll notice that the estimated delivery time of the cash deposit is 1-3 business days.
d) For “Frequency,” select “Just once.”
e) Enter a “Date” you wish to transfer money from your bank into your account.
f) For “Amount,” you may contribute up to $7,500. If you’re 50 or older, you can contribute up to $8,600.
Note
Wait 3-5 business days for your funds to settle. Personally, I prefer a “clean” conversion from a Traditional IRA to a Roth IRA. So every year that I perform a Backdoor IRA conversion, I wait for my funds in my Traditional IRA and do not invest a single dollar. I only invest after the Backdoor IRA conversion.
Similar to Step 1, open a Roth IRA account. Don’t fund it directly — we are doing a Backdoor IRA conversion, so the funds will come from your Traditional IRA in the next step.
a) Go to Fidelity Roth IRA and follow their step-by-step guide.
To complete the conversion, transfer the settled cash from your Traditional IRA directly into your Roth IRA. Since settlement times vary, attempt this step after your deposit clears:
a) Go to Fidelity Transfers.
b) Select your Traditional IRA under "Transfer From".
c) Select your Roth IRA under "Transfer To" and complete the conversion.
Congratulations! That’s it. You’ve successfully set up a Backdoor Roth IRA. Remember to invest the cash inside your Roth IRA and file IRS Form 8606 at tax time.
If you’re interested in learning about another way to grow even more of your investments tax-free, read my blog post on the Mega Backdoor Roth or how to set up automatic investing.
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