Monies Wealth

A handout · tax year 2026

The 2026 contribution order & two routes to a Roth IRA

Which account to fill next, and how much fits — drawn as plumbing. Then the Roth question in full: which door your income leaves open, what changes when you file jointly, and the pot test that quietly decides the tax bill.

2The plumbing — the six vessels, in filling order

3Two routes to a Roth IRA · single filers

4Two routes to a Roth IRA · married filing jointly

5Case study · Route 1: Back door Roth conversion and the IRA tax pot trap

6References I · contribution order

7References II · Roth routes

Dr. Gulseren MutluMonies Wealth LLC · Austin, Texas

Educational only — not individualized investment, tax, or legal advice. Sources for every figure are on the references pages. Monies Wealth LLC, Registered Investment Adviser, State of Texas, CRD #327872.

The 2026 contribution order

Tax Year 2026single filers

Money flows like water — each vessel overflows into the next, and the order is the strategy.

AccountHow it works2026 limit

1Emergency bucketCash / liquid reserves — savings account or money market funds3–6× monthly expenses

2HSAHDHP required. Fully deductible. Health related withdrawals tax-free$4,400 / $5,400 (55+)

3Workplace PlanEmployee contribution (pre-tax) + employer match (if offered)$72,000 401(k) / SEP (employee + employer)
$17,000 SIMPLE

4IRA and Roth IRAContribute directly to IRA or Roth; phase-out applies$7,500 / $8,600 (50+)

5Backdoor Roth IRAMust fund the IRA (not deductible) first, then convert to Roth— taxable$7,500 / $8,600 (50+)

6Taxable Brokerage AccountAfter-tax money; dividends, interest and gains taxed yearlyUnlimited

Dr. Gulseren MutluMonies Wealth LLC · Austin, Texas

Two routes to a Roth IRA · single filers

Tax Year 2026

Route 1 · the $7,500 IRA route — your income decides which door

Under $153,000 Front door open

Contribute directly — $7,500 after tax, straight into the Roth
Done. The money grows tax-free

Paperwork: none.
$8,600 at 50+ — the $7,500 base plus a $1,100 catch-up.

$153,000 – $168,000 Phase-out band

Contribute the reduced direct amount — the IRS worksheet sets it
Backdoor the remainder — the two-step, for the gap

Paperwork: Form 8606 for the backdoor portion.
IRA tax pot test: yes, on that portion.

Over $168,000 Back door

Deposit $7,500 after tax into a traditional IRA, claiming no deduction
Convert the same day to the Roth IRA

Paperwork: Form 8606, every year — any taxes owed on the conversion are reported there.
IRA tax pot test: yes — 31 December balances decide the tax bill.

Route 2 · Mega backdoor Roth conversion — if your 401(k) plan allows

1 · Check the planDoes it permit after-tax contributions and either in-plan Roth conversion or an in-service withdrawal to a Roth IRA? Most plans do not.

2 · Contribute after taxThrough payroll, up to $72,000 minus your deferral and all employer contributions. The money goes into a separate after-tax subaccount in your plan.

3 · Convert to RothThe plan moves the after-tax money to the Roth 401(k) in the same plan — each paycheck with automatic conversion; otherwise you request it.

4 · Taxes: its own mini potEarnings between steps 2 and 3 are taxed as ordinary income, calculated on the after-tax subaccount alone (your IRAs don’t count). Convert promptly and the tax stays near $0.

Dr. Gulseren MutluMonies Wealth LLC · Austin, Texas

Two routes to a Roth IRA · married filing jointly

Tax Year 2026

Route 1 · Front door — $7,500 each, $15,000 for the couple

Under $242,000 Front door open

Each spouse contributes directly — $7,500 each, $15,000 for the couple, after tax
Done. The money grows tax-free

Paperwork: none.
$8,600 each at 50+ — $17,200 for the couple.

$242,000 – $252,000 Phase-out band

Contribute the reduced direct amount — the IRS worksheet sets it
Backdoor the remainder — the two-step, for the gap

Paperwork: Form 8606 for the backdoor portion.
One household MAGI decides the band — not one each.

Over $252,000 Back door

Each spouse deposits $7,500 after tax into their own traditional IRA, claiming no deduction
Convert the same day to the Roth IRA

Paperwork: Form 8606, every year — any taxes owed on the conversion are reported there.
IRA tax pot test: yes — 31 December balances decide the tax bill.
Above the wall, the front door shuts for both spouses at once.

Route 2 is unaffected by how you file

No income testThe mega backdoor has no MAGI threshold, single or joint. Only the plan’s rules decide.

Both spouses separatelyEach spouse’s own plan sets its own $72,000 room — the ceilings do not combine or offset.

The limit is per personThe $7,500 IRA limit and the $72,000 plan ceiling are individual, so a couple can run both routes twice over.

The IRA tax pot is per person tooYour spouse’s IRA balances never enter your IRA tax pot. One spouse’s rollover IRA does not spoil the other’s backdoor.

Dr. Gulseren MutluMonies Wealth LLC · Austin, Texas

Case study · Route 1: Back door Roth conversion and the IRA tax pot trap

Tax Year 2026single filers

Everything identical: $200,000 salary, single filer — above the $168,000 phase-out, their 401(k) plan does not allow Route 2, so both must use the back door — $300,000 of old retirement savings, a $7,500 after-tax deposit to IRA, converted to Roth instantly. The only difference is where the old $300,000 sits.

Dr. Ellen $300,000 left in the old employer’s 401(k)

Salary, single filer: $200,000
Old retirement savings: $300,000
Which account: 401(k) — outside the pot
Deposit to IRA, not deductible (after-tax): $7,500
Converted to Roth, same day: $7,500
IRA tax pot — $300K excluded: $7,500
Taxable fraction — 0 / 7,500: 0%
Taxable portion — 7,500 × 0%: $0
Tax owed: $0

Dr. Kevin the same $300,000 — rolled into an IRA

Salary, single filer: $200,000
Old retirement savings: $300,000
Which account: Rollover IRA — inside the pot
Deposit to IRA, not deductible (after-tax): $7,500
Converted to Roth, same day: $7,500
IRA tax pot — 300,000 + 7,500: $307,500
Taxable fraction — 300,000 / 307,500: ~97.5%
Taxable portion — 7,500 × ~97.5%: $7,317
Tax owed at 24% — 7,317 × 24%: $1,756

The pot excludes

401(k) · 403(b) · 457 and other employer plans. (Roth IRA · Roth 401(k) · inherited IRAs are calculated separately)

The IRA tax pot includes

Traditional IRA · Rollover IRA · SEP IRA · SIMPLE IRA

All of them, at every institution, counted as one pot: the 31 December balance plus anything converted during the year.

Why Kevin owes tax: When Kevin deposits to his IRA, his $7,500 of after-tax money mixes with the $300,000 of pre-tax money in his IRA tax pot (“commingling”). Under IRS rules, ~97.5% of the $7,500 moved from the IRA to Roth is taxable.

Which door is open for you — and is your IRA tax pot clean? That is a 30-minute conversation, not a worksheet.

Free 30-minute introductory call → monieswealth.com

Dr. Gulseren MutluMonies Wealth LLC · Austin, Texas

References I · contribution order

Tax Year 2026

Figure	What it is	Source
$72,000	Employee plus employer contributions, IRC §415(c); also the SEP IRA ceiling, capped at 25% of compensation	1, 2, 4
$17,000	SIMPLE IRA employee deferral limit	2, 4
$7,500	IRA annual contribution limit, shared across all traditional and Roth IRAs	2
$8,600	IRA limit at age 50 and over — $7,500 plus the $1,100 catch-up	1, 2
$153,000	Roth IRA phase-out start for single filers; ends at $168,000	2
$4,400	HSA contribution limit, self-only high-deductible coverage	3
$5,400	HSA self-only limit at age 55 and over — $4,400 plus the $1,000 statutory catch-up	3
HDHP	High-deductible health plan. HSA eligibility — deductible ≥ $1,700 self-only, out-of-pocket ≤ $8,500	3

Primary sources

1IRS Notice 2025-67 — 2026 amounts for retirement plans and IRAs
irs.gov/pub/irs-drop/n-25-67.pdf

2IRS news release IR-2025-111 — 2026 401(k) and IRA limits
irs.gov/newsroom/401k-limit-increases-to-24500-for-2026-ira-limit-increases-to-7500

3IRS Rev. Proc. 2025-19 — 2026 HSA and HDHP amounts
irs.gov/pub/irs-drop/rp-25-19.pdf

4IRS — COLA increases for dollar limitations, by plan type
irs.gov/retirement-plans/cola-increases-for-dollar-limitations-on-benefits-and-contributions

Dr. Gulseren MutluMonies Wealth LLC · Austin, Texas

References II · Roth routes

Tax Year 20262026 figures

Figure	What it is	Source
$153,000 – $168,000	Roth IRA phase-out range for single filers, which is why $200,000 closes the front door in the case study (see also References I)	2
$242,000 – $252,000	The same range filing jointly	2
$24,500	Employee elective deferral limit, which is subtracted from the §415(c) room	1, 2
IRA tax pot (pro-rata) rule	That all traditional, rollover, SEP and SIMPLE IRAs count as one pot at 31 December	3, 4, 5
Form 8606	Where nondeductible basis and each conversion are reported, annually	4, 5
~97.5%	Taxable fraction computed from the figures above — arithmetic, not IRS-published	—
24%	The marginal federal rate assumed for the case study at these income levels	—

Primary sources

1IRS Notice 2025-67 — 2026 amounts relating to retirement plans and IRAs · www.irs.gov/pub/irs-drop/n-25-67.pdf

2IRS news release IR-2025-111 — 2026 contribution limits · www.irs.gov/newsroom/401k-limit-increases-to-24500-for-2026-ira-limit-increases-to-7500

3IRS Publication 590-A — contributions to IRAs; the pro-rata rule and Form 8606 · www.irs.gov/publications/p590a

4IRS Publication 590-B — distributions from IRAs; conversions · www.irs.gov/publications/p590b

5IRS Form 8606 instructions — nondeductible IRAs · www.irs.gov/forms-pubs/about-form-8606

Every IRS figure above is drawn from the documents listed here; links verified 31 July 2026. The taxable fraction and the assumed 24% marginal rate are arithmetic and assumption respectively, and are marked as such. Case-study names and balances are illustrative.

Dr. Gulseren MutluMonies Wealth LLC · Austin, Texas

Educational only — not individualized investment, tax, or legal advice. All figures are as at tax year 2026. Monies Wealth LLC, Registered Investment Adviser, State of Texas, CRD #327872.