Clark Howard Urges $380,000 Couples to Skip $15,000 Backdoor Roth Over Tax Risk

2 articles · Updated · 24/7 Wall St. · May 19

$380,000-earning couples already maxing two 401(k)s and a mega-backdoor Roth should usually skip the extra $15,000 annual backdoor Roth IRA, Clark Howard said, because the payoff is modest relative to the hassle.
At a 7% return over 20 years, that strategy could still build about $614,000 in combined tax-free wealth, but Howard argues it adds only a small slice to households already sheltering far more through workplace plans.
The main hazard is the IRS pro-rata rule: if either spouse holds pre-tax IRA money, a $7,500 conversion can become mostly taxable, potentially creating roughly $1,800 to $2,000 in unexpected federal tax per spouse each year.
Howard said the strategy works cleanly only after rolling any pre-tax IRA balances into a current 401(k), then making the nondeductible contribution, converting it, and filing Form 8606 to preserve basis.
His broader advice is to prioritize 401(k) deferrals, employer matches and in-plan mega-backdoor Roth options first, treating the IRA backdoor as a niche tool rather than a default goal.

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