Roth IRA alternatives when you make too much—with examples

Earning a high income opens doors to living generously today and saving for tomorrow. But it can also bring unique challenges when planning for retirement.

Take Roth IRAs, for example. These popular accounts offer significant tax benefits, but income limits can prevent high earners from contributing directly.

Do you make too much for a Roth IRA? Don’t worry, there are still smart ways to grow your retirement savings. We’ll break down who qualifies for a Roth IRA and explore alternative strategies to help you make the most of your retirement planning, even if your income exceeds the limits.

When you're opening an individual retirement savings account through a financial institution, you have two options: traditional IRAs and Roth IRAs. Each fits into specific tax buckets: "tax now," "tax later" or "tax never."

• Traditional IRAs fall into the tax later bucket. These accounts are funded with pretax dollars. Any taxes you pay on both the contributions and the earnings are deferred until you start making withdrawals.

• Roth IRAs belong to the tax now and tax never buckets. You make contributions with dollars after paying taxes on them. Since you paid the taxes upfront, your earnings grow tax-free and can be withdrawn tax-free as long as certain requirements are met.¹

While the Roth IRA offers the appeal of tax-free withdrawals, high earners may find they're not allowed to make direct contributions to a Roth account because of IRS income limits.

When your adjusted gross income reaches a certain amount, depending on your filing status, you may only be eligible to contribute a reduced amount to a Roth IRA—or not be allowed to contribute at all.

In 2025:

• If you're a single filer with a modified adjusted gross income (MAGI) between $150,000 and $165,000, you can contribute a reduced amount to a Roth IRA. If you have a MAGI that exceeds $165,000, you can't contribute to a Roth IRA.
• If you're part of a couple filing jointly and your MAGI is between $236,000 and $246,000, you can contribute a reduced amount to a Roth IRA. If your MAGI is more than $246,000, then you can't contribute anything to a Roth IRA.
• If you're married and filing separately and have a MAGI over $10,000, you can't contribute to a Roth IRA.

If you make too much to contribute to a Roth IRA, you still have ways besides directly contributing to a Roth IRA to make the most of your financial resources. Here are some Roth IRA alternatives and options:

A backdoor Roth IRA lets you indirectly fund a Roth IRA even if your earnings exceed the income limit. Here's how to do it: Let's say you have $7,000 (the 2025 Roth IRA contribution limit) that you want to invest in a Roth IRA. You could open a traditional IRA, make after-tax (nondeductible) contributions with your $7,000, then subsequently convert the account into a Roth IRA. You'll pay tax on any investment earnings that build up before the conversion, but once the money is in the Roth account, earnings compound tax-free.

A benefit of a backdoor Roth IRA conversion is that you can gain access to tax-free qualified withdrawals in retirement¹; Roth IRA owners aren't subject to required minimum distributions; and your beneficiaries may have access to tax-free qualified withdrawals.

The backdoor Roth IRA strategy can have potential downsides. The conversion rules and tax law can get complicated if you have an existing traditional IRA or if you hold multiple IRAs (including a SEP or SIMPLE IRA.) In certain situations, you may get pushed into a higher tax bracket. Or you may see changes in how your Social Security is taxed or your Medicare Part B premium is determined.

A financial advisor can work with you to assess your specific situation and how tax rules apply to you, then help you determine whether the backdoor Roth strategy is an option.

Traditional IRAs are funded with pretax dollars, meaning you won’t pay taxes until you start withdrawing funds in retirement. This upfront tax advantage can be especially helpful if you’re in your peak earning years and expect to be in a lower tax bracket during retirement. For example, contributing that same $7,000 to a traditional IRA allows your money to grow tax-deferred until you begin taking withdrawals, making it a strong alternative to a Roth IRA in certain situations.

Some or all of your $7,000 contribution also may be tax-deductible. Yet, this is another instance when a high income can pose a barrier. Your deduction may be limited if you or your spouse are covered by an employer-sponsored plan and your income exceeds certain levels.²

There's a lot for high earners to like about employer-sponsored retirement plans like 401(k)s and 403(b)s. Anyone who's eligible can contribute, regardless of income. Plus, they allow you to save a significant amount each year.

In 2025, the standard contribution limit for these retirement accounts is $23,500. For individuals aged 50 or older, an additional catch-up contribution of $7,500 is allowed. If you fall into this age group, you can contribute a total of $31,000 for the year.

Plus, the plans have many of the tax benefits of IRAs. If your employer matches contributions, that free money is a bonus.

Most employers offer a Roth version of the common retirement plans, like a Roth 401(k), which has the same tax advantage as Roth IRAs.

Another popular savings option is to put money that you would otherwise contribute to a Roth IRA into a savings account throughout the year. There is no contribution limit and deposits are protected by NCUA or FDIC insurance. High-yield savings accounts are gaining popularity and may be an option to consider during high interest rate environments. Your money can be placed into a savings account and earn interest right away.

With this approach, if your income or status changes and you become eligible to fund a Roth IRA, you easily can access the money for that contribution.

Finally, consider investing your money in: 

• Stocks
• Exchange-traded funds (ETFs)
• Municipal bonds
• Index funds
• A brokerage account

Diversifying your investments among these types of taxable accounts and tax-advantaged options like IRAs can give you more flexibility and access to your money both before and after retirement.

One possible downside with investments held in taxable accounts is you may owe capital gains tax if their value increases between the time you buy and sell.