Funding Roth IRAs Through a QDRO: A High-Earner’s Secret Weapon

Ovando Bowen
Sep 24
5 min read

If you’re a high earner, you’ve probably run into the Roth IRA wall. Roth IRAs are one of the best retirement savings vehicles out there — tax-free growth, tax-free withdrawals in retirement, and no required minimum distributions. But the IRS has long kept a lid on who can contribute.

For years, couples making over a certain amount (for 2025, $236,000 for joint filers) have been shut out of Roth IRA contributions. The so-called “backdoor Roth” has been one workaround, but it’s messy, often confusing, and carries tax traps if not done perfectly.

What most high earners don’t know is that there’s another option hiding in plain sight: the QDRO. This little-known legal tool, often used in divorce, can be applied inside a marriage to unlock Roth IRA funding opportunities for families making above the income limits.

Let’s break down how it works, why it’s legal, and how it can supercharge a couple’s retirement plan.

The Roth IRA Advantage

First, let’s remind ourselves why Roth IRAs are so desirable:

Tax-free growth. Once money is inside, you never pay tax on growth again.
Tax-free withdrawals. In retirement, withdrawals are completely tax-free (if certain conditions are met).
No RMDs. Unlike traditional IRAs or 401(k)s, you’re never forced to withdraw money.
Estate planning perks. Heirs can receive Roth funds tax-free, making them a powerful inheritance tool.

The catch? Income limits. For 2025, if you’re married filing jointly and your income is $236,000 or more, you can’t contribute directly to a Roth IRA.

Roth IRA Basics in 60 Seconds

What is a Roth IRA?A Roth IRA is a retirement account where you put in after-tax money now and withdraw it completely tax-free later.

Why it’s powerful:

Tax-free growth on investments.
Tax-free withdrawals in retirement.
No required minimum distributions (RMDs).
Can pass money to heirs tax-free.

Who can contribute?

Anyone with earned income.
BUT contributions phase out at higher incomes (in 2025, married couples earning $236,000 or more can’t contribute directly).

Contribution limits (2025):

$6,500 per year (under age 50).
$8,000 per year (age 50+).

Bottom line: Roth IRAs are one of the most tax-efficient retirement tools available — but high earners need creative strategies (like a QDRO) to access them.

The Problem for High Earners

High-earning families often find themselves with a strange dilemma:

They’ve done the hard work of saving in 401(k)s and pensions.
They want the tax-free growth of Roth IRAs.
But the IRS says their income is too high to qualify.

Backdoor Roths are one workaround, but they’re complicated, especially if you already have large pre-tax IRA balances. Many couples avoid them out of fear of mistakes or surprise tax bills.

That’s where a QDRO comes in.

What Is A QDRO?

A QDRO, or Qualified Domestic Relations Order, is a court order typically used in divorce to divide retirement accounts. But the law doesn’t actually require divorce. By making a valid interspousal agreement under state law and getting a judge’s approval, couples can use a QDRO while still married.

It lets one spouse legally transfer retirement money (like from a 401(k) or pension) to the other spouse’s retirement account. Because the receiving spouse now owns the funds, they may have access to tax strategies the couple couldn’t otherwise use — including Roth conversions.

How a QDRO Helps Fund a Roth

Here’s the magic:

Spouse A has a large 401(k) balance.
Spouse B is younger or in a lower tax bracket.
Through a QDRO, Spouse A transfers part of the 401(k) into Spouse B’s IRA.
Spouse B can now convert some of those funds into a Roth IRA.

This bypasses the income restrictions, because the transfer itself isn’t treated as a Roth contribution — it’s treated as a QDRO transfer, which is fully legal under federal law.

Once the money is inside Spouse B’s IRA, it can be converted into a Roth and grow tax-free for life.

Real-Life Example: David and Laura

David and Laura file jointly and earn $400,000 per year. They are far above the Roth IRA income limits.
David has $800,000 in a 401(k). Laura has much less in retirement savings.
They want Roth exposure but can’t contribute directly.

Without a QDRO:

They’re locked out of Roth contributions.
Their only option is the backdoor Roth, which could create tax headaches.

With a QDRO:

David transfers $100,000 from his 401(k) into Laura’s IRA.
Laura converts $20,000 per year into a Roth IRA, spreading out the tax impact.
Over 10 years, they move $200,000 into Roth accounts that will never be taxed again.

That’s the difference between paying taxes forever versus creating a permanent tax-free bucket of money for retirement.

Why This Strategy Is Legal

Skeptical? That’s natural. After all, this sounds like a loophole the IRS would close. But the truth is:

Federal law defines QDROs as transfers to a spouse or ex-spouse.
The IRS confirms that QDRO distributions to a spouse can be rolled into their own IRA.
The Department of Labor has confirmed that QDROs don’t require divorce.
Courts have ruled that once a QDRO meets technical requirements, plan administrators must honor it.

As long as the process is followed — court approval, plan administrator qualification, proper rollover — it’s completely legitimate.

Other Benefits for High Earners

Funding Roth IRAs isn’t the only perk. QDROs can also:

Shift income to a lower tax bracket. If one spouse earns less, withdrawals or conversions may be taxed at a lower rate.
Protect assets. If one spouse faces medical expenses, funds can be transferred for planning purposes.
Delay RMDs. If one spouse is younger, transferring assets may push back mandatory withdrawals.

Risks to Keep in Mind

This isn’t a risk-free strategy. Be aware of:

Divorce risk. Once money is transferred, it belongs to the other spouse.
Death risk. If the receiving spouse dies, they control who inherits the funds.
Costs. Court fees, plan fees, and attorney costs are in the thousands
Complexity. Not all attorneys or advisors are familiar with a QDRO.
No Guarantee: Because of the unique nature of this strategy some judges are reluctant to sign QDRO's even when all the paperwork is in order.

Because of these risks, it’s critical to work with professionals who understand both QDROs and advanced tax planning.

Who Should Consider This Strategy?

Funding Roth IRAs through a QDRO can be a smart move for:

Couples making above the Roth income limit.
Families with one spouse holding the majority of retirement assets.
High earners who want to diversify tax strategies in retirement.
Couples who trust each other and want to maximize long-term planning.

The Bottom Line

Roth IRAs are one of the most powerful retirement tools, but high earners often feel locked out. A QDRO changes that.

By legally transferring funds between spouses, couples can open the door to Roth conversions that would otherwise be off-limits. Over time, this can mean hundreds of thousands of dollars in tax-free growth — a huge advantage in retirement planning.

It’s not simple, and it’s not for everyone. But for high earners frustrated by the Roth income limits, a QDRO may just be the secret weapon they’ve been waiting for.

Key Takeaways:

Roth IRAs grow tax-free and have no RMDs, but high earners are often shut out.
A QDRO lets couples transfer funds between spouses legally.
Those funds can then be converted into Roth IRAs.
This bypasses income restrictions and builds permanent tax-free accounts.
The strategy carries risks and costs but can pay off enormously for the right couples.

Make sure to speak to a professional financial fiduciary and the professionals at Ovando Bowen LLP to determine if this is the right strategy for you and your spouse.