What is the pro-rata rule and why does it matter?

The pro-rata rule treats all your traditional IRA accounts as one pool when calculating conversion taxes. If you have $90K in pre-tax IRA and $10K in non-deductible basis, 90% of any conversion is taxable — not just the non-deductible portion.

How do I avoid the pro-rata rule?

Roll pre-tax IRA funds into your employer 401(k) before December 31 of the conversion year, leaving only the non-deductible basis. Then convert the entire non-deductible IRA tax-free.

Is the mega backdoor Roth different?

Yes. The mega backdoor Roth uses after-tax 401(k) contributions (above the $23,000 elective deferral limit) that are then converted to Roth 401(k) or rolled to a Roth IRA. Potential for $43,500 additional Roth contributions (2024).

Backdoor Roth Conversion Tax Calculator

Calculate taxes on a backdoor Roth IRA conversion. Shows the pro-rata rule impact if you have existing pre-tax IRA funds, the taxable conversion amount, and net after-tax benefit.

Principal ($)

Annual Rate (%)

Years

Compounding / Year

$ Finance Disclaimer: These calculators are for educational and illustrative purposes only. Results do not constitute financial advice. Consult a licensed financial advisor before making investment or borrowing decisions.

How to Use

Enter the values for the scenario you are assessing. Calculate taxes on a backdoor Roth IRA conversion. Shows the pro-rata rule impact if you have existing pre-tax IRA funds, the taxable conversion amount, and net after-tax benefit. Use the backdoor roth conversion result to inform your calculation.

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Frequently Asked Questions

What is the pro-rata rule and why does it matter?

How do I avoid the pro-rata rule?

Is the mega backdoor Roth different?