Backdoor Roth Ira Conversion Pro Rata Rule

You have several options.

Backdoor roth ira conversion pro rata rule.

So you know how to do the backdoor roth ira conversion. Would the pro rata rule apply in the case where qualified pre tax contributions were deposited into. But what if you have pre tax money in your traditional ira. Under the pro rata rule your ira account has a balance of 100 000 50 000 40 000 10 000 100 000.

31 is the date the ira s are valued for purposes of making the calculation. A taxpayer with a pre tax ira of 10 000 who does a 5 500 backdoor roth ira and then. Dear joanna a quick follow up to your previous article on backdoor roth ira conversions. 10 of your balance is after tax funds.

Any conversion done from any ira account will be deemed to consist of some pre tax funds and some after tax funds. The pro rata rule applies even if a qualified plan is rolled over after the conversion takes place because dec. Company sponsored plans like 401 k s and 403 b s are not used in the pro rata calcu lation unless rolled over to an ira in the year of conversion. Here s more detail on the rule.

This is the pro rata rule. Click here for an example of the pro rata rule calculation showing. So what if you have a pre tax ira account and want to make annual backdoor roth conversions without owing extra tax. The pro rata rule comes into effect de.