Backdoor Roth Ira Conversion Pro Rata Rule

Here s more detail on the rule.

Backdoor roth ira conversion pro rata rule. Click here for an example of the pro rata rule calculation showing. The pro rata rule comes into effect de. A taxpayer with a pre tax ira of 10 000 who does a 5 500 backdoor roth ira and then. Any conversion done from any ira account will be deemed to consist of some pre tax funds and some after tax funds.

Dear joanna a quick follow up to your previous article on backdoor roth ira conversions. A method that taxpayers can use to place retirement savings in a roth ira even if their income is higher than the maximum the irs allows for regular roth ira contributions. The pro rata rule applies even if a qualified plan is rolled over after the conversion takes place because dec. This is the pro rata rule.

So what if you have a pre tax ira account and want to make annual backdoor roth conversions without owing extra tax. Converts the remaining 10 000 the following year. 10 of your balance is after tax funds. Would the pro rata rule apply in the case where qualified pre tax contributions were deposited into.

You have several options. 31 is the date the ira s are valued for purposes of making the calculation. So you know how to do the backdoor roth ira conversion. But what if you have pre tax money in your traditional ira.