Cross-post. Maybe this sub is more appropraite.
Like the title states. I've got $10k in a rollover IRA from a previous employer 401k. I haven't made any IRA contributions for 2025 yet and am above the income limit to contribute directly to a Roth.
Can I convert all of my $10k pre-tax rollover IRA to my Roth today and then in a month contribute after-tax $7k to an IRA and then perform a backdoor to that same Roth and avoid the pro-rata rule?
TIA
Does Pro-rata apply if I perform a pre-tax traditional IRA conversion to Roth and then later on in the same year, contribute after-tax to traditional IRA and perform a backdoor Roth?
byu/HorologyDoctor intax
Posted by HorologyDoctor
3 Comments
The Pro-rata rule is based on the ending balance of all applicable accounts on the last day of the year.
The pro-rata rule just means that your Roth conversion is a proportional mixture of the pre-tax and after tax traditional IRA money.
If you convert $17k in 2025, of which $10k is pre-tax and $7k is after tax, and you end the year with $0 in all traditional IRAs, then the $17k conversion is $10k taxable and $7k nontaxable.
You can contribute the $7000 after-tax now and convert the entire $17000 at once, it will have the same effect. You will pay tax on $10k of conversion. There’s no pro-rata rule because there’s no balance left in the IRA. Or really you do pay “pro rata” but the rate is 100% of pre-tax contributions.