Back Door Roth Ira Conversion Pro Rata Rule

This is the pro rata rule.

Back door roth ira conversion pro rata rule.

The pro rata rule applies even if a qualified plan is rolled over after the conversion takes place because dec. The pro rata rule is used to determine the after tax amount of a roth conversion when the taxpayer has both pre tax and after tax balances in their ira s. Converts the remaining 10 000 the following year. A taxpayer with a pre tax ira of 10 000 who does a 5 500 backdoor roth ira and then.

Click here for an example of the pro rata rule calculation showing. Here s more detail on the rule. 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.

Dear joanna a quick follow up to your previous article on backdoor roth ira conversions. You have several options. So what if you have a pre tax ira account and want to make annual backdoor roth conversions without owing extra tax. Any conversion done from any ira account will be deemed to consist of some pre tax funds and some after tax funds.

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.