How do I avoid the pro-rata tax on a backdoor Roth?

Roll existing pre-tax IRA money into your employer 401(k) before December 31 of the conversion year. With a $0 pre-tax IRA balance, the backdoor conversion is essentially tax-free.

Backdoor Roth IRA Calculator — Conversion Tax & Pro-Rata Rule

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Backdoor Roth

Conversion tax • Pro-rata • Growth

Nondeductible contribution

Existing pre-tax IRA balance ⓘ

Your marginal tax rate

Years until retirement

yrs

Expected annual return

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Enter your contribution to see the conversion

How the Backdoor Roth Calculator Works

Enter your nondeductible contribution to a traditional IRA (2026 limit is $7,000, or $8,000 if 50+).
Add any existing pre-tax IRA balance — this triggers the pro-rata rule.
See the taxable amount, tax owed, and tax-free growth over time.

What Is a Backdoor Roth IRA?

A backdoor Roth lets high earners — who are above the Roth IRA income limits — still get money into a Roth. You make a nondeductible contribution to a traditional IRA, then convert it to a Roth. If you have no other pre-tax IRA money, the conversion is essentially tax-free, and all future growth comes out tax-free in retirement.

The catch is the IRS pro-rata rule: it treats all your traditional, SEP and SIMPLE IRAs as one pot. If part of that pot is pre-tax, a proportional share of your conversion is taxable. Example: convert $7,000 with $63,000 of pre-tax IRA money and 90% of the conversion is taxable. This calculator shows that split. The 2026 IRA contribution limit is $7,000 ($8,000 if age 50+). Estimate only — not tax advice.

Formula & Logic

The backdoor Roth is a legal two-step used by earners above the Roth income limit: contribute to a traditional IRA without claiming a deduction, then convert that balance to a Roth. Because the contribution was never deducted, only the growth between contribution and conversion is taxable — usually near zero if the conversion happens promptly. The trap is the pro-rata rule. The IRS treats all your traditional, SEP and SIMPLE IRAs as one pool, so if you hold any pre-tax IRA money, each conversion is taxed proportionally and the manoeuvre becomes expensive.

Taxable portion = Conversion × (pre-tax IRA balance ÷ total IRA balance)With no pre-tax IRA money: taxable portion ≈ growth onlyPro-rata applies across ALL traditional/SEP/SIMPLE IRAs at 31 December

where:

basis: the non-deductible contribution, which is not taxed again
pro-rata: the rule that spoils the strategy if pre-tax IRA money exists
401(k) rollover: moving pre-tax IRA money into a workplace 401(k) removes it from the pro-rata pool

Assumptions: Requires Form 8606 for both the contribution and the conversion. The pro-rata calculation uses balances on 31 December of the conversion year, not the conversion date.

SourceIRS Publication 590-A

Step-by-Step Example: The Pro-Rata Rule in Action

The same $7,000 backdoor contribution, with and without an existing pre-tax IRA.

Non-deductible contribution$7,000
Existing pre-tax IRA$63,000
Marginal rate32%

Clean case first: with no other IRA, converting $7,000 is taxed only on any growth — effectively $0.
Now with the $63,000 pre-tax balance: total IRA value = $63,000 + $7,000 = $70,000.
Non-taxable proportion: $7,000 ÷ $70,000 = 10%.
Converting $7,000 therefore has 90% taxable: $6,300.
Tax due: $6,300 × 32% = $2,016 on what should have been a free conversion.
The fix: roll the $63,000 into a 401(k) first, emptying the pro-rata pool.

Result$2,016 of unexpected tax — or $0 if the pre-tax IRA is cleared first

Order of operations is everything. Rolling pre-tax IRA money into an employer 401(k) before 31 December removes it from the calculation entirely and restores the clean result. Doing the conversion first and the rollover afterwards does not help, because the test is done on the year-end balance.

Backdoor Roth FAQ

Is a backdoor Roth legal? ▾

Yes. It's a recognized, IRS-acknowledged strategy: a nondeductible traditional IRA contribution followed by a Roth conversion. There's no income limit on conversions.

What is the pro-rata rule? ▾

The IRS treats all your traditional, SEP and SIMPLE IRAs as one account. The taxable share of a conversion equals your pre-tax balance divided by your total IRA balance — so pre-tax money makes part of the conversion taxable.

How do I avoid the pro-rata tax? ▾

Roll existing pre-tax IRA money into your employer 401(k) before December 31 of the conversion year. With $0 pre-tax IRA balance, the backdoor conversion is essentially tax-free.

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