Backdoor Roth Pro-Rata 2027
Backdoor Roth: contribute non-deductible IRA, convert to Roth. Pro-rata rule (IRC §408(d)(2)) aggregates ALL traditional IRA balances — pre-tax + post-tax mixed creates partial taxable conversion.
| Conversion amount | — |
| After-tax basis | — |
| Pre-tax IRA balance | — |
| Total IRA balance | — |
| Non-taxable portion | — |
| Taxable portion | — |
| Tax owed | — |
Backdoor Roth IRA: high earners contribute non-deductible traditional IRA, then convert to Roth. The pro-rata rule (IRC §408(d)(2)) aggregates ALL traditional IRAs across custodians — pre-tax balance reduces basis recovery, creating taxable conversion.
Pro-Rata Rule Explained
If you have $7K basis + $93K pre-tax in IRAs (total $100K), basis = 7%. Converting $7K means only $490 (7%) is tax-free; $6,510 (93%) is taxable. Surprises high earners who roll old 401(k)s to IRA.
401(k) Reverse Rollover Workaround
Roll pre-tax IRA to current employer 401(k) (if plan accepts). Removes pre-tax from IRA aggregation. Then backdoor Roth works cleanly — basis is 100% of IRA total.
Form 8606 Tracking
File Form 8606 every year you contribute non-deductible IRA. Tracks basis. Without 8606, IRS assumes zero basis on conversion = full taxable.
Mega Backdoor Variation
Higher earners with after-tax 401(k) capacity can mega-backdoor: contribute up to $46K (2026 estimate) after-tax to 401(k), in-service withdraw to Roth IRA. Avoids IRA pro-rata entirely.
Last updated May 2026. Sources: IRS Pub 590-A, IRC §408(d)(2).