What's the IRA pro-rata rule?

When converting any Traditional/SEP/SIMPLE IRA to Roth, the IRS aggregates ALL pre-tax IRA balances. Tax-free portion of conversion = basis ÷ total IRA aggregate.

Do 401(k) balances count?

No. Only Traditional, SEP, SIMPLE, and Rollover IRAs count. 401(k), 403(b), 457(b), and Roth IRAs are excluded.

Can I do Backdoor Roth without pro-rata issues?

Yes if your only Traditional IRA balance equals your nondeductible basis. Roll pre-existing pre-tax IRAs into a 401(k) first.

When is the pro-rata measured?

December 31 of the conversion year. Rollovers must complete before year-end to affect that year's pro-rata.

Is this calculator free?

Yes. Runs in your browser. No data shared.

Pro-Rata Rule Cleanup Strategies Calculator (2026)

The IRA pro-rata rule (Form 8606) pro-rates Backdoor Roth conversions based on ALL your pre-tax IRA balances. Pre-tax IRA money turns most of your conversion into taxable income.

IRA Balances (12/31)

Traditional IRA balance ($)

SEP IRA balance ($)

SIMPLE IRA balance ($)

Rollover IRA balance ($)

Conversion

Nondeductible Contribution Basis ($)

Amount Converted to Roth ($)

Tax

Marginal Tax Bracket %

Tax-Free Portion

—

Taxable Portion

—

Tax Owed

—

Total pre-tax IRA balance	—
After-tax basis	—
Total IRA aggregate	—
Basis % (tax-free ratio)	—
Conversion amount	—
Tax-free portion	—
Taxable portion	—
Tax owed on conversion	—

The IRA pro-rata rule (Form 8606) pro-rates every Backdoor Roth conversion based on ALL your pre-tax IRA balances at year-end. If you have any Traditional, SEP, SIMPLE, or Rollover IRA balance, most of your $7,000 Backdoor Roth conversion is taxable — not the tax-free move you expected. Cleanup strategies exist but require planning before December 31.

How Pro-Rata Pollutes Backdoor Roths

Example: you have $93,000 in a Rollover IRA from an old 401(k), plus you contribute $7,000 nondeductible to a new Traditional IRA and immediately convert it. The IRS aggregates: total IRA balance $100,000, basis $7,000 (7%). Of your $7,000 conversion, only 7% ($490) is tax-free. The other $6,510 is taxable. You created tax basis on the remaining IRA but most of the 'Backdoor' benefit is gone. The rule aggregates Traditional + SEP + SIMPLE + Rollover IRAs but NOT Roth IRAs, 401(k)s, 403(b)s, or 457(b)s.

Three Cleanup Strategies

(1) Roll pre-tax IRA into employer 401(k): 401(k) balances are excluded from pro-rata. If your current employer's plan accepts rollovers-in (most do), roll the entire pre-tax IRA balance there. This resets your IRA aggregate to just the basis, making future Backdoor Roths nearly 100% tax-free. (2) Convert the entire balance to Roth: pay tax once on the entire pre-tax portion, run clean Backdoor Roths thereafter. Best if you have a low-income year (gap year, sabbatical, early retirement). (3) Solo 401(k) for self-employed: replaces SEP-IRA with a 401(k)-equivalent that's excluded from pro-rata. Switch BEFORE starting Backdoor Roth. Critical timing: pro-rata uses Dec 31 balances — December rollovers solve next year's problem. They don't retroactively fix this year's conversion.

Last updated May 2026. Sources: IRS Form 8606.