Transparent method
The formula
Worked example
Example inputs
How to interpret the result
The pro-rata rule looks at every traditional, SEP and SIMPLE IRA balance combined across all accounts as of year-end, not just the specific account being converted, so an existing pre-tax balance sitting in an entirely different old IRA can make a supposedly tax-free backdoor conversion partially taxable in a way that's easy to miss if only the conversion account itself gets considered.
Before you rely on it
What to check
Include every traditional, SEP and SIMPLE IRA balance across all accounts as of year-end in the calculation, not just the specific account holding the after-tax contribution being converted.
The common error
Where people go wrong with backdoor roth pro-rata calculator
Calculating a backdoor Roth conversion's tax treatment using only the specific account being converted, while ignoring other pre-tax IRA balances held elsewhere. The pro-rata rule combines all of them, and missing one produces a materially wrong taxable-share estimate.
Sensitivity evidence
How roth conversion changes the estimated taxable conversion
| Roth conversion | Estimated taxable conversion | Estimated conversion tax |
|---|---|---|
| $5,600 | $5,234 | $1,256 |
| $6,300 | $5,888 | $1,413 |
| $7,000worked example | $6,542 | $1,570 |
| $7,700 | $7,196 | $1,727 |
| $8,400 | $7,850 | $1,884 |
Every input, tested
Which input moves the estimated taxable conversion most
| Input | Tested from | To | Estimated taxable conversion at each end | Swing |
|---|---|---|---|---|
| Roth conversion | $6,300 | $7,700 | $5,888 to $7,196 | $1,308 (20%) |
| Total traditional, SEP and SIMPLE IRA balance | $96,300 | $117,700 | $6,491 to $6,584 | $93 (1.4%) |
| After-tax IRA basis | $6,300 | $7,700 | $6,588 to $6,496 | $92 (1.4%) |
| Marginal tax rate | 22.0% | 26.0% | $6,542 to $6,542 | none |
Two variables at once
Estimated taxable conversion by roth conversion and after-tax IRA basis
| Roth conversion \ After-tax IRA basis | $5,600 | $7,000 | $8,400 |
|---|---|---|---|
| $5,600 | $5,307 | $5,234 | $5,160 |
| $6,300 | $5,970 | $5,888 | $5,805 |
| $7,000 | $6,634 | $6,542 | $6,450 |
| $7,700 | $7,297 | $7,196 | $7,096 |
| $8,400 | $7,960 | $7,850 | $7,741 |
Step by step
The worked example, input by input
| Input | Value used |
|---|---|
| Roth conversion | $7,000 |
| After-tax IRA basis | $7,000 |
| Total traditional, SEP and SIMPLE IRA balance | $107,000 |
| Marginal tax rate | 24.0% |
| Estimated taxable conversion | $6,542 |
| Estimated conversion tax | $1,570 |
Where the inputs come from
Roth conversion is the amount you convert, often the non-deductible contribution you just made. After-tax IRA basis is the total of non-deductible contributions tracked on Form 8606. Total traditional, SEP and SIMPLE IRA balance is measured on December 31 of the conversion year across all such accounts, which is the number people miss. Enter your marginal rate for the tax estimate.
Using the estimated taxable conversion in a real decision
If the pre-tax balance is large, the backdoor Roth loses much of its appeal, unless you roll the pre-tax money into a 401(k) first.
When the result stops applying
The rule applies to IRAs, including SEP and SIMPLE IRAs, but not to money in an employer plan such as a 401(k), which is why rolling IRA money into a plan can clear the way. The rule counts balances at year-end, not on the date of conversion. Failing to file Form 8606 can cause double taxation. Rules on Roth eligibility income limits change.
What to compare it with
See the Roth IRA contribution calculator for direct contributions and the traditional versus Roth IRA page. The mega backdoor Roth calculator covers after-tax 401(k) money, which avoids pro-rata. If your income is below the Roth limit, a direct contribution is simpler.
People also ask
Frequently asked questions
What is the pro-rata rule?
It requires that a conversion be treated as coming proportionally from pre-tax and after-tax money across all your traditional, SEP and SIMPLE IRAs, so you cannot convert only the after-tax dollars.
How can I avoid pro-rata taxes?
Roll the pre-tax IRA balances into a workplace 401(k), if the plan accepts them, before year-end, so the IRA balance on December 31 is zero or small.
What is Form 8606?
The form that tracks your after-tax IRA basis and reports conversions. Filing it each year is essential, so you do not pay tax twice on the same money.