Backdoor Roth Pro-Rata Calculator United States

What the backdoor Roth pro-rata calculator does

The backdoor Roth pro-rata calculator estimates how much of a traditional-to-Roth IRA conversion is taxable under the IRS pro-rata rule. You enter your total pre-tax IRA balance, your after-tax (nondeductible) basis, the amount you plan to convert and your marginal tax rate. The tool returns the taxable portion, the nontaxable portion, the taxable percentage and an estimate of the tax on the conversion.

A backdoor Roth has two steps: a nondeductible contribution to a traditional IRA, then a conversion to a Roth IRA. People with income above the Roth IRA contribution limits use it because conversions have no income cap. The pro-rata rule often surprises people who hold pre-tax IRA money from earlier contributions or rollovers, and the calculator shows its effect before you convert.

How the pro-rata rule works

The rule treats all of your traditional, SEP and SIMPLE IRAs as one account measured on the last day of the tax year. When you convert, the IRS treats the conversion as a proportional slice of your pre-tax and after-tax dollars, even if you only meant to move the after-tax ones. The taxable share of any conversion equals your pre-tax balance divided by your pre-tax balance plus your after-tax basis.

So if you also hold pre-tax IRA money, you cannot convert a nondeductible contribution on its own, and a small conversion is taxed at the same proportion as a large one.

The formula

• Total IRA balance = pre-tax balance + after-tax basis.
• Taxable percentage = pre-tax balance ÷ total IRA balance.
• Taxable portion = conversion amount × taxable percentage.
• Nontaxable portion = conversion amount − taxable portion.
• Estimated tax = taxable portion × your marginal tax rate.

The tool also estimates the after-tax basis you have left, the remaining pre-tax balance, and the conversion amount net of the estimated tax. Basis is used up in proportion to the nontaxable share of the conversion, and the remaining basis carries forward to future years on Form 8606.

Why existing pre-tax money matters

The amount of pre-tax IRA money you already hold drives the taxable percentage. With a zero pre-tax balance, almost the whole conversion of a nondeductible contribution is nontaxable. With a large pre-tax balance from a rollover of an old workplace plan, the taxable percentage climbs sharply and much of the conversion becomes taxable income for the year.

For this reason, planners often suggest clearing pre-tax IRA balances before a backdoor Roth. A common approach is to roll pre-tax IRA money into a current employer’s 401(k), if the plan accepts roll-ins, so the IRA pre-tax balance is zero on December 31. A later conversion of nondeductible contributions is then almost entirely tax-free. Whether you can do this depends on your plan’s rules and your situation.

Reading your result

The output leads with the taxable portion of your conversion, which goes on your tax return as ordinary income. Next to it are the nontaxable portion, which uses up basis instead of creating tax, and the taxable percentage. The estimated tax applies your marginal rate to the taxable portion.

The remaining basis and remaining pre-tax balance help with future conversions. If you convert only part of your balance this year, the leftover basis stays with you and reduces the taxable share of later conversions, although the pro-rata calculation is redone each year against your year-end balances.

What you need to enter

• Your total pre-tax balance across all traditional, SEP, and SIMPLE IRAs.
• Your total after-tax basis, which you track on Form 8606.
• The amount you intend to convert to a Roth IRA this year.
• Your marginal tax rate.

The rule uses combined year-end figures, so if you expect further contributions or rollovers before December 31, enter the balances you expect at year end. A conversion generally cannot be undone, so rerun the numbers before each one.

This is general information only and not financial or tax advice. Consult a qualified professional before making a conversion.

About This Backdoor Roth Pro-Rata Calculator

Use this backdoor Roth pro-rata calculator to get an instant estimate based on the figures you enter. Adjust the inputs above to match your situation, or browse all our calculators to plan your next step.