Backdoor Roth IRA: contribute non-deductible Traditional IRA, then immediately convert to Roth. The pro-rata rule applies if you have existing pre-tax IRA balances.
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A legal side door into the Roth IRA
The Roth IRA is one of the best accounts in the tax code: contributions grow tax-free and come out tax-free in retirement. But direct contributions phase out once your income climbs, and high earners are locked out entirely. The backdoor is the workaround Congress has tacitly blessed. You contribute to a traditional IRA, which has no income limit on contributions, take no deduction for it, and then immediately convert that money to a Roth. Because the contribution was after-tax money and you convert before it grows, the conversion is tax-free, and you land in the same place a direct Roth contribution would have put you. This calculator's job is to tell you whether that last step really is tax-free for you, because for many people it is not.
What makes or breaks it is one rule, and this tool is built around it. The IRS does not let you cherry-pick which dollars you convert. It looks at every traditional, SEP, and SIMPLE IRA you own and applies a single blended ratio. That is the pro-rata rule, and ignoring it is the most expensive backdoor Roth mistake there is.
The pro-rata rule, in dollars
The clean case is when you have no other IRA money. Contribute $7,500 of after-tax money, convert it, and the conversion is generally fully basis before any earnings. Now introduce a $67,500 pre-tax rollover IRA. The IRS sees a $75,000 aggregate IRA balance, only $7,500 of which is after-tax. Here is what a $7,500 conversion costs at a 32% marginal rate.
The same $7,500 conversion now has a $6,750 taxable portion and triggers about $2,160 of federal tax at 32%. The $750 of basis recovered in the conversion is tax-free; unused basis remains tracked on Form 8606 for future distributions. The lesson is that a backdoor Roth is cleanest when the year-end pre-tax IRA balance is zero.
The cleanup move that makes it free again
There is a clean escape from the pro-rata trap, and it hinges on a quirk in how the rule is defined: only IRA-type accounts count toward the blend. Employer plans do not. So if your 401(k) accepts incoming rollovers, you may be able to roll eligible pre-tax IRA money into the 401(k) before December 31 of the conversion year. Once that pre-tax money is inside the 401(k), your year-end IRA balance may consist only of after-tax basis, and the conversion can become tax-free again. The timing matters: the pro-rata calculation uses year-end IRA balances, not only the balance on the conversion date. In this example, a successful cleanup turns the roughly $2,160 federal tax estimate back to zero. File Form 8606 to report nondeductible contributions and conversions and preserve the basis record.
Does the pro-rata rule count my spouse's IRAs or my 401(k)?
Neither. The pro-rata calculation is strictly per person and strictly IRA-only. Your spouse's IRA balances are irrelevant to your conversion, and money sitting in any 401(k), 403(b), or similar employer plan is excluded entirely. Only your own traditional, SEP, and SIMPLE IRA balances go into the blend, which is exactly why the rollover-to-401(k) cleanup works.
Is the backdoor Roth still allowed?
Yes. Proposals to close it have surfaced in Congress but none has become law, and the IRS has acknowledged the strategy in practice. The technique relies on two facts that remain true: there is no income limit on non-deductible traditional IRA contributions, and there is no income limit on Roth conversions. Until a law changes one of those, the backdoor works. As always with a strategy that depends on current rules, confirm nothing has changed in the year you execute it, ideally with a CPA.