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.
Tax owed on conversion
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Taxable portion of conversion
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Non-taxable (basis) portion
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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 $7,000 of after-tax money, convert it, and because 100% of your IRA balance is after-tax basis, none of the conversion is taxable. The full $7,000 lands in the Roth tax-free. Now introduce a complication: a $63,000 pre-tax balance sitting in a rollover IRA from an old 401(k). Suddenly the IRS sees a $70,000 total IRA, only $7,000 of which is after-tax. Here is what the conversion costs at a 32% marginal rate.
| Step | Amount |
|---|---|
| Non-deductible contribution | $7,000 |
| Existing pre-tax IRA balance | $63,000 |
| After-tax share (7,000 / 70,000) | 10% |
| Non-taxable basis in the conversion | $700 |
| Taxable portion (90%) | $6,300 |
| Tax owed at 32% | $2,016 |
The same $7,000 contribution that was free in the clean case now triggers $2,016 of tax, because the pre-tax balance drags 90% of the conversion into taxable territory. Worse, the $700 of basis you could not fully use does not vanish, it stays as basis spread across your remaining IRA, to be recovered in tiny slices over future conversions. That is a paperwork headache for years. The lesson the table drives home: a backdoor Roth is only clean if your 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, and most do, you can roll your entire pre-tax IRA balance into the 401(k) before December 31 of the conversion year. Once that pre-tax money is inside the 401(k), your IRA balance is back to pure after-tax basis, and the conversion becomes tax-free again. The timing matters: the pro-rata calculation is done on your IRA balances as of year-end, not the day you convert, so the rollover has to be completed by the last day of the year. Done right, this turns a $2,016 tax bill back into zero. One more detail people forget: you must file Form 8606 for the non-deductible contribution and again for the conversion, every single year. Skip it and the IRS has no record of your basis, and you risk being taxed twice on the same dollars.
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.