Backdoor Roth Pro-Rata Rule Tax Cost Calculator
Example: Non-deductible IRA contribution (max $7,000 in 2025): 7000 $ · Existing pre-tax traditional IRA balance (all IRAs combined): 0 $ · Federal marginal tax rate: 24 %
| Tax owed on this conversion | $0 |
| Taxable portion of conversion (pro-rata %) | 0.00% |
| After-tax value converted to Roth | $7,000 |
| Effective tax rate on the conversion | 0.00% |
Worked example
Contributing $7,000 after-tax with no existing traditional IRA balance: the pro-rata calculation is $0 pre-tax ÷ ($0 + $7,000) = 0% taxable. Tax cost: $0. The entire $7,000 converts tax-free to Roth. Now add $63,000 in existing traditional IRA money: the taxable portion becomes $63,000 ÷ $70,000 = 90%. Tax on $6,300 at 24% = $1,512. The backdoor Roth now costs $1,512 in taxes — which may still be worthwhile, but must be planned for.
Frequently asked questions
How can I avoid the pro-rata rule?
Roll your pre-tax traditional IRA money into your employer's 401(k) or 403(b) before December 31 of the year you convert. 401(k) balances are not counted in the pro-rata calculation. This clears the way for a clean backdoor Roth. Not all 401(k) plans accept IRA rollovers, so check with your plan administrator.
Does the pro-rata rule apply to each IRA separately?
No. The IRS aggregates all traditional, SEP, and SIMPLE IRAs you own (but not Roth IRAs or inherited IRAs) into one pool for the pro-rata calculation. It does not matter which IRA account you convert from — the entire IRA universe is counted.
What form do I use to report the basis in my non-deductible IRA?
Form 8606 tracks your after-tax (non-deductible) IRA contributions and calculates the taxable portion of your conversions. Filing Form 8606 every year you make a non-deductible contribution is essential — if you lose track of your basis, you may pay tax twice on the same money.