Backdoor Roth IRA Calculator
High earners above the Roth IRA income limit can still contribute via the “backdoor”: contribute to a traditional IRA (non-deductible) and convert to Roth. But if you have existing pre-tax IRA balances, the pro-rata rule triggers unexpected taxes.
Backdoor Roth IRA Strategy
The 3-step backdoor: (1) A non-deductible contribution to a traditional IRA. (2) A conversion of that IRA to a Roth IRA. (3) Tax on any gains between contribution and conversion — typically little to none when the conversion follows immediately.
The pro-rata rule (IRC §408(d)(2)). The IRS treats ALL of your traditional IRA balances as one pot when determining the tax-free portion of a conversion. If you have $95,000 in pre-tax IRA funds and make a $5,000 after-tax contribution, only 5% ($5K / $100K) of any conversion is tax-free — not 100%.
The workaround: a rollover to an employer plan. If your 401(k) accepts incoming rollovers, all pre-tax traditional IRA money can move into it. That leaves only after-tax basis in your IRA, making the backdoor conversion nearly tax-free. SEP and SIMPLE IRA balances also count toward the pro-rata calculation.
Mega backdoor Roth. Some 401(k) plans allow after-tax (non-Roth) contributions above the $23,500 limit, up to the total annual addition limit of $70,000 (2025). These after-tax contributions can be converted to Roth — either in-plan or via rollover. This is the mega backdoor Roth, and it allows much larger Roth contributions than the standard $7,000 backdoor.
The December 31 test. The pro-rata rule is applied based on your total IRA balance as of December 31 of the year of conversion. A rollover to a 401(k) that completes after year-end doesn’t count against that balance.