How can I avoid the Pro-Rata rule when doing a Backdoor Roth IRA?

You can eliminate the pro-rata tax by rolling all pre-tax Traditional, SEP, or SIMPLE IRA balances into an active employer 401(k) or 403(b) plan before December 31 of the conversion tax year, leaving a $0 pre-tax IRA balance.

What is the annual IRA contribution limit for 2026?

The statutory IRA contribution limit is $7,000 for individuals under age 50, and $8,000 for individuals age 50 and older (including the $1,000 statutory catch-up contribution).

USAUpdated for 2026retirement

Backdoor Roth IRA Pro-Rata Rule Calculator (Form 8606) 2026

Calculate taxable conversion amounts and unexpected tax liability when executing a Backdoor Roth IRA conversion with existing pre-tax balances across Traditional, SEP, and SIMPLE IRAs under the IRS aggregate Pro-Rata rule.

Retirement & Pensions Taxes & Duties Investment & Assets Finance & Investment

Calculated Result

Taxes Owed on Conversion

$2,016

Calculator Inputs

Non-Deductible (After-Tax) Contribution (Basis)

Quick select:

Amount Converted to Roth IRA

Quick select:

Total Pre-Tax Balance in All IRAs (Traditional + SEP + SIMPLE)

Quick select:

Taxes Owed on Conversion

$2,016

Taxable Portion of Conversion

$6,300

Nontaxable (Tax-Free) Portion

$700

Total Aggregated IRA Pool Value

$70,000

Effective Tax Rate on Conversion

28.8 %

Remaining Unconverted After-Tax Basis

$6,300

The IRS treats all Traditional, SEP, and SIMPLE IRAs as a single combined account on December 31 under IRC § 408(d)(2). Qualified 401(k) balances are excluded from the pro-rata calculation.

Official Statute: Internal Revenue Code (26 U.S.C. § 408(d)(2) - Pro-Rata Rule for Aggregate IRA Distributions & IRS Form 8606)Last Verified: 2026-09-04

Calculation Methodology

Total Aggregate IRA Balance = Year-End Pre-Tax IRA Balance + Roth Conversion Amount. Non-Taxable Ratio = Total Basis (After-Tax Contributions) / Total Aggregate Balance. Non-Taxable Portion = Conversion Amount * Non-Taxable Ratio. Taxable Conversion Amount = Conversion Amount - Non-Taxable Portion. Estimated Tax Due = Taxable Conversion * Marginal Tax Rate %.

Frequently Asked Questions

The IRS Pro-Rata rule (IRC § 408(d)(2)) mandates that when you convert non-deductible (after-tax) dollars to a Roth IRA, you cannot isolate just the after-tax portion. The IRS views all your Traditional, SEP, and SIMPLE IRAs as one aggregated pool.

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USA

Backdoor Roth IRA Pro-Rata Rule Calculator (Form 8606) 2026

Calculator Inputs

Calculation Methodology

Frequently Asked Questions

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