Backdoor Roth IRA Pro-Rata Tax Calculator
Estimate the tax impact of your Backdoor Roth IRA conversion under the IRS pro-rata rule.
Your non-deductible (post-tax) contributions to your Traditional IRA for the year.
Combined total value of W-2 SEP IRAs, SIMPLE IRAs, and pre-tax Traditional IRAs as of Dec 31. Do NOT include 401(k), 403(b), or Roth IRA balances.
What is the Backdoor Roth IRA Pro-Rata Tax Calculator?
The Backdoor Roth IRA Pro-Rata Tax Calculator helps high-earning taxpayers determine the tax liability of converting Traditional IRA funds to a Roth IRA. In the US, if your income exceeds the direct Roth IRA contribution limit, the 'Backdoor Roth' strategy is a legal way to fund a Roth IRA. However, if you hold *any* pre-tax money in a Traditional, SEP, or SIMPLE IRA on December 31, the IRS pro-rata rule prevents you from only converting post-tax contributions tax-free. This tool calculates the exact taxable fraction, tax owed, and remaining basis carried forward.
How Does the Backdoor Roth IRA Pro-Rata Tax Calculator Work?
1. Enter Conversion Amount â The total amount you are converting to a Roth IRA this year (usually $7,000, or $8,000 for age 50+).
2. Enter Nondeductible IRA Basis â The portion of your Traditional IRA contribution that was made with post-tax (non-deductible) cash.
3. Input Year-End Pre-Tax Balances â The total combined value of all your pre-tax Traditional, SEP, and SIMPLE IRAs as of December 31.
4. Set Marginal Tax Rate â Enter your combined Federal and State tax bracket.
5. View Taxable Ratio & Tax Owed â Review the breakdown showing your tax-free ratio and estimated tax bill.
Formula & Calculation Method
The IRS Pro-Rata Rule Formula:
Total Combined IRA Value = Pre-Tax IRA Balances + Conversion Amount
Tax-Free Ratio = Nondeductible IRA Basis / Total Combined IRA Value
Tax-Free Conversion Portion = Conversion Amount à Tax-Free Ratio
Taxable Conversion Portion = Conversion Amount - Tax-Free Conversion Portion
Tax Owed:
Tax Owed = Taxable Conversion Portion à Marginal Tax Rate
Remaining Tax Basis:
Remaining Basis = Nondeductible IRA Basis - Tax-Free Conversion Portion (carried forward to next year's IRS Form 8606)
Example Calculation
Example: Backdoor Roth Conversion of $7,000 (all non-deductible), with $21,000 in pre-tax IRAs, at a 32% tax bracket.
- Total Combined IRA Value = $21,000 + $7,000 = $28,000
- Tax-Free Ratio = $7,000 / $28,000 = 0.25 (25% tax-free)
- Tax-Free Portion = $7,000 Ã 25% = $1,750
- Taxable Portion = $7,000 - $1,750 = $5,250
- Tax Owed on Conversion: $5,250 Ã 32% = $1,680
- Remaining Basis (Form 8606): $5,250 (carried forward to future conversions)
Frequently Asked Questions
**The IRS Pro-Rata Rule Formula:** Total Combined IRA Value = Pre-Tax IRA Balances + Conversion Amount Tax-Free Ratio = Nondeductible IRA Basis / Total Combined IRA Value Tax-Free Conversion Portion = Conversion Amount à Tax-Free Ratio Taxable Conversion Portion = Conversion Amount - Tax-Free Conversion Portion **Tax Owed:** Tax Owed = Taxable Conversion Portion à Marginal Tax Rate **Remaining Tax Basis:** Remaining Basis = Nondeductible IRA Basis - Tax-Free Conversion Portion (carried forward to next year's IRS Form 8606)
Disclaimer: Retirement and FIRE projections are based on compound growth assumptions. Past performance does not guarantee future financial results.