Traditional IRA的pre-tax money会在做backdoor时因pro-rata rule产生收入税。一种减小影响的方法是尽量不要往traditional IRA存入pre-tax money。在存入non-deductible contribution后,可能会在做backdoor第二步前产生earning。上面的例子中,就有1k pre-tax earning。在rollover到Roth IRA时也会按比例产生收入税。如果...
403(b), 457(b), or similar accounts. If you do hold tax-deferred IRA dollars on December 31st of the calendar year in which you made the Roth conversion, you’ll be subject to taxes when making your conversion per thepro-rata rule. ...
The article offers advice on how to convert a new non-deductible individual retirement account (IRA) to a Roth IRA at little or no tax cost even if an individual has an existing pre-tax IRA. Cosidering the pro-rata rule, it suggests rolling a pre-tax IRA dollars into a 401(k) and...
Step 1 is necessary because if you didn’t do it, your conversion will be taxed by the percentage of pretax money in all IRAs (the “pro-rata rule”). Money in employer sponsored plans doesn’t count in the pro-rata rule. Step 5 – Report on your tax return Since you made a non...
Let’s say you have a traditional IRA with a pre-tax $15,000 balance. You then open a separate traditional IRA, make a post-tax, nondeductible $5,000 contribution, and do a backdoor Roth conversion. Under the pro-rata rule, the IRS considers the conversion as coming proportionally from...
仅以mega backdoor而言,目的地pre-tax 401(k)也可以换成traditional IRA。但因为高收入人士往往同时做backdoor(以traditional IRA为跳板的backdoor Roth)。为应对traditional IRA的pro-rata rule,在年底清空traditional IRA为佳,所以mega backdoor优先rollover至pre-tax 401(k),这样一来不影响backdoor。
and you don’t have any SEP or SIMPLE IRAs. If you had a few dollars of earnings posted in the Traditional IRA after you converted and you left them in the account, get the value from your year-end statement and put it in the second box. The software will apply the pro-rata rule....
这个Pro-rata rule呢,就是为了防止大家只convert after-tax to Roth IRA然后把pre-tax 的继续留着。 根据IRS Notice 2014-54里的解释 'If a participant’s account balance in a planqualified under § 401(a) or in a § 403(b) plan includes both after-tax andpretax amounts, then, under §...
The Pro Rata Rule This method can be most beneficial tax-wise if you don’t have other deducted IRA funds, including those previously rolled out of a 401(k), SEP IRAs, or Simple IRAs. If you do, then the portion that you convert to the Roth has to be prorated over the total amoun...
1) Do I need to consider the pro-rata rule which factors in my pre-tax IRA funds into the calculation? 2) Regarding the pro-rata rule for Roth conversions, does the mix of pre and post tax contributions include both 401k and IRAs or is that separate?