@downtoinvest: pt 2 The pro rata rule is one of the most confusing parts of doing a backdoor Roth IRA and it trips up a ton of high earners every year. Quick version of how the pro rata rule works💸: if you make too much to contribute to a Roth IRA directly, the backdoor Roth IRA is the workaround. But the second you have existing pre-tax IRA money (sep, simple, traditional, rollover) the IRS looks at all of it👀 when you do the conversion, not just the new money you put in. Opening a brand new traditional IRA does not get you around this. That's why your conversion ends up part taxable and part not, based on the ratio of pre-tax to after-tax dollars across your IRAs. One move people look at to avoid the pro rata rule✨: rolling pre-tax IRA money into an active 401k or 403b (if your plan allows it). There are tradeoffs though, so this isn't one size fits all. Education only, not advice. backdoor Roth IRA, pro rata rule explained, high earners Roth IRA, how to do a backdoor Roth IRA, pre-tax IRA conversion taxes

Mallory | Personal Finance

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Thursday 28 May 2026 16:24:37 GMT