Author Topic: Backdoor Roth Mistake - Pro Rata  (Read 690 times)

APBioSpartan

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Backdoor Roth Mistake - Pro Rata
« on: November 02, 2024, 11:38:33 PM »
I feel like an idiot.  I thought the pro rata rule was account based, and didn’t realize everything was summarize to the IRS.  I found this out after I put money in my traditional IRA (today) in preparation for a Roth conversion (which I haven’t done yet).  My wife and I (33/33) make roughly 350k/yr.  Is it worth still converting and getting hit with the tax bill?  I have a 6-figure rollover IRA which includes a few rollovers from previous workplace 401k’s (pre-tax).  Or, it is possible for me to pull out my traditional IRA contribution without penalty by claiming it’s an excess contribution?

MDM

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Re: Backdoor Roth Mistake - Pro Rata
« Reply #1 on: November 03, 2024, 12:23:40 AM »
Do you have a good current workplace 401k into which you can roll all rollover IRA funds?  If so, no pro-rata for you.

If you can do the reverse rollover but can't get it done by 31-Dec-2024, still no problem: just don't do the conversion part of the backdoor Roth until 2025.

APBioSpartan

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Re: Backdoor Roth Mistake - Pro Rata
« Reply #2 on: November 03, 2024, 07:53:32 PM »
My wife's workplace plan isn't that great, so I'm not sure it that would be a beneficial approach.  Is it better to just pay the taxes on it pro rata or pull it out as an excess contribution and put into a brokerage?