^^ this assumes you are over the income limit on the Roth IRA

Options if you want more post-tax exposure:

1) Roll the traditional IRA into a traditional 401k. Then you will have $0 in the traditional IRA and can do the backdoor into the Roth IRA

2) Leave IRAs as is. See if your work has a Roth 401k and contribute to that instead

3) Leave IRAs as is. See if your work has an after tax feature in the 401k (functions like a Roth IRA) -- useful if you max out your Roth 401k but want to save even more

Anonymous wrote:

Anonymous wrote:You can contributed, but you'll be subject to the pro-rata rule.

For the unknowledgeable, could you explain the pro-rata rule or point to a trust worthy online explanation? I can google, sure. But just hoping for a little nudge of help. Thanks.

The IRS will consider all of your traditional IRAs as one IRA so if you have an IRA with $95k in it that was funded with pre-tax contributions you can’t open a new IRA with $5k of after-tax money and say “I am just converting this $5k of after tax money and I don’t owe any tax on it”.

Instead, the IRS will say that when we look at all of your IRAs together 95% of your IRA is pretax so 95% of that $5k was actually pretax money and you have to pay tax on that amount ($4750) as income when you convert it.

It’s called pro rata because you have to figure out the % of your total IRA money that is pretax and that % is how much is taxable for your conversion.

You shouldn't. Since it wouldn't be clear which funds from the traditional are moving to the roth and how much to tax it.

Anonymous wrote:You can contributed, but you'll be subject to the pro-rata rule.

For the unknowledgeable, could you explain the pro-rata rule or point to a trust worthy online explanation? I can google, sure. But just hoping for a little nudge of help. Thanks.

It’s not that you can’t do it, but it’s usually not worth it due to the prorate rule. If you work and your company allows it, rollover your traditional Ira into your company plan and then you can do the back door Roth.

You can contributed, but you'll be subject to the pro-rata rule.

I have a traditional IRA with a good amount of money in it. I wanted to do a back door Roth, but I just read online that I cannot. Is that true, or am I misunderstanding something?