Back Door Roth and pro-rata rule with other pre-tax IRA’s
I had a client who did back-door Roth’s in 2023. He has a Simple IRA and a SEP IRA account, but no ‘plain’ pre-tax IRA’s. Will either the Simple or SEP trigger the ‘pro-rata’ rule and create any additional tax issues or are SEP and Simple exempt from triggering those?
Thank you,
Craig
Permalink Submitted by Alan - IRA critic on Fri, 2024-05-31 21:55
They are not exempt. Only Roth IRAs and inherited IRAs are exempt. The 2023 year end balance of both the SIMPLE and SEP IRA must be shown on line 6 of Form 8606, which will make the amount of the conversion mostly taxable.