I have a client who wants to open a ROTH but his income is too high to qualify for a direct deposit into one. We discussed the back door option of funding a non deductible IRA and then converting to a ROTH. However I found out that he also has $200k in a SIMPLE IRA. Does this affect the pro rata rule and thus if he does the back door option, it would not be 100% tax free? (in fact it would only be 3.5% tax free- $7,000/200,000 = 3.5)
I just want to make sure I give him the right advice on the back door option.
Thanks