Let’s say a client has a $100k in Traditional IRAs with a $40k basis from after-tax contributions. I know he can do a Roth conversion and $40k (40%) would not be taxable upon conversion. Now, he also has a $100k 401k that he wants to rollover but NOT convert. If he does this AFTER the conversion (but in the same tax year), does that still leave the tax-free % of what was converted at 40%? Or do they look at how much you ended the year with in IRAs for purposes of the pro-rata rule?

Any help appreciated.

Thanks!

Dave