Back Door Roth if Client has a Rollover IRA already
Hello,
If a client has a rollover IRA with $10K in it and they open a non deductible IRA and put the after tax money into that and then do the ROTH conversion does that avoid the pro rate rules?
Thanks!
Permalink Submitted by Alan - IRA critic on Wed, 2023-11-15 22:34
No, that triggers the pro rata rules. But a pre tax IRA balance of 10k is small enough that it could be converted along with the new contributions perhaps over a 2 or 3 year period. Or if the client has a 401k that accepts IRA rollovers, the pre tax IRA balance could be rolled into that 401k, and then the conversion of the ND contribution would be tax free.