Reverse rollover AFTER a Roth Conversion
We have someone who has completed a backdoor Roth contribution – already has done the conversion to the Roth IRA – but also had other IRA dollars and is now learning of the pro rata rule. He has the ability to do a reverse rollover to his 401k, but how do you feel about doing the reverse rollover AFTER having already done the conversion. Since the pro rata rule is applied on balances at the end of the year, are we going to be okay here, or could the 401k deem that some of what’s left in the Trad IRA now still includes basis and therefore can’t be rolled back to them, making the reverse rollover less effective?
Permalink Submitted by Alan - IRA critic on Wed, 2025-04-09 15:45
The reverse rollover of pre tax IRA amounts can be done any time before the end of the conversion year and the amount of that rollover will not be included on line 6 of Form 8606, which calculates the taxable portion of a conversion. Usually, it is recommended to do the reverse rollover before the conversion, and the reason for that is to prevent the conversion from being taxable should the current employer plan not accept the reverse rollover.