timing of Rolling In IRA to 401k to avoid pro rata
I roll an IRA into a 401k to avoid the aggregation and pro-rata rules of a ND Trad IRA contribution and a Roth conversion. Does the balance in the Trad IRA (as a result of the 401k Roll-In) need to be zero at the end of the previous year, or the end of the current year in order to avoid the pro-rata rule? EX: I transfer the IRA into the 401k in Aug 24. It transfers fine. I make the ND contribution and Roth conversion in Sep 2024. Will that work? Or did the transfer to the 401(k) need to be done in 2023? Thank you.
Permalink Submitted by Alan - IRA critic on Thu, 2024-08-15 17:22
Needs to be 0 at the end of the current year. Prior YE balance is irrelevant. Once the 401k has accepted the IRA rollover the conversion can be done immediately.