Retirement
Backdoor Roth Calculator
The backdoor Roth lets high earners fund a Roth despite the income limit: contribute to a traditional IRA with after-tax dollars, then convert it. With no other pre-tax IRA money, the conversion is tax-free. The catch is the pro-rata rule, which taxes part of it if you hold pre-tax IRA balances.
After-tax money into a traditional IRA — up to the annual IRA limit.
Traditional, SEP, and SIMPLE IRA balances. This is what triggers pro-rata tax.
Tax on the conversion
$0
No pre-tax IRA money, so the whole conversion is tax-free.
With no pre-tax IRA balance, this is the clean case: contribute, convert, done, no tax. Do the conversion soon after the contribution to avoid gains that would be taxable, and file Form 8606 to document the non-deductible basis.
- Total IRA value
- $7,000
- Taxable fraction
- 0%
- Taxable amount
- $0
- Lands in Roth tax-free
- $7,000
How this calculator works
All traditional IRA balances are pooled. The taxable fraction of a conversion is the pre-tax balance divided by the total IRA value including the new contribution. The taxable amount is that fraction of the converted amount, taxed at your marginal rate; the remainder lands in the Roth tax-free. With no pre-tax balance, the fraction is zero.
This assumes you convert the full non-deductible contribution and that the contribution has not grown before conversion — any gains would be taxable. A flat marginal rate is used. The 401(k) rollover workaround is described but not modelled. Report the transaction on Form 8606, and confirm current IRA limits and rules.
Try an example
Frequently asked questions
What is a backdoor Roth IRA?
A two-step move for people above the Roth income limit: contribute to a traditional IRA with after-tax dollars (no deduction), then convert it to a Roth. There is no income limit on conversions, so it is a legal, IRS-acknowledged way to get money into a Roth when you cannot contribute directly.
What is the pro-rata rule?
The IRS treats all your traditional, SEP, and SIMPLE IRAs as a single pool when you convert. If part of that pool is pre-tax money, the same proportion of your conversion is taxable — you cannot cherry-pick only the after-tax dollars. It is what turns a clean backdoor Roth into a partly taxable one.
How do I avoid the pro-rata tax?
Get pre-tax IRA money out of the picture before converting. The usual route is rolling it into your current employer's 401(k), which is not counted in the pro-rata calculation. That leaves only the after-tax contribution in your IRAs, so the conversion is fully tax-free.
Is the backdoor Roth legal?
Yes. It is a well-established strategy that the IRS has explicitly acknowledged, and Congress has considered but not closed it. You must report it correctly on Form 8606 to establish the after-tax basis. Proposals to eliminate it surface periodically, so its future is not guaranteed.
Should I worry about the step transaction doctrine?
It was a theoretical concern that contributing and converting immediately might be recharacterized, but the consensus and IRS guidance have effectively put it to rest — there is no required waiting period. Most people convert within days. Keeping the contribution in cash until converting avoids taxable gains.
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Disclaimer: DayCents provides this calculator for educational purposes only. Results are estimates based on your inputs and the stated assumptions — they are not financial advice, a quote, or an offer of credit. Consult a qualified financial professional before making major money decisions.