Pro-Rata Rule

A rule that can make IRA conversions partly taxable even when basis exists.

The pro-rata rule is an IRA tax concept that can treat a conversion as coming proportionally from pre-tax and after-tax IRA money. It is especially important for backdoor Roth situations because existing pre-tax IRA balances may make part of the conversion taxable.

Related terms

After-Tax Basis Backdoor Roth Form 8606

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Open the Roth Conversion Calculator to see how this term appears in educational scenario modeling.

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