Backdoor Roth IRA Conversion Tax Impact Simulator (2026 Edition)
Use our Backdoor Roth IRA Conversion Calculator to simulate the tax impact of your conversion. Includes pro-rata rule analysis and break-even point for 2026. Estimate your taxes, growth potential, and break-even point before converting your traditional IRA to a Roth.
Ready to Analyze Your Roth Conversion?
Enter your IRA details and tax information to see the tax impact and long-term benefits of a Backdoor Roth conversion.
Our Roth conversion calculator helps you estimate the taxable income from converting your traditional IRA to a Roth IRA. The taxable amount depends on your after-tax basis (non-deductible contributions) and the pro-rata rule if you have other traditional IRA assets.
When you convert a traditional IRA to a Roth IRA, you pay ordinary income tax on the taxable portion. The taxable amount is calculated as: Total IRA Balance - After-Tax Basis. However, if you have multiple traditional IRAs, the pro-rata rule applies, meaning you can't selectively convert only the non-deductible portion.
How the Pro-Rata Rule Affects Your After-Tax Basis
The pro-rata rule is crucial for backdoor Roth conversions. If you have pre-tax money in any traditional IRA (including SEP-IRAs and SIMPLE IRAs), the IRS requires you to calculate the taxable percentage based on all your IRA assets combined. This means:
- You can't convert only your non-deductible contributions tax-free
- The taxable percentage = (Total pre-tax IRA balance) / (Total IRA balance)
- 401(k) balances do NOT count toward the pro-rata rule
- You can minimize the impact by rolling pre-tax IRA funds into a 401(k) before converting
Example:
If you have $50,000 in pre-tax traditional IRA and make a $7,000 non-deductible contribution, your total IRA balance is $57,000. When you convert, 87.7% ($50,000/$57,000) will be taxable, not just the pre-tax portion. This is why understanding the pro-rata rule is essential for backdoor Roth conversions.
The pro-rata rule is the most critical factor in determining the tax impact of a backdoor Roth conversion. This rule prevents high-income earners from selectively converting only their non-deductible IRA contributions tax-free.
How it works: When you convert any portion of your traditional IRA to a Roth, the IRS calculates the taxable percentage based on ALL your traditional IRA assets (including SEP-IRAs and SIMPLE IRAs). You can't cherry-pick which dollars to convert.
Strategies to Minimize Pro-Rata Rule Impact
Roll Pre-Tax IRAs into 401(k)
If your employer's 401(k) accepts rollovers, move pre-tax IRA funds there before doing the backdoor Roth. This removes them from the pro-rata calculation.
Convert All Traditional IRAs
If you're willing to pay the tax, converting all traditional IRA assets eliminates future pro-rata complications.
Time Your Contributions
Make non-deductible contributions and convert them quickly before significant earnings accumulate.
The break-even point is when the tax-free growth in your Roth IRA exceeds what you would have had in a traditional IRA after taxes. Our calculator shows you exactly when this occurs based on your specific situation.
Key factors affecting break-even:
- Tax rate difference: The larger the gap between your current and retirement tax rates, the faster you break even
- Investment returns: Higher expected returns accelerate break-even because tax-free growth compounds faster
- Time horizon: Longer investment periods favor Roth conversions due to more years of tax-free growth
- Ability to pay tax from savings: Paying conversion tax from outside the IRA preserves more money for growth
💡 Pro Tip:
If your break-even point is less than 10 years, a Roth conversion is typically a strong candidate. If it's 20+ years, consider whether you'll have enough time to benefit from the tax-free growth.
How much tax will I owe on a backdoor Roth conversion?
You'll owe ordinary income tax on the taxable portion of your conversion. This includes all pre-tax contributions and earnings. The amount depends on your marginal tax rate, state taxes, and the pro-rata rule if you have other traditional IRA assets. Our calculator shows your exact tax liability based on your specific situation.
Is a backdoor Roth IRA worth it in 2026?
A backdoor Roth IRA is worth it if you'll be in a higher tax bracket in retirement, can pay the conversion tax from savings, and have a long investment horizon (typically 10+ years). Use our calculator to see your specific break-even point and long-term tax savings for 2026.
How does the pro-rata rule work for backdoor Roth?
The pro-rata rule requires you to consider all your traditional IRA assets when calculating the taxable portion of a conversion. You can't just convert the non-deductible portion if you have other pre-tax IRA money. The taxable percentage is calculated as: (Total pre-tax IRA balance) / (Total IRA balance). Our calculator automatically accounts for the pro-rata rule.
What are the 2026 Roth IRA income limits?
For 2026, Roth IRA contribution limits are $7,000 ($8,000 if age 50+) for individuals. Income limits for direct contributions are: Single/MFS: $146,000-$161,000 (phase-out), Married Filing Jointly: $230,000-$240,000 (phase-out). High earners above these limits can use the backdoor Roth strategy.
Can I do a backdoor Roth if I have a traditional IRA?
Yes, but the pro-rata rule applies. If you have pre-tax money in traditional IRAs, a portion of your conversion will be taxable based on the ratio of pre-tax to total IRA assets. You can minimize this by rolling pre-tax IRA funds into a 401(k) before doing the backdoor Roth conversion.
How long does it take to break even on a Roth conversion?
The break-even point typically occurs 8-15 years after conversion, depending on your tax rates, investment returns, and time horizon. Our calculator shows your exact break-even year by comparing tax-free Roth growth to traditional IRA growth after taxes.
Does my 401(k) balance affect the pro-rata rule?
No, 401(k) balances do not affect the pro-rata rule. The pro-rata rule only applies to traditional IRAs, SEP-IRAs, and SIMPLE IRAs. Your 401(k) is separate and doesn't count when calculating the taxable portion of a Roth conversion from an IRA.
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