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Broke Pro Rata rule??

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  • Broke Pro Rata rule??

    In January 2019 I opened a backdoor roth IRA for my wife, I made the contribution for 2018 but the conversion was done in 2019. At the time of the conversion my wife did not have any other IRA account. She switched job and started contributing to a simple IRA that was offered at work in 2019, so on December 31st of 2019 she had a simple IRA. Because the conversion was done in 2019 even though the contribution was for 2018 did we violate the pro rata rule? If so what should we do to resolve it? The Simple IRA only has about 12k in it and I'm already planning on rolling it into a solo 401k when we're able to in March 2021.


  • #2
    What did you put on form 8606?
    Contributions are by tax year, conversions are by calendar year.
    2018, 2019.


    • #3
      You didn’t “break” it, you are simply subject to it. Not such a big deal. She’ll simply pay pro-rata taxes on any conversions in calendar years in which she has a pre-tax IRA balance. This creates basis for your pre-tax TIRA. Again, not a cause for concern.
      Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087