Getting around Pro-rata rule

Submitted by Ed Burgio on Thu, 2020-02-06 01:52

Any help with this is appreciated, as I’m having difficulty finding much information online.

I have an IRA worth $280k, with about $85k as after-tax contributions. I would love to get those into a Roth, but obviously run into the pro-rata rule.

Also, I have about $1mil in a current 401k and about $15k in an old 401k from a previous employer.

Can I simply rollover the pre-tax portion of my IRA into one of my existing 401Ks, then convert the $85k after-tax into a Roth?

From what I’ve gathered online, I have the following understanding: I can do this, but I have to do it in two steps around 12/31. So, rollover the pretax amount to a 401k in 2020, then convert the after-tax IRA into a Roth in 2021. Is this correct? And if so, would I then also have to wait until 2022 to rollover my 401k into a traditional IRA? I’d ultimately, when all is said and done, prefer to only have one Roth IRA, one Traditional IRA, and one 401k (until I retire, which will then be rolled into the Traditional IRA).

Are all those steps correct? Is there a quicker way to do it? I truly appreciate any help.



Submitted by Alan - IRA critic on Thu, 2020-02-06 02:33

  • All you have to do is first rollover the pre tax value to your current 401k if it will accept IRA rollovers. Do this first, any time in the year. Once you are positive that the 401k accepted the rollover, then convert the after tax amount left in the IRA with no further delay.
  • It could take close to a month to complete the rollover to your 401k, but only a day to convert the remaining IRA amount to your Roth IRA.  In some cases you may be able to complete the entire process in as little as 2 weeks.
  • Be sure your 8606 form shows the correct amount of after tax contributions that your IRA contains. Your last 8606 should show 85k on line 14. Once you empty the TIRA by the roll out and conversion, keep it open to make more non deductible contributions and conversions. This process is called a back door Roth.
  • After you are done doing back door Roth conversions you can roll the 401k accounts back into your TIRA, or you can do it when you are sure that your income is low enough to make regular Roth IRA contributions and will likely stay within that level.


Submitted by Ed Burgio on Thu, 2020-02-06 19:36

Great. That’s much easier than expected . So, there’s no real reason to wait until the end of the year for anything? No idea why I thought that . Thank you for your help! 



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