Q & A
Roth IRAs - Does the pro rata rule apply in a situation where a “backdoor” conversion was effected prior to any deposit from a qualified plan, but both events did occur in the same calendar year? Does the pro rata rule still apply given the funds were never co-mingled in an account at any time?
Answer: Yes. The pro rata rule applies even if a qualified plan is rolled over after the conversion takes place because Dec. 31 is the date the IRA’s are valued for purposes of making the calculation. The pro rata rule applies to all IRAs in the taxpayers name regardless of the source of funds or the deductibility of the contributions. The rule prevents one from converting just amounts attributable to after-tax contributions. Read more…
Source: http://www.marketwatch.com, October 11, 2013
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