Sum of ALL Traditional, SEP, and SIMPLE IRAs (Pre-tax + After-tax).
Total after-tax contributions made (Form 8606).
The amount you are moving to a Roth IRA or withdrawing.
Tax-Free Percentage:0.00%
Tax-Free Amount (Return of Basis):$0.00
Taxable Income Generated:$0.00
Remaining Basis (Carry Forward):$0.00
function calculateProRata() {
// Get inputs by exact ID
var totalBalanceInput = document.getElementById("totalIraBalance");
var totalBasisInput = document.getElementById("totalBasis");
var conversionInput = document.getElementById("conversionAmount");
var resultsDiv = document.getElementById("resultsArea");
// Parse values
var totalBalance = parseFloat(totalBalanceInput.value);
var totalBasis = parseFloat(totalBasisInput.value);
var conversionAmount = parseFloat(conversionInput.value);
// Validation
if (isNaN(totalBalance) || isNaN(totalBasis) || isNaN(conversionAmount)) {
alert("Please enter valid numbers for all fields.");
return;
}
if (totalBalance < 0 || totalBasis < 0 || conversionAmount Total Balance (market loss), cap basis at total balance for the ratio calc.
// Safety check: Cannot convert more than the balance
if (conversionAmount > totalBalance) {
alert("Conversion amount cannot exceed Total IRA Balance.");
return;
}
// The Formula: (Total Basis / Total IRA Balance)
// Note: If the user inputs 0 balance, avoid divide by zero.
var taxFreeRatio = 0;
if (totalBalance > 0) {
taxFreeRatio = totalBasis / totalBalance;
}
// Cap ratio at 1 (100%)
if (taxFreeRatio > 1) {
taxFreeRatio = 1;
}
// Calculate amounts
var taxFreeAmount = conversionAmount * taxFreeRatio;
var taxableAmount = conversionAmount – taxFreeAmount;
// Calculate remaining basis
// Logic: Original Basis – Basis used in this transaction
var basisUsed = taxFreeAmount;
var remainingBasis = totalBasis – basisUsed;
if (remainingBasis < 0) remainingBasis = 0;
// Display Results
document.getElementById("taxFreePct").innerText = (taxFreeRatio * 100).toFixed(2) + "%";
document.getElementById("taxFreeAmt").innerText = "$" + taxFreeAmount.toLocaleString("en-US", {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById("taxableAmt").innerText = "$" + taxableAmount.toLocaleString("en-US", {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById("remainingBasis").innerText = "$" + remainingBasis.toLocaleString("en-US", {minimumFractionDigits: 2, maximumFractionDigits: 2});
// Show results container
resultsDiv.style.display = "block";
}
How to Calculate the Pro-Rata Rule for IRAs
The Pro-Rata Rule is a tax calculation used by the IRS to determine how much of a distribution or Roth conversion is tax-free versus taxable when you have both "pre-tax" and "after-tax" (non-deductible) money in your IRA accounts.
Many investors encounter this rule when attempting a Backdoor Roth IRA strategy. A common misconception is that you can separate your non-deductible contributions from your pre-tax earnings and convert only the non-deductible portion to avoid taxes. The IRS Pro-Rata rule prevents this by viewing all your IRAs as one single aggregate account.
The "Cream in the Coffee" Analogy
Think of your pre-tax IRA money as coffee and your after-tax (non-deductible) contributions as cream. Once you pour the cream into the coffee, you cannot spoon just the cream back out. Every sip you take (every withdrawal or conversion) will contain a proportional mix of both cream and coffee.
The Calculation Formula
To determine the tax implications of your conversion, the IRS uses Form 8606. The simplified math works as follows:
Tax-Free Percentage = Total Basis ÷ Total Year-End IRA Balance
Total Basis: The sum of all non-deductible contributions you have made to your IRAs that have not yet been withdrawn.
Total IRA Balance: The aggregate value of ALL your Traditional IRAs, SEP IRAs, and SIMPLE IRAs as of December 31st of the tax year.
Conversion Amount: The specific dollar amount you are moving to a Roth IRA.
Example Scenario
Let's say you have an old Rollover IRA with $94,000 of pre-tax money. You want to do a Backdoor Roth, so you contribute $6,000 of non-deductible (after-tax) money to a Traditional IRA.
Total IRA Balance: $100,000 ($94,000 pre-tax + $6,000 basis)
Total Basis: $6,000
Conversion Amount: $6,000
Even though you just put the $6,000 in, you cannot convert just that specific $6,000 tax-free. According to the Pro-Rata rule:
$6,000 (Basis) ÷ $100,000 (Total Balance) = 6%
Only 6% of your conversion is tax-free. Therefore, if you convert $6,000, only $360 is tax-free, and you will owe income tax on the remaining $5,640.
How to Avoid the Pro-Rata Rule
To avoid a surprise tax bill, investors often try to zero out their pre-tax IRA balances before December 31st. This is commonly done by rolling over pre-tax IRA funds into a current 401(k) or 403(b) plan, if the plan allows "reverse rollovers." Since 401(k) balances are not included in the Pro-Rata calculation, this leaves only the non-deductible basis in the IRA, allowing for a nearly tax-free conversion.