Mega backdoor Roth in plan conversion

Hi,

I have some pretax dollars in ROLLOVER IRA (that are invested in ETFs)

But I would also like to maximize my backdoor Roth option. To do this, I have post tax dollars deposited in my 401k that are then converted to Roth dollars by doing an in plan conversion.
Then I get this amount converted to a Roth IRA (where I again invest it in ETFs)

In this case will the amount that I am converting to ROTH IRA be subjected to the PRO RATA rule since I have pre tax roll over IRA dollars ?
Fidelity advisers are unsure since I am doing an in plan Roth conversion

246

Employee Tax Expert

Aug 6, 2025 4:27:20 PM

The pro rata rule comes into play when you have existing pre-tax money in other traditional IRAs.

The IRS treats all your traditional IRAs as one big account when you do a conversion. For example, if you have $93,000 in pre-tax money and $7,000 in after-tax money in your traditional IRAs, and you want to convert $7,000 to a Roth, 93% of that $7,000 will be treated as coming from the pre-tax portion, even if you intended to convert only the after-tax money.

This means that even though you made after-tax contributions, a significant portion of the conversion will be taxed as ordinary income because it's coming from your pre-tax IRA balance.

The only way to completely avoid the pro rata rule is to have no pre-tax money in your traditional IRAs before doing a Roth conversion. This can be achieved by rolling over your pre-tax IRA money into your employer's retirement plan (if allowed).

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Mega backdoor Roth in plan conversion