Yes, the pro-rata rule will apply since you had pre-tax funds in your traditional IRA on December 31, 2023. Therefore, part of your conversion will be taxable. TurboTax will calculate the taxable part on Form 8606 (and use the Taxable IRA Distribution worksheet if applicable).
You won't be able to take any actions to prevent the pro-rata rule for 2023. But if you plan on doing Backdoor Roth in the future you have two options:
- A reverse rollover where you rollover IRA money to a company plan, like a 401(k). Only pre-tax funds can be rolled from an IRA to a company plan. Therefore, you would isolate the basis and could start the Backdoor Roth procedure fresh. But it only works if your employer allows it, not all plans do.
- Convert the rest of the pre-tax funds in the traditional IRA to Roth IRA in 2024 (with any nondeductible contribution you make in 2024) and pay the taxes on the pre-tax funds. Your gains then can grow tax-free in the Roth IRA and your traditional IRA will be empty. Then you can use the Backdoor Roth procedure without any issues in the future.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
