There is an answer to a similar question in the community, but this situation is a little bit different.
There is an IRRA account that was a rollover from a retirement plan and has been sitting for a few years, worth about $1500. In 2024 a non-deductible contribution to an IRA of $3000 was made. The $3000 are then converted to roth IRA from the IRA.
1) How is the prorate rule works here? Since the non-deductible contributions are more than pre-tax IRRA funds. How is this calculation done?
2) For 2025, if non-deductible contributions are made (say, worth $2000), and then converted to roth, is the prorata rule applicable here again? In other words, it sounds as if the IRRA funs will be taxed every year there is a non-deductible contribution to an IRA that gets converted to a roth IRA. If so, is it advisable to convert the IRRA funds before converting the non-deductible IRA funds?
Thank you!
