I am looking for a professional check on my plan to "un-clog" my Traditional IRA so I can begin doing Backdoor Roth IRA contributions without triggering the Pro-Rata Rule.
Current Situation:
- I have an IRA at Fidelity with approximately $74,000 in it. This is a mix of annual post-tax IRA basis contributions along with a previous employer's 401(k) that I rolled in roughly 8 years ago. I am 31 now and didn't know what I was doing when I originally did this, I am regretting it now and am trying to undo this/see what other options I may have.
- My current income will soon approach the limit where I can no longer contribute directly to a Roth IRA, so I want to try to repair this situation so I may be able to utilize the Backdoor Roth method in the near future (probably for my 2026 filing).
- I understand that because of the Pro-Rata Rule, I cannot simply contribute $7,000 of post-tax money to that IRA and convert it tax-free to my Roth while that $74k balance exists as it is a mixture of pre and post-tax money.
I did some research online and it seems that I may be able to perform a "Reverse Rollover" by moving the entire $74,000 from my Fidelity IRA into my current employer's 401(k) plan (at T. Rowe Price). I am in the process of speaking with T. Rowe Price to confirm that they will accept incoming rollovers to a 401(k) from traditional IRAs.
If I can do this, my plan is to roll the $74,000 in this IRA into my current employer's 401(k), then file my taxes, and contribute the $7,000 (or however much I can to maximize my return, the rest will go to my Roth) to this IRA along with my 2025 filing.
My Questions:
- Can I do a reverse rollover of the $74,000 to my current 401(k) with some post-tax (basis) mixed with pre-tax (401(k) rollover)?
If I move the $74,000 into the 401(k) and my Traditional IRA balance is roughly the "fresh" $7,000 (or however much) I contributed for 2025, am I correct that the Pro-Rata rule will no longer apply to any Roth conversions I do in the future?
Does the IRS look at the total balance of all IRAs combined, even if the money is moved after the conversion but before the end of the year?
Are there any specific "gotchas" in TurboTax when reporting an IRA-to-401k rollover (1099-R with Code G?) to ensure it doesn't accidentally show up as taxable income?
