The Pro-Rata Rule applies only when you have both pre-tax and after-tax amounts in your Traditional IRA and you do a conversion to a Roth IRA.
- If the $25K rollover was entirely pre-tax, and you had no other after-tax basis in your Traditional IRA, then the $16K Roth conversion is fully taxable, and the Pro-Rata Rule does not apply.
- If you had after-tax contributions in your Traditional IRA before the conversion, then the Pro-Rata Rule would apply, and part of the $16K would be non-taxable.
@user17581270646 Hope this helps!!
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