Backdoor roth IRA and pro rata

Forum|Forum|5 months ago
January 13, 2026
1 reply
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I put in $7000 to my Traditional IRA account on 12/22/25, then transferred all of it to Roth IRA account on 12/23/25. Apparently $0.65 dividend accrued on my Traditional IRA account on 12/31/25 . I realized this on 1/5/26 (new year at this point), and I immediately proceeded to convert that $0.65 from Traditional IRA to Roth IRA on 1/5/26.

My question: how will this impact how I I go about doing my tax return for year 2025 and 2026? (Given my balance in Traditional IRA was not $0 at end of 2025, how does this affect the pro rata rule? consequence?)

Is my tax filing going to be complicated for tax filing of 2025 AND 2026?

Best answer by Opus 17

It won't affect you. Technically, the pro-rata rule means that only 99.9907% of the conversion is tax-free, but the IRS uses three significant digits and rounds up, so 0.9999 should round up to 1.000. If you do another backdoor conversion in 2026, and assuming you contribute $7500 and convert $7500.65, the 65 cents will be rounded up to $1 and will be taxable next year.