Pro-Rata Rule: Past years backdoor IRA with current year SEP

[fgur]

I've been using the backdoor IRA for a number of years.

Each year I would make both the contribution and Roth conversion of the entire amount around April of tax year + 1 (before the deadline).

This means that for tax year 2022 I contributed $6000 (contribution done in April 2023 before the deadline) and my basis was $6000 from the previous year. The Roth conversion happened few days after the contribution, in 2023. 

In 2023 I started a new business and decided to not use the backdoor IRA anymore, and instead tuck away as much as I can in pre-tax SEP-IRA. This means I made no non-deductible contributions in 2023, but there was a conversion that was done as noted above.

On Dec 31 2023 I had no SEP-IRA or any other IRAs with a balance. I opened my SEP-IRA in April of 2024 and made a one-time funding of $30K to count against 2023. 

My question is as follows: Will I have any tax implications resulting from the pro-rata rule? After all, there was no money in SEP accounts at the time I made a traditional-to-roth conversion in 2023, no SEP-IRA funds available on 12/31/2023, and SEP funds for 2023 were contributed in April of 2024.

[DanaB27]

It seems the pro-rata rule won't apply since the value of all your traditional/SEP/SIMPLE IRAs on December 31, 2023, was $0.

Line 6 Form 8606 Instructions state:

"Enter the total value of all your traditional, traditional SEP, and traditional SIMPLE IRAs as of December 31, 2023, plus any outstanding rollovers. A statement should be sent to you by January 31, 2024, showing the value of each IRA on December 31, 2023. However, if you recharacterized any amounts originally contributed, enter on line 6 the total value, taking into account all recharacterizations of those amounts, including recharacterizations made after December 31, 2023." 

[fgur]

Thank you!

The reason I wasn't sure is because of the ability to make a contribution well into tax year+1 (by the 4/15th deadline) towards the tax year in question. I wasn't sure what the IRS considers as the funding time for the purpose of evaluating 12/31/<tax year> value.