Backdoor roth IRA and pro rata

[ibj215]

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?    

[Opus 17 · Accepted solution]

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.