I didn’t fully understand pro rata rule, and I rolled over my ex employers 401k into robinhood ira to get 2% bonus and also contributed after tax amounts into Ira. Now I have both pre tax and after tax dollars in Ira, so I can’t cleanly do backdoor Roth. Has anyone had this issue before and resolved this? My hypothesis now is to roll pre tax amount to TSP, lose the 2% bonus from robinhood, and roll over the remaining after tax amounts into Roth. I know it’s a mess… appreciate any input

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Yes, to do a backdoor you need a ‘clean IRA’… all IRAs are aggregated for IRS purposes… so all pretax money that’s left over (you can do a conversion if you want) needs to go into some kind of plan… so whether that’s a TSP or 401(k)/403(b), etc…

But it only matters for the purposes of the backdoor… so if you already did it for 2025, you’re good until 2026… the IRS looks at balances at the end of the prior year and the end of the tax year…

How prorata works… without getting too dirty… if you have an IRA with $100k in it… you contribute your $7,000 (or $8,000)… you convert the $7,000 that’s 7%, so 93% of the conversion is taxable…

There’s still time to clean it up… you just need to roll the account(s)… but also pay attention, because if any interest posts to the account at the end of the month, you would need to do another rollover for the couple of dollars that posted… I would call Robinhood and ask them about the 2% bonus and how it works that your now pulling it out… they may tax it as income… it might offset… but I would definitely speak with a retirement specialist / desk before doing anything to know what happens with that…

SUPER IMPORTANT NOTE: make sure your doing direct rollovers as to avoid the indirect 60 day rollover… you can only do one of those every rolling 12 months…

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That happens from time to time… 😂

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I believe your plan to roll into TSP should work.
How much in pre-tax money are we talking about?

Another option you could just convert it to Roth and pay tax now.

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Agree

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Roll over all of it into your employer and once your balance is zero in your traditional IRA, you can start putting post money in it in the pro Rider won’t apply anymore because it will be all post tax. I don’t think there’s much you can do with the contributions you already made but it’s only 7K max per year so it shouldn’t be that crazy.

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