You Can Convert $500,000+ to Roth Annually, But Only Contribute $8,000

The Roth conversion loophole that bypasses contribution limits — with one costly catch

The Details

Most people think they can convert just their after-tax IRA contributions tax-free. The pro-rata rule forces proportional taxation across ALL traditional, SEP, and SIMPLE IRAs combined — even those at different custodians. December 31 balances determine the ratio.

What this means for you

Retirement decisions compound — getting one of these details wrong can cost tens of thousands of dollars over a retirement. The good news: most of these mistakes are completely avoidable if you understand how the rule actually works.

Next step

If you want to see how this applies to your specific situation, take the free Retire Ready Score — a 2-minute assessment that scores your current plan across income, taxes, healthcare, and protection.