Roth Conversion & Backdoor Roth Calculator for PE Professionals

PE professionals earning above the Roth IRA income phase-out ($153,000–$168,000 single / $242,000–$252,000 MFJ in 2026) cannot contribute directly to a Roth IRA — even in years without carry distributions, most partners are well above the threshold. But two contribution workarounds remain available at any income level: the backdoor Roth IRA and the mega backdoor Roth through a ManCo solo 401(k). A third lever — Roth conversion timing — lets you convert existing pre-tax balances at a lower rate during no-carry years. This calculator models all three. Not tax or investment advice. Confirm mechanics with your CPA before executing any Roth strategy.

Three calculators in one. Part 1: Annual backdoor Roth capacity and the pro-rata trap — if you have a SEP-IRA or rollover IRA, your backdoor Roth generates a taxable event; see the exact cost and the fix. Part 2: Mega backdoor Roth capacity through your ManCo solo 401(k) after-tax contribution bucket. Part 3: Roth conversion window — how much cheaper it is to convert pre-tax retirement balances in a flat management-fee year vs. a carry distribution year, and the long-run tax advantage of converting at all.

Part 1 — Backdoor Roth capacity & pro-rata trap

Filing status

Your age bracket

MAGI this year ($)* Modified adjusted gross income — include carry K-1 income, management fees, W-2 salary, and investment income. This year's estimate before any Roth conversion.

Pre-tax IRA balance at year-end ($)* December 31 aggregate of all traditional IRAs, SEP-IRAs, and SIMPLE IRAs — excluding Roth IRAs and 401(k)/solo 401(k) plans. Enter 0 if none or if you will roll them into your solo 401(k) before year-end.

Marginal tax rate on conversion income (%) Federal marginal rate plus state if applicable. CA 13.3%; NY up to 10.9%; TX/FL 0%. PE professionals with management fee income are typically at 37% federal.

Part 2 — Mega backdoor Roth (ManCo solo 401k)

If your ManCo solo 401(k) plan document allows after-tax employee contributions and in-plan Roth conversions, you can contribute additional after-tax dollars — up to the § 415 annual additions limit of $72,000 in 2026 — and immediately convert them to Roth. No income limit applies. No pro-rata interaction with your pre-tax 401(k) balance.

Part 3 — Roth conversion window optimizer

Roth conversions are taxed as ordinary income in the year of conversion. PE income is lumpy: flat management-fee years with no carry distribution, followed by years with $2M–$10M+ of carry. Each no-carry year is a Roth conversion window — the same conversion costs less in tax and the future growth compounds tax-free.

Conversion amount ($)* Pre-tax IRA or 401(k) balance you are considering converting in a single year.

Federal marginal rate in low-carry year (%) Your federal marginal rate on ordinary income in a year without carry distributions. Driven by ManCo management fees and investment income. A partner with $250K management fee income, standard deduction, and minimal other income is often in the 32% or 35% bracket.

Federal marginal rate in carry distribution year (%) In a carry distribution year, the carry itself is LTCG-taxed — but any Roth conversion added on top is ordinary income. Most PE partners with meaningful distributions are at 37% federal on that ordinary income tranche.

State income tax rate (%) Roth conversions are also taxed at the state level. CA: 13.3%; NY: up to 10.9%; TX/FL: 0%. If you are planning a state residency change before the conversion, the rate may differ between the two years.

Years until expected withdrawal Used to project the future value of the converted amount (8% annual growth assumption) and the tax liability avoided at withdrawal.

When to use each strategy

Strategy	Best for	Key requirement	Annual Roth capacity
Backdoor Roth IRA	Any PE professional — especially effective when no pre-tax IRA balances exist (or after rolling SEP into solo 401k)	No pre-tax IRA/SEP-IRA balances at year-end; earned income ≥ IRA limit	$7,500–$8,600/year
Mega backdoor Roth	ManCo S-Corp owners with after-tax 401k capacity and the right plan document	Solo 401(k) plan document must permit after-tax contributions and in-plan Roth conversions	$0–$47,500/year depending on salary and PS rate
Roth conversion	PE professionals with existing pre-tax IRA or 401(k) balances; execute in low-carry years	Pre-tax balance to convert; patience to wait for a low-income year to minimize tax cost	Unlimited amount; sized by rate-tolerance and retirement timeline

The pro-rata trap: why PE partners with SEP-IRAs can't just do a clean backdoor Roth

The backdoor Roth works cleanly only when you have no other pre-tax IRA balances. Under IRC § 408(d)(2), the IRS aggregates all traditional IRAs, SEP-IRAs, and SIMPLE IRAs when computing the taxable portion of any conversion.³ You cannot selectively convert "just the non-deductible portion."

Many PE partners have accumulated pre-tax IRA balances from: SEP-IRA contributions during years when the ManCo was an LLC before S-Corp election; prior-employer 401(k) rollovers into a traditional IRA when joining the firm; or deductible IRA contributions before PE income pushed them above the phase-out. A $500,000 SEP-IRA means 98.5% of any backdoor Roth conversion is immediately taxable — costing roughly $2,730 in federal tax at 37% just to contribute $7,500 to Roth. The economics collapse.

The solution: roll the pre-tax IRA and SEP-IRA into your ManCo solo 401(k) by December 31. The 401(k) plan is excluded from the IRA aggregation pool. After the rollover, the pre-tax IRA balance is $0 and the backdoor Roth is clean in every subsequent year. See the Roth conversion guide for timing, rollover requirements, and the right sequence if you're setting up a ManCo S-Corp and solo 401(k) for the first time.

Mega backdoor Roth: the plan document is the bottleneck

The § 415 annual additions limit of $72,000 for 2026 sets the ceiling for all contributions to a single participant's 401(k): employee deferrals + employer profit sharing + after-tax employee contributions. If your employee deferral and employer profit sharing don't fill the full $72,000, the gap can be filled with after-tax contributions — which can then be converted to Roth with no income limit and no pro-rata interaction with the pre-tax 401(k) balance.

The bottleneck is plan document language, not tax law. Many off-the-shelf solo 401(k) plans — including some popular online providers — do not include provisions for after-tax contributions or in-plan Roth conversions. If your current plan document doesn't allow it, you can amend the plan or establish a new plan with a provider that supports these features. The amendment can be made at any time and applies to contributions made after the amendment effective date.

Get matched with a PE-specialist fee-only advisor

Backdoor Roth mechanics, SEP-IRA rollover timing, mega backdoor Roth, and Roth conversion windows all interact with your carry tax strategy, ManCo structure, and state residency planning. A PE-specialist fee-only advisor models all of them together — not in isolation.

Sources

IRS newsroom: 401(k) limit increases to $24,500 for 2026, IRA limit increases to $7,500 — confirms 2026 IRA contribution limit $7,500 (under 50), catch-up $1,100 (age 50+), total $8,600; Roth IRA phase-outs $153K–$168K single / $242K–$252K MFJ; 401(k) deferral $24,500; catch-up $8,000 (50+), $11,250 (60–63); § 415 annual additions limit $72,000
IRS Notice 2025-67 — Full COLA table for all 2026 qualified retirement plan limits under IRC §§ 401, 402, 408, 414, 415
IRS Publication 590-A: Contributions to Individual Retirement Arrangements (IRAs) — IRC § 408(d)(2) pro-rata (aggregation) rule; Form 8606 mechanics; non-deductible IRA contributions and Roth conversion
IRS: Retirement Topics — IRA Contribution Limits — Roth IRA income phase-out ranges confirmed

All tax values verified June 2026 against IRS Notice 2025-67 and IRS.gov. 2026 IRA contribution limit $7,500 under age 50 / $8,600 age 50+ (with $1,100 catch-up). Roth IRA phase-out $153,000–$168,000 single, $242,000–$252,000 MFJ. § 415 annual additions limit $72,000. No income limit on Roth conversions (enacted 2010; unchanged).