Hi

One of my client's wife contributed pre-tax dollars to a simple IRA account in 2016 as part of her company’s retirement plan. She did not contribute money to the simple IRA account the last few years as the company has switched to a 401k plan. They otherwise have no IRA accounts. This year she and her husband each opened new traditional IRA accounts and contributed post tax dollars to it and then converted it to a Roth IRA. The Simple IRA has a cost basis of $5,730 and market value of $13,844. They contributed 12k for each of them into the backdoor Roth IRA (6k for 2021 and 6k for 2022).   Will they be responsible to pay taxes on the conversion of the traditional IRA to the Roth IRA? Their concern is that the Simple IRA will be considered to be a traditional IRA  or 401K by the IRS and the conversion of the new traditional IRA that they opened this year will be considered distributions as part of the pro-rata rule/ “cream in your coffee” rule. Please reply

GK