So I rolled over all of my pre-tax IRAs to a self employed 401k last month. I would like to now make a 2016 nondeductible Traditional IRA contribution and convert it to a Roth IRA. However, in looking at how a tax return in completed, I believe I will have to use the 12/31/16 balance of my pre-tax IRAs as part of the pro-rata calculation. Are there any Tax Pros on here that can confirm my interpretation?

While I'm at it, one other question about a self employed 401k contribution. I "pay" my spouse a % of my net profits so that she can make a 401k contribution. I am confused about how the calculation works. She makes $60k, and we want to max her contribution of $18k plus 25% for the employer contribution but I get different answers from different sources. Any comments on this would be appreciated.

You should wait until 2018 to make non deductible IRA contributions and then convert. You may be able to make non deductible contributions and accumulate them until 2018 (ask CPA). If you convert in a year that you have pretax IRAs, SEPs, and SIMPLEs included, then you have to use the pretax in the cost basis. It sounds like you rolled IRAs to a 401k in 2017, so if you convert in 2017, you will have to use those in the cost basis.

Consulting a CPA for this next part is wise. The 18k is not a problem. If she is an employee and not owner, then I am pretty sure it is 25% of her salary. I am curious as to what you are hearing from your other sources. I think I have heard someone say 25% of her net salary after the 401k contribution, but that didn't seem right to me. The errors for the profit sharing usually are around the salary vs distributions/draw (taxed as S-corp) and 20% match for owner vs 25% non owner.