Bill proposed to crack down on backdoor roth (and other loopholes)

[Anonymous]

This is a pretty wild marriage penalty:

Sec. 138201. Increase in Top Marginal Individual Income Tax Rate.
The provision increases the top marginal individual income tax rate in section 1(j)(2) to 39.6%. This marginal rate applies to married individuals filing jointly with taxable income over $450,000, to heads of households with taxable income over $425,000, to unmarried individuals with taxable income over $400,000, to married individuals filing separate returns with taxable income over $225,000, and to estates and trusts with taxable income over $12,500. The amendments made by this section apply to taxable years beginning after December 31, 2021.

[Anonymous]

I don't know why they would do anything to disincentivize savings and investment, when the country is already in such poor shape coming out of covid. It's like they want to lose the midterms in a landslide.

[Anonymous]

Anonymous wrote:I don't know why they would do anything to disincentivize savings and investment, when the country is already in such poor shape coming out of covid. It's like they want to lose the midterms in a landslide.

There’s a savings glut in this country, go ask any bank about their balance sheet. It’s all concentrated at the top 10%

[Anonymous]

Anonymous wrote:I don't know why they would do anything to disincentivize savings and investment, when the country is already in such poor shape coming out of covid. It's like they want to lose the midterms in a landslide.

I don’t know, “tax the rich” is gaining some steam in progressive circles. Not sure if you read that ProPublica article about Peter Theils IRA, but it was pretty enraging.

If they want to encourage savings by making some of it tax free, they should just do it with a simple straightforward account. Oh wait, they do. It is called the Roth IRA and it is income limited and it is limited to 6000 a year. This bill is closing some loopholes that allow high earners to save significantly more than 6000 each year in this type of account. If they want to raise the income limits on that, or the contribution amount limits, that would be great news to me.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I just started doing a mega back door in 2020. Hopefully this doesn’t pass

I hope it does so that you get no benefit from it.

In case you haven't seen an a-hole before, check out a mirror!

[Anonymous]

Anonymous wrote:

Anonymous wrote:I don't know why they would do anything to disincentivize savings and investment, when the country is already in such poor shape coming out of covid. It's like they want to lose the midterms in a landslide.

I don’t know, “tax the rich” is gaining some steam in progressive circles. Not sure if you read that ProPublica article about Peter Theils IRA, but it was pretty enraging.

If they want to encourage savings by making some of it tax free, they should just do it with a simple straightforward account. Oh wait, they do. It is called the Roth IRA and it is income limited and it is limited to 6000 a year. This bill is closing some loopholes that allow high earners to save significantly more than 6000 each year in this type of account. If they want to raise the income limits on that, or the contribution amount limits, that would be great news to me.

Why demonize somebody for taking advantage of loopholes that Congress purposefully created? That's what I don't understand.

[Anonymous]

Literally everyone I know who uses backdoor and megabackdoor Roths that know is either high income or rich or both (myself included). It was always shocking to me that they were possible. Even as I used them - because why not?

I’m glad they’re closing them. Now they need to end the QSBS tax dodge and fix the hedge fund compensation loopholes too.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I just started doing a mega back door in 2020. Hopefully this doesn’t pass

I hope it does so that you get no benefit from it.

I am poor by DCUM standards.

+1

I am all for taxing the rich but this seems like small potatoes on what they should be focusing on.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I just started doing a mega back door in 2020. Hopefully this doesn’t pass

I hope it does so that you get no benefit from it.

I am poor by DCUM standards.

+1

I am all for taxing the rich but this seems like small potatoes on what they should be focusing on.

But it’s not “small potatoes.” That’s what you’re not understanding. Especially when PE and VCs use it to shield private ownership stock from taxation when those shares inevitably explode in value.

Besides, the proposal already keeps the backdoor Roth for upper middle class households. We are a $400K HHI and will still get to use the backdoor Roth for savings. I think the limitations being proposed are actually quite sensible.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I don't know why they would do anything to disincentivize savings and investment, when the country is already in such poor shape coming out of covid. It's like they want to lose the midterms in a landslide.

I don’t know, “tax the rich” is gaining some steam in progressive circles. Not sure if you read that ProPublica article about Peter Theils IRA, but it was pretty enraging.

If they want to encourage savings by making some of it tax free, they should just do it with a simple straightforward account. Oh wait, they do. It is called the Roth IRA and it is income limited and it is limited to 6000 a year. This bill is closing some loopholes that allow high earners to save significantly more than 6000 each year in this type of account. If they want to raise the income limits on that, or the contribution amount limits, that would be great news to me.

Why demonize somebody for taking advantage of loopholes that Congress purposefully created? That's what I don't understand.

Demonize? I’m just saying they should close the loopholes. And I use them myself. I wouldn’t say they were purposefully created….

(Peter Theils situation is pretty unique.)

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I just started doing a mega back door in 2020. Hopefully this doesn’t pass

I hope it does so that you get no benefit from it.

I am poor by DCUM standards.

+1

I am all for taxing the rich but this seems like small potatoes on what they should be focusing on.

But it’s not “small potatoes.” That’s what you’re not understanding. Especially when PE and VCs use it to shield private ownership stock from taxation when those shares inevitably explode in value.

Besides, the proposal already keeps the backdoor Roth for upper middle class households. We are a $400K HHI and will still get to use the backdoor Roth for savings. I think the limitations being proposed are actually quite sensible.

If this passes that statement is incorrect. Backdoor Roth is closed for everyone.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I just started doing a mega back door in 2020. Hopefully this doesn’t pass

I hope it does so that you get no benefit from it.

I am poor by DCUM standards.

+1

I am all for taxing the rich but this seems like small potatoes on what they should be focusing on.

But it’s not “small potatoes.” That’s what you’re not understanding. Especially when PE and VCs use it to shield private ownership stock from taxation when those shares inevitably explode in value.

Besides, the proposal already keeps the backdoor Roth for upper middle class households. We are a $400K HHI and will still get to use the backdoor Roth for savings. I think the limitations being proposed are actually quite sensible.

If this passes that statement is incorrect. Backdoor Roth is closed for everyone.

This is not true. You can read the Ways & Means Committee text:

In order to close these so-called “back-door” Roth IRA strategies, the bill eliminates Roth conversions for both IRAs and employer-sponsored plans for single taxpayers (or taxpayers married filing separately) with taxable income over $400,000, married taxpayers filing jointly with taxable income over $450,000, and heads of households with taxable income over $425,000 (all indexed for inflation). This provision applies to distributions, transfers, and contributions made in taxable years beginning after December 31, 2031.

The backdoor conversion is still available to the vast majority of middle class and upper middle class families. And this ban on Roth conversions for rich people doesn't go into effect for another decade.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I just started doing a mega back door in 2020. Hopefully this doesn’t pass

I hope it does so that you get no benefit from it.

I am poor by DCUM standards.

+1

I am all for taxing the rich but this seems like small potatoes on what they should be focusing on.

But it’s not “small potatoes.” That’s what you’re not understanding. Especially when PE and VCs use it to shield private ownership stock from taxation when those shares inevitably explode in value.

Besides, the proposal already keeps the backdoor Roth for upper middle class households. We are a $400K HHI and will still get to use the backdoor Roth for savings. I think the limitations being proposed are actually quite sensible.

If this passes that statement is incorrect. Backdoor Roth is closed for everyone.

This is not true. You can read the Ways & Means Committee text:

In order to close these so-called “back-door” Roth IRA strategies, the bill eliminates Roth conversions for both IRAs and employer-sponsored plans for single taxpayers (or taxpayers married filing separately) with taxable income over $400,000, married taxpayers filing jointly with taxable income over $450,000, and heads of households with taxable income over $425,000 (all indexed for inflation). This provision applies to distributions, transfers, and contributions made in taxable years beginning after December 31, 2031.

The backdoor conversion is still available to the vast majority of middle class and upper middle class families. And this ban on Roth conversions for rich people doesn't go into effect for another decade.

You are wrong. Read the next paragraph. Or they actual text to the bill. Or any article that summarizes it

[Anonymous]

JOE MANCHIN WILL SAVE US

[Anonymous]

Anonymous wrote:JOE MANCHIN WILL SAVE US

Delay, maybe. https://thehill.com/homenews/senate/572955-manchin-suggests-pausing-35-trillion-package-discussions-until-2022-report

Get your backdoor conversion done Jan. 1st, 2022!