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

[Anonymous]

Anonymous wrote:

Anonymous wrote:Newsflash - you are not caught in the crossfire, you are part of a group of taxpayers who are targeted. This is a feature, not a bug.

As for "it seems fundamentally unfair and would shake one's belief in any promise made by the Government in the future," don't be ridiculous. Tax laws change all the time, sometimes they benefit you, sometimes they don't. But that fact that they change is not, in and of itself, unfair. Does it sting? Sure. Unfair? Of course not. At least this one is targeted at people who can afford it.

Many people planned and made decisions based on the protections that these accounts offered. If we capped IRAs at $500k and taxed all distributions above that amount, I bet we'd see protests in the streets of DC. By your definition, that would not be unfair. It seems pretty unfair to me. I see no reason why the cap couldn't be lowered to capture anyone at almost any level; when you look at the median income and net worth in this country, almost anyone who chose to save for 20-30 years rather than spend looks like a fat cat.

I understand PP's frustration with the AAPL stock because early withdrawals from IRAs are taxed at short-term capital gains rates, so the people who tried to prudently plan, aren't just losing the IRA but are paying an extra double-digit % penalty by paying short-term capital gains tax on what would normally be capital gains.

It's also pretty obviously targeted just at Peter Thiel. Nobody cared when Mitt Romney's $100m IRA was disclosed. Something about Peter Thiel really pissed off the dems. He has a few billion dollars to fight back with so it will be interesting to watch.

I mean, people cared about Romeny a little, that is why it was in the news and you know about it. Thiel took it to another level, yes. But also, backdoor roths in general (mega and otherwise) have been growing in popularity among certain circles. My large employer even has a handout from fidelity explaining how to do it. It is an obviously unfair loophole (especially megabackdoor roths).

[Anonymous]

Anonymous wrote:

Anonymous wrote:Newsflash - you are not caught in the crossfire, you are part of a group of taxpayers who are targeted. This is a feature, not a bug.

As for "it seems fundamentally unfair and would shake one's belief in any promise made by the Government in the future," don't be ridiculous. Tax laws change all the time, sometimes they benefit you, sometimes they don't. But that fact that they change is not, in and of itself, unfair. Does it sting? Sure. Unfair? Of course not. At least this one is targeted at people who can afford it.

Many people planned and made decisions based on the protections that these accounts offered. If we capped IRAs at $500k and taxed all distributions above that amount, I bet we'd see protests in the streets of DC. By your definition, that would not be unfair. It seems pretty unfair to me. I see no reason why the cap couldn't be lowered to capture anyone at almost any level; when you look at the median income and net worth in this country, almost anyone who chose to save for 20-30 years rather than spend looks like a fat cat.

I understand PP's frustration with the AAPL stock because early withdrawals from IRAs are taxed at short-term capital gains rates, so the people who tried to prudently plan, aren't just losing the IRA but are paying an extra double-digit % penalty by paying short-term capital gains tax on what would normally be capital gains.

It's also pretty obviously targeted just at Peter Thiel. Nobody cared when Mitt Romney's $100m IRA was disclosed. Something about Peter Thiel really pissed off the dems. He has a few billion dollars to fight back with so it will be interesting to watch.

Tax laws change every single year, and every year someone is adversely affected. Complaining that something that happens all the time is "unfair" (i) when it happens to you, and (ii) when it it targeted at the extraordinarily wealthy is . . . well, it's something.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Newsflash - you are not caught in the crossfire, you are part of a group of taxpayers who are targeted. This is a feature, not a bug.

As for "it seems fundamentally unfair and would shake one's belief in any promise made by the Government in the future," don't be ridiculous. Tax laws change all the time, sometimes they benefit you, sometimes they don't. But that fact that they change is not, in and of itself, unfair. Does it sting? Sure. Unfair? Of course not. At least this one is targeted at people who can afford it.

Many people planned and made decisions based on the protections that these accounts offered. If we capped IRAs at $500k and taxed all distributions above that amount, I bet we'd see protests in the streets of DC. By your definition, that would not be unfair. It seems pretty unfair to me. I see no reason why the cap couldn't be lowered to capture anyone at almost any level; when you look at the median income and net worth in this country, almost anyone who chose to save for 20-30 years rather than spend looks like a fat cat.

I understand PP's frustration with the AAPL stock because early withdrawals from IRAs are taxed at short-term capital gains rates, so the people who tried to prudently plan, aren't just losing the IRA but are paying an extra double-digit % penalty by paying short-term capital gains tax on what would normally be capital gains.

It's also pretty obviously targeted just at Peter Thiel. Nobody cared when Mitt Romney's $100m IRA was disclosed. Something about Peter Thiel really pissed off the dems. He has a few billion dollars to fight back with so it will be interesting to watch.

This... isn't right. Unless you're saying that's what the proposal would be if the rules change?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Newsflash - you are not caught in the crossfire, you are part of a group of taxpayers who are targeted. This is a feature, not a bug.

As for "it seems fundamentally unfair and would shake one's belief in any promise made by the Government in the future," don't be ridiculous. Tax laws change all the time, sometimes they benefit you, sometimes they don't. But that fact that they change is not, in and of itself, unfair. Does it sting? Sure. Unfair? Of course not. At least this one is targeted at people who can afford it.

Many people planned and made decisions based on the protections that these accounts offered. If we capped IRAs at $500k and taxed all distributions above that amount, I bet we'd see protests in the streets of DC. By your definition, that would not be unfair. It seems pretty unfair to me. I see no reason why the cap couldn't be lowered to capture anyone at almost any level; when you look at the median income and net worth in this country, almost anyone who chose to save for 20-30 years rather than spend looks like a fat cat.

I understand PP's frustration with the AAPL stock because early withdrawals from IRAs are taxed at short-term capital gains rates, so the people who tried to prudently plan, aren't just losing the IRA but are paying an extra double-digit % penalty by paying short-term capital gains tax on what would normally be capital gains.

It's also pretty obviously targeted just at Peter Thiel. Nobody cared when Mitt Romney's $100m IRA was disclosed. Something about Peter Thiel really pissed off the dems. He has a few billion dollars to fight back with so it will be interesting to watch.

This... isn't right. Unless you're saying that's what the proposal would be if the rules change?

Roth withdrawals for those under 59 are taxed at short term / ordinary income tax rates.

If the PP had held AAPL outside their Roth in a normal account, it would be taxed at long term capital gains rates, which are lower.

Under the proposed law, not only are the Roth advantages rolled back but people are actually worse off than if they’d never done it in the first place. I’m not sure if that’s intentionally or just a byproduct of what seems to be a hastily drafted bill.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Newsflash - you are not caught in the crossfire, you are part of a group of taxpayers who are targeted. This is a feature, not a bug.

As for "it seems fundamentally unfair and would shake one's belief in any promise made by the Government in the future," don't be ridiculous. Tax laws change all the time, sometimes they benefit you, sometimes they don't. But that fact that they change is not, in and of itself, unfair. Does it sting? Sure. Unfair? Of course not. At least this one is targeted at people who can afford it.

Many people planned and made decisions based on the protections that these accounts offered. If we capped IRAs at $500k and taxed all distributions above that amount, I bet we'd see protests in the streets of DC. By your definition, that would not be unfair. It seems pretty unfair to me. I see no reason why the cap couldn't be lowered to capture anyone at almost any level; when you look at the median income and net worth in this country, almost anyone who chose to save for 20-30 years rather than spend looks like a fat cat.

I understand PP's frustration with the AAPL stock because early withdrawals from IRAs are taxed at short-term capital gains rates, so the people who tried to prudently plan, aren't just losing the IRA but are paying an extra double-digit % penalty by paying short-term capital gains tax on what would normally be capital gains.

It's also pretty obviously targeted just at Peter Thiel. Nobody cared when Mitt Romney's $100m IRA was disclosed. Something about Peter Thiel really pissed off the dems. He has a few billion dollars to fight back with so it will be interesting to watch.

This... isn't right. Unless you're saying that's what the proposal would be if the rules change?

Roth withdrawals for those under 59 are taxed at short term / ordinary income tax rates.

If the PP had held AAPL outside their Roth in a normal account, it would be taxed at long term capital gains rates, which are lower.

Under the proposed law, not only are the Roth advantages rolled back but people are actually worse off than if they’d never done it in the first place. I’m not sure if that’s intentionally or just a byproduct of what seems to be a hastily drafted bill.

I mean, this is just a bill, there are details that will be changed, if it even goes forward. I won't be surprised if they let it be long term capital gains rate. But I still am just not feeling bad for people this impacts.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Newsflash - you are not caught in the crossfire, you are part of a group of taxpayers who are targeted. This is a feature, not a bug.

As for "it seems fundamentally unfair and would shake one's belief in any promise made by the Government in the future," don't be ridiculous. Tax laws change all the time, sometimes they benefit you, sometimes they don't. But that fact that they change is not, in and of itself, unfair. Does it sting? Sure. Unfair? Of course not. At least this one is targeted at people who can afford it.

Many people planned and made decisions based on the protections that these accounts offered. If we capped IRAs at $500k and taxed all distributions above that amount, I bet we'd see protests in the streets of DC. By your definition, that would not be unfair. It seems pretty unfair to me. I see no reason why the cap couldn't be lowered to capture anyone at almost any level; when you look at the median income and net worth in this country, almost anyone who chose to save for 20-30 years rather than spend looks like a fat cat.

I understand PP's frustration with the AAPL stock because early withdrawals from IRAs are taxed at short-term capital gains rates, so the people who tried to prudently plan, aren't just losing the IRA but are paying an extra double-digit % penalty by paying short-term capital gains tax on what would normally be capital gains.

It's also pretty obviously targeted just at Peter Thiel. Nobody cared when Mitt Romney's $100m IRA was disclosed. Something about Peter Thiel really pissed off the dems. He has a few billion dollars to fight back with so it will be interesting to watch.

This... isn't right. Unless you're saying that's what the proposal would be if the rules change?

Roth withdrawals for those under 59 are taxed at short term / ordinary income tax rates.

If the PP had held AAPL outside their Roth in a normal account, it would be taxed at long term capital gains rates, which are lower.

Under the proposed law, not only are the Roth advantages rolled back but people are actually worse off than if they’d never done it in the first place. I’m not sure if that’s intentionally or just a byproduct of what seems to be a hastily drafted bill.

I mean, this is just a bill, there are details that will be changed, if it even goes forward. I won't be surprised if they let it be long term capital gains rate. But I still am just not feeling bad for people this impacts.

New poster here:

If the bill goes forward they will either:
1. Require RMDs starting at 59.5 for any amounts over $10M
or
2. Require RMDs for amounts over $10M immediately, but waiving the 10% penalty and applying the LTCG tax rate if the holder is under 59.5 years of age

They will find a way to make it sensible and work.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Newsflash - you are not caught in the crossfire, you are part of a group of taxpayers who are targeted. This is a feature, not a bug.

As for "it seems fundamentally unfair and would shake one's belief in any promise made by the Government in the future," don't be ridiculous. Tax laws change all the time, sometimes they benefit you, sometimes they don't. But that fact that they change is not, in and of itself, unfair. Does it sting? Sure. Unfair? Of course not. At least this one is targeted at people who can afford it.

Many people planned and made decisions based on the protections that these accounts offered. If we capped IRAs at $500k and taxed all distributions above that amount, I bet we'd see protests in the streets of DC. By your definition, that would not be unfair. It seems pretty unfair to me. I see no reason why the cap couldn't be lowered to capture anyone at almost any level; when you look at the median income and net worth in this country, almost anyone who chose to save for 20-30 years rather than spend looks like a fat cat.

I understand PP's frustration with the AAPL stock because early withdrawals from IRAs are taxed at short-term capital gains rates, so the people who tried to prudently plan, aren't just losing the IRA but are paying an extra double-digit % penalty by paying short-term capital gains tax on what would normally be capital gains.

It's also pretty obviously targeted just at Peter Thiel. Nobody cared when Mitt Romney's $100m IRA was disclosed. Something about Peter Thiel really pissed off the dems. He has a few billion dollars to fight back with so it will be interesting to watch.

This... isn't right. Unless you're saying that's what the proposal would be if the rules change?

Roth withdrawals of earnings for those under 59 are taxed at short term / ordinary income tax rates.

If the PP had held AAPL outside their Roth in a normal account, it would be taxed at long term capital gains rates, which are lower.

Under the proposed law, not only are the Roth advantages rolled back but people are actually worse off than if they’d never done it in the first place. I’m not sure if that’s intentionally or just a byproduct of what seems to be a hastily drafted bill.

Fixed it for you.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Newsflash - you are not caught in the crossfire, you are part of a group of taxpayers who are targeted. This is a feature, not a bug.

As for "it seems fundamentally unfair and would shake one's belief in any promise made by the Government in the future," don't be ridiculous. Tax laws change all the time, sometimes they benefit you, sometimes they don't. But that fact that they change is not, in and of itself, unfair. Does it sting? Sure. Unfair? Of course not. At least this one is targeted at people who can afford it.

Many people planned and made decisions based on the protections that these accounts offered. If we capped IRAs at $500k and taxed all distributions above that amount, I bet we'd see protests in the streets of DC. By your definition, that would not be unfair. It seems pretty unfair to me. I see no reason why the cap couldn't be lowered to capture anyone at almost any level; when you look at the median income and net worth in this country, almost anyone who chose to save for 20-30 years rather than spend looks like a fat cat.

I understand PP's frustration with the AAPL stock because early withdrawals from IRAs are taxed at short-term capital gains rates, so the people who tried to prudently plan, aren't just losing the IRA but are paying an extra double-digit % penalty by paying short-term capital gains tax on what would normally be capital gains.

It's also pretty obviously targeted just at Peter Thiel. Nobody cared when Mitt Romney's $100m IRA was disclosed. Something about Peter Thiel really pissed off the dems. He has a few billion dollars to fight back with so it will be interesting to watch.

This... isn't right. Unless you're saying that's what the proposal would be if the rules change?

Roth withdrawals of earnings for those under 59 are taxed at short term / ordinary income tax rates.

If the PP had held AAPL outside their Roth in a normal account, it would be taxed at long term capital gains rates, which are lower.

Under the proposed law, not only are the Roth advantages rolled back but people are actually worse off than if they’d never done it in the first place. I’m not sure if that’s intentionally or just a byproduct of what seems to be a hastily drafted bill.

Fixed it for you.

True, but to achieve a $10M or multi billion Roth, you have to have a lot of earnings. even megabackdoor tops out at $38k/year, regular is $6k.

[Anonymous]

I'm just seeing this thread. Can someone help me by answering some questions?

We're 65 and 55, and have never used a backdoor Roth. We have $300K in a recent after-tax bonus and aren't sure where to put it now.

If we put it into a backdoor Roth, then

1). Is it grandfathered in if they close this loophole soon -- and we don't take distributions for a decade or so?

2). I don't really get the difference between this and just investing it in a brokerage account and later paying capital gains? Do we not have to pay any kind of taxes at all on distributiosn from a backdoor roth?

Thanks for advisign.

[Anonymous]

Anonymous wrote:I'm just seeing this thread. Can someone help me by answering some questions?

We're 65 and 55, and have never used a backdoor Roth. We have $300K in a recent after-tax bonus and aren't sure where to put it now.

If we put it into a backdoor Roth, then

1). Is it grandfathered in if they close this loophole soon -- and we don't take distributions for a decade or so?

2). I don't really get the difference between this and just investing it in a brokerage account and later paying capital gains? Do we not have to pay any kind of taxes at all on distributiosn from a backdoor roth?

Thanks for advisign.

(1) no one knows.

(2) OMG just google “back door Roth”and read.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Newsflash - you are not caught in the crossfire, you are part of a group of taxpayers who are targeted. This is a feature, not a bug.

As for "it seems fundamentally unfair and would shake one's belief in any promise made by the Government in the future," don't be ridiculous. Tax laws change all the time, sometimes they benefit you, sometimes they don't. But that fact that they change is not, in and of itself, unfair. Does it sting? Sure. Unfair? Of course not. At least this one is targeted at people who can afford it.

Many people planned and made decisions based on the protections that these accounts offered. If we capped IRAs at $500k and taxed all distributions above that amount, I bet we'd see protests in the streets of DC. By your definition, that would not be unfair. It seems pretty unfair to me. I see no reason why the cap couldn't be lowered to capture anyone at almost any level; when you look at the median income and net worth in this country, almost anyone who chose to save for 20-30 years rather than spend looks like a fat cat.

I understand PP's frustration with the AAPL stock because early withdrawals from IRAs are taxed at short-term capital gains rates, so the people who tried to prudently plan, aren't just losing the IRA but are paying an extra double-digit % penalty by paying short-term capital gains tax on what would normally be capital gains.

It's also pretty obviously targeted just at Peter Thiel. Nobody cared when Mitt Romney's $100m IRA was disclosed. Something about Peter Thiel really pissed off the dems. He has a few billion dollars to fight back with so it will be interesting to watch.

This... isn't right. Unless you're saying that's what the proposal would be if the rules change?

Roth withdrawals for those under 59 are taxed at short term / ordinary income tax rates.

If the PP had held AAPL outside their Roth in a normal account, it would be taxed at long term capital gains rates, which are lower.

Under the proposed law, not only are the Roth advantages rolled back but people are actually worse off than if they’d never done it in the first place. I’m not sure if that’s intentionally or just a byproduct of what seems to be a hastily drafted bill.

I mean, this is just a bill, there are details that will be changed, if it even goes forward. I won't be surprised if they let it be long term capital gains rate. But I still am just not feeling bad for people this impacts.

Why feel bad if you lower CMS reimbursements to physicians, they're all rich and have job stability...

Why feel bad if you raise income taxes on people who make $250k/year or more, who cares if they live in a HCOL area and are loaded up with student debt from a decade spent in school, they're still better off than most workers...

Why feel bad if you raise property taxes, people who own a home are better off than the homeless...

It's a slippery slope and I'd rather taxes were fair, consistent, and policy driven, vs emotional witch hunts which in this case is politically focused on one solitary citizen.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Newsflash - you are not caught in the crossfire, you are part of a group of taxpayers who are targeted. This is a feature, not a bug.

As for "it seems fundamentally unfair and would shake one's belief in any promise made by the Government in the future," don't be ridiculous. Tax laws change all the time, sometimes they benefit you, sometimes they don't. But that fact that they change is not, in and of itself, unfair. Does it sting? Sure. Unfair? Of course not. At least this one is targeted at people who can afford it.

Many people planned and made decisions based on the protections that these accounts offered. If we capped IRAs at $500k and taxed all distributions above that amount, I bet we'd see protests in the streets of DC. By your definition, that would not be unfair. It seems pretty unfair to me. I see no reason why the cap couldn't be lowered to capture anyone at almost any level; when you look at the median income and net worth in this country, almost anyone who chose to save for 20-30 years rather than spend looks like a fat cat.

I understand PP's frustration with the AAPL stock because early withdrawals from IRAs are taxed at short-term capital gains rates, so the people who tried to prudently plan, aren't just losing the IRA but are paying an extra double-digit % penalty by paying short-term capital gains tax on what would normally be capital gains.

It's also pretty obviously targeted just at Peter Thiel. Nobody cared when Mitt Romney's $100m IRA was disclosed. Something about Peter Thiel really pissed off the dems. He has a few billion dollars to fight back with so it will be interesting to watch.

This... isn't right. Unless you're saying that's what the proposal would be if the rules change?

Roth withdrawals for those under 59 are taxed at short term / ordinary income tax rates.

If the PP had held AAPL outside their Roth in a normal account, it would be taxed at long term capital gains rates, which are lower.

Under the proposed law, not only are the Roth advantages rolled back but people are actually worse off than if they’d never done it in the first place. I’m not sure if that’s intentionally or just a byproduct of what seems to be a hastily drafted bill.

I mean, this is just a bill, there are details that will be changed, if it even goes forward. I won't be surprised if they let it be long term capital gains rate. But I still am just not feeling bad for people this impacts.

Why feel bad if you lower CMS reimbursements to physicians, they're all rich and have job stability...

Why feel bad if you raise income taxes on people who make $250k/year or more, who cares if they live in a HCOL area and are loaded up with student debt from a decade spent in school, they're still better off than most workers...

Why feel bad if you raise property taxes, people who own a home are better off than the homeless...

It's a slippery slope and I'd rather taxes were fair, consistent, and policy driven, vs emotional witch hunts which in this case is politically focused on one solitary citizen.

No, it is targeting MANY high income, high wealth individuals who use a neat tax loophole to get tax breaks for 'retirement' on their long term investments. BTW, i make >$250k, and use megabackdoor Roth. Might even hit $10M in qualified accounts at some point, if I don't retire early. I'm personally sad (for my net worth) that the backdoor roth party may be over, but it is a crazy loophole that shouldn't be there. It is the definition of tax break for the rich. And also, yes, a HUGE tax break for a particular mega rich guy. But, it is very policy driven.

[Anonymous]

Anonymous wrote:I'm just seeing this thread. Can someone help me by answering some questions?

We're 65 and 55, and have never used a backdoor Roth. We have $300K in a recent after-tax bonus and aren't sure where to put it now.

If we put it into a backdoor Roth, then

1). Is it grandfathered in if they close this loophole soon -- and we don't take distributions for a decade or so?

2). I don't really get the difference between this and just investing it in a brokerage account and later paying capital gains? Do we not have to pay any kind of taxes at all on distributiosn from a backdoor roth?

Thanks for advisign.

I mean... you can each backdoor $6k in to a Roth if you do it by end of year, even if this passes. Seems unlikely you can use a megabackdoor (depends on employer plan), but you could look into it. It may not be worth your effort to try to shelld $12k out of $300k, but that is possible. Unless you already have a traditional IRA. #2, yes, you save the long term capital gains. And yeah, google it.

Put the rest in brokerage.

This bill won't meaningfully change your future.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Newsflash - you are not caught in the crossfire, you are part of a group of taxpayers who are targeted. This is a feature, not a bug.

As for "it seems fundamentally unfair and would shake one's belief in any promise made by the Government in the future," don't be ridiculous. Tax laws change all the time, sometimes they benefit you, sometimes they don't. But that fact that they change is not, in and of itself, unfair. Does it sting? Sure. Unfair? Of course not. At least this one is targeted at people who can afford it.

Many people planned and made decisions based on the protections that these accounts offered. If we capped IRAs at $500k and taxed all distributions above that amount, I bet we'd see protests in the streets of DC. By your definition, that would not be unfair. It seems pretty unfair to me. I see no reason why the cap couldn't be lowered to capture anyone at almost any level; when you look at the median income and net worth in this country, almost anyone who chose to save for 20-30 years rather than spend looks like a fat cat.

I understand PP's frustration with the AAPL stock because early withdrawals from IRAs are taxed at short-term capital gains rates, so the people who tried to prudently plan, aren't just losing the IRA but are paying an extra double-digit % penalty by paying short-term capital gains tax on what would normally be capital gains.

It's also pretty obviously targeted just at Peter Thiel. Nobody cared when Mitt Romney's $100m IRA was disclosed. Something about Peter Thiel really pissed off the dems. He has a few billion dollars to fight back with so it will be interesting to watch.

This... isn't right. Unless you're saying that's what the proposal would be if the rules change?

Roth withdrawals for those under 59 are taxed at short term / ordinary income tax rates.

If the PP had held AAPL outside their Roth in a normal account, it would be taxed at long term capital gains rates, which are lower.

Under the proposed law, not only are the Roth advantages rolled back but people are actually worse off than if they’d never done it in the first place. I’m not sure if that’s intentionally or just a byproduct of what seems to be a hastily drafted bill.

I mean, this is just a bill, there are details that will be changed, if it even goes forward. I won't be surprised if they let it be long term capital gains rate. But I still am just not feeling bad for people this impacts.

Why feel bad if you lower CMS reimbursements to physicians, they're all rich and have job stability...

Why feel bad if you raise income taxes on people who make $250k/year or more, who cares if they live in a HCOL area and are loaded up with student debt from a decade spent in school, they're still better off than most workers...

Why feel bad if you raise property taxes, people who own a home are better off than the homeless...

It's a slippery slope and I'd rather taxes were fair, consistent, and policy driven, vs emotional witch hunts which in this case is politically focused on one solitary citizen.

No, it is targeting MANY high income, high wealth individuals who use a neat tax loophole to get tax breaks for 'retirement' on their long term investments. BTW, i make >$250k, and use megabackdoor Roth. Might even hit $10M in qualified accounts at some point, if I don't retire early. I'm personally sad (for my net worth) that the backdoor roth party may be over, but it is a crazy loophole that shouldn't be there. It is the definition of tax break for the rich. And also, yes, a HUGE tax break for a particular mega rich guy. But, it is very policy driven.

I'm all for capping it they should just allow excess balances to be withdrawn tax free so it doesn't turn into years long litigation.

And there are numerous other tax breaks for the rich that are much worse like QSBS, 1031 exchanges, and inherited step up basis that have all been left in place.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I'm just seeing this thread. Can someone help me by answering some questions?

We're 65 and 55, and have never used a backdoor Roth. We have $300K in a recent after-tax bonus and aren't sure where to put it now.

If we put it into a backdoor Roth, then

1). Is it grandfathered in if they close this loophole soon -- and we don't take distributions for a decade or so?

2). I don't really get the difference between this and just investing it in a brokerage account and later paying capital gains? Do we not have to pay any kind of taxes at all on distributiosn from a backdoor roth?

Thanks for advisign.

I mean... you can each backdoor $6k in to a Roth if you do it by end of year, even if this passes. Seems unlikely you can use a megabackdoor (depends on employer plan), but you could look into it. It may not be worth your effort to try to shelld $12k out of $300k, but that is possible. Unless you already have a traditional IRA. #2, yes, you save the long term capital gains. And yeah, google it.

Put the rest in brokerage.

This bill won't meaningfully change your future.

based on the proposals coming out I'd probably avoid any future Roth contributions period, and maybe scale down traditional 401k contributions as well. it's clear they have a bulls eye painted on them.