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

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]Most of these apply to those with HHi over $400k. So if you make less you can still do it. [/quote]

Yes, MOST do, but the backdoor roth is all incomes.  Because it is basically a loophole  they are closing. You have to make above the roth limit (~$200k for marrieds?) to even be considering this.

From the summary:  "Furthermore, this section prohibits all employee after-tax contributions in qualified plans and [b]prohibits after-tax IRA contributions from being converted to Roth regardless of income level,[/b] effective for distributions, transfers, and contributions made after December 31, 2021."

It is a bummer for me personally - but good fiscal policy.  I can't really argue that i deserve such a loop hole.  Spouse and I both have access to megabackdoor roths, so we can save a crap ton of money that can grow tax free.  I guess we'll switch to taxable accounts if this passes.[/quote]

I dont get then why they needed to state the below paragraph if the summary quoted in the post supercedes it. 
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, 203[/quote]

That first paragraph is talking about Roth conversions in general, the kind you usually pay regular income taxes on when you convert.  You can still do that, up to $400k income.  (A common strategy for FIRE people, Roth conversion ladders.) This is delayed for 10 years before going into affect, presumably because this actually results in lost near term tax revenue for the gov't.

But converting after-tax IRA dollars to Roth IRAs would be disallowed, at all income levels.  [/quote]

I'm not actually sure what that first part is trying to accomplish, since it results in tax revenue when people convert traditional to roth.  Maybe they are just trying to prevent people from getting too much Roth space in general?
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