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

Forum Index » Money and Finances

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

Subject:

Emoticons





More smilies

Text Color: Font: Close Marks

[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote]I think that later date is for Roth conversions not back door roths[/quote]

Aren't these the same thing (just two names for the same action)?[/quote]

No they are not.  The one that is delayed by 10 years is for [b]conversions of traditional pretax IRA amounts[/b] to Roth for people &gt;400/450K (which is not indexed to inflation until then…).  If you are under 400/450K you will still be able to convert pretax IRA to Roth (this is a taxable event, one people tend to do in years where their brackets are lower).   The one that is immediate/2022 is banning all back door and mega back door Roths, which is something people who earn &gt;100K ish start being phased out of doing.  [b][u]The back doors use POST-tax money.[/b][/u] This is banned for all income levels.  It’s very confusing, which is what Congress is probably counting on.  I hope this helps.[/quote]

But... isn't "conversions of traditional pretax IRA amounts" a backdoor roth?[/quote]

No.  Backdoors use POST-tax money.[/quote]

No, they do not. You contribute to a traditional IRA. That is pretax. You convert it and pay tax on the conversion (hopefully you kept it a small or 0 gain). Then it’s Roth money.[/quote]

NP.  I'm not sure if you are the same poster who keeps correcting the other poster(s).  You are WRONG.

A traditional IRA contribution can be either pre-tax or post-tax.

- If the contributor does not have a workplace 401K and the contributor may elect to claim a tax deduction based on that contribution. If that IRA is converted to an Roth, it's just plain Roth conversion.   This conversion would typically happen several years after the contribution (If the intent was to convert to Roth in the same year, why bother claiming a tax deduction in the first place only to give it back when you convert?)
 
If the contributor has a workplace 401K and contributes to a Traditional IRA, it would be post-tax contribution.  If that person's income is above the Roth contribution limits, he/she could still convert that money into a Roth.  That is a BACKDOOR ROTH conversion.  If their income was within Roth contribution limits, they would just contribute to a Roth directly (hence the "backdoor").

If someone is doing this in the same year [/quote]

Options

	Disable HTML in this message
	Disable BB Code in this message
	Disable smilies in this message

Review message

Search Recent Topics Hottest Topics