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][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]I just started doing a mega back door in 2020. Hopefully this doesn’t pass[/quote]

I hope it does so that you get no benefit from it.[/quote]

I am poor by DCUM standards. [/quote]

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

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.

[b]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[/b] think the limitations being proposed are actually quite sensible.[/quote]

If this passes that statement is incorrect. [b]Backdoor Roth is closed for everyone.[/b][/quote]

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

[quote][i]
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.[/i][/quote]

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.
[/quote]

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

Weird, the two paragraphs seem to be in conflict with each other:

[quote][i]
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). [b]This provision applies to distributions, transfers, and contributions made in taxable years beginning after December 31, 2031.[/b]

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

[/quote]

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