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][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]

The text of the bill is not publicly available anywhere.[/quote]

Ah, ok. I didn't read the bill either, just  articles about it, and the summary here.  Yes, the  paragraphs sort of conflict. I think that first half of the first sentence is misplaced, and should be at the start of the next  paragraph. Two things are happening.
1) Conversions in general will no longer be allowed  for incomes 400k/450k, starting in 2032. This is generally talking about taxable conversions.  Despite the lead in to this paragraph, it isn't directly targeting back door roths.
2) after tax conversions (needed for back door) are disallowed for all, starting in 2022.[/quote]

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