- November 19, 2023
- Posted by: legaleseblogger
- Category: Related News
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Exploring the Option of Backdoor Roth IRA Contributions
As I consider my retirement planning options, I am interested in supplementing my employer-sponsored retirement plan with a backdoor Roth IRA. Given the current $6500 contribution limit, I am debating whether it is worth the effort to pursue this strategy, especially considering the possibility that it may be outlawed in the near future. My goal is to make contributions to this account for the next 15-20 years to ensure a secure retirement fund.
I am seeking clarification on the potential legality of the backdoor Roth loophole strategy, and I’m wondering if there are any indications that it may become illegal in the future.
The AI Legalese Decoder can help with this situation by providing insights and analysis of current and proposed legislation related to Roth IRAs. Its advanced algorithms can track and interpret legal language to anticipate any potential changes to the backdoor Roth IRA strategy. By utilizing the AI Legalese Decoder, I can make informed decisions about my retirement savings strategy and adapt to any potential shifts in legislation.
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****** just grabbed a
True itÔÇÖs not a life-changing amount of money you can invest each year, but I would rather invest 6.5k and never pay taxes on gains/dividends than invest 6.5k in an after-tax brokerage account and pay taxes on gains/dividends. Also note you can contribute for a spouse too if you have one, even if they have no earned income. Over time it will add up, and grow. Best of luck.
>I’d like to be able to contribute to this account for the next 15-20 years.
So if you can’t contribute for a full 20 years you don’t want to contribute at *all*?
At the very least, you can definitely contribute $13.5k before anything changes. More likely you’ll get at least $20k-30k before anything changes.
What makes you think it will be outlawed soon? There’s no indication it will be made illegal. Making it illegal to transfer non-deductible IRA contributions to a Roth isn’t something that’s going to balance the sheets, so Congress doesn’t really have any real reason to do this.
And for what it’s worth, it’s not much extra work – every January 2nd you do a transfer (brokerage to your IRA) Then two days later, you do another one (IRA to Roth IRA). Done. You can even automate both those transactions.
> is it worth it to go through the trouble of doing a backdoor Roth if this is something that is going to be outlawed soon?
who cares? just do it, lets suppose it does indeed gets outlawed in 5 years how does that change your action? it doesn’t
> I’d like to be able to contribute to this account for the next 15-20 years.
well, when it gets outlawed you flat out won’t be able to contribute at all
Congress attempted to close the backdoor Roth loopholes (both regular and mega) in the original version of the “Build Back Better Act” in late 2021, which never got enough votes to pass. The modified bill that eventually did pass a few months later (the Inflation Reduction Act) made no mention of backdoor Roth.
So while it’s always possible they could try again, it seems like it wasn’t particularly politically popular to close this loophole. After all, many members of Congress are likely frequent users of it.
No signs. But itÔÇÖs one of those things that wonÔÇÖt happen until it does.
Even if itÔÇÖs closed next year, which is unlikely, you can still do $6,500 this year and enjoy 20 years of tax free growth.
The loophole has been around forever and isnÔÇÖt exactly a secret. Congress wouldÔÇÖve closed it a long time ago if they wanted to.
How many years of being able to invest for tax free growth would make it “worth it” if the answer isnt 1 year?
ItÔÇÖs not a loophole anymore. ItÔÇÖs a legal action in the Tax Cuts and Jobs Act of 2017.
Congress could decide to make backdoor Roth no longer legal or make all Roth contributions no longer legal. It would protect long-revenue revenue. Even if that happens, itÔÇÖs not likely that existing accounts would be unRothed, so you might as well take advantage while you can.
And even if Roths get unRothed, youÔÇÖre no worse off than with a regular taxable brokerage.
One common sentiment I see is that it usually makes sense for high earners (120k+) to contribute to regular taxed advantaged accounts. But this seems counterintuitive to the whole idea of using the backdoor Roth because one falls above the earnings threshold