Join Early Retirement Today
Reply
 
Thread Tools Display Modes
Old 12-14-2021, 05:04 AM   #81
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
JoeWras's Avatar
 
Join Date: Sep 2012
Posts: 11,702
I've had after tax money in my IRA since the 90s, even before Roth came around. The original plan was it would be a nice bonus to have a portion of an untaxed distribution some day. If I take no action, that would still be the case.

Roth came along and the plan was to convert this over a few years, while still staying below the 22% bracket. I started that plan last year since I'm now retired.

Due to this bill, I sped up my plan and converted all my IRA with after-tax money (and also rolled over a conduit IRA into my 401k to get rid of the basis) this year. Did this for both me and DW.

Because it pushed us slightly into the 24% bracket, I decided this was a good year to contribute to our DAF with bunched contributions (one tax year ahead of original plan). This dropped us back into the 22% bracket with room.

I can't trust what Congress will do. It is pretty clear that if they pass BBB in some form, this is likely to survive, if even next year. But I'm not taking that chance. I ripped the bandage off and got it done.

I encourage anyone out there who has after-tax money in an IRA sitting around to consider taking action. Time is running out. I foolishly ignored this bill for months because I believed the summary headlines which said: "Only rich people making over $400k are affected." Nope. It was a real wake up call to find out we are all affected by section a of the bill.

Just be careful and know how the pro-rata rules apply.
__________________
Retired Class of 2018


JoeWras is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 12-14-2021, 05:07 AM   #82
Thinks s/he gets paid by the post
 
Join Date: Mar 2014
Location: Dallas
Posts: 1,155
Quote:
Originally Posted by JoeWras View Post
I don't believe that statement is true.

Here's the text: https://www.congress.gov/bill/117th-...bill/5376/text

Search on "138311". The part of the law is in section 138311. It is broken into two subsections a) and b).

Section a) has a date of December 31, 2021. Section b) has the 2031 date.

Section b is the "rich people" section disallowing rollovers and conversions of any type a decade hence.

Section a is the key section for everyone and reads with typical lawyer negative logic. Here's what it says:

People smarter than me have tied this back to the more easy-to-read Ways and Means document which more clearly says after-tax of any type is done at the end of 2021.

Of course, I'm guessing this date will slip by a year when the Senate reconciles. It could be retroactive, but is unlikely. That's just my opinion. The point is, the House passed the 2021 date.

Need another opinion? Check out this brand new CNN business article.
https://www.cnn.com/2021/12/13/succe...ies/index.html
Your read is correct. I picked up the incorrect date (December 31, 2031) from section about 409(B) plan conversions.
pjigar is offline   Reply With Quote
Old 01-01-2022, 09:07 AM   #83
Recycles dryer sheets
 
Join Date: Dec 2012
Posts: 164
When do we think we will know if backdoor Roth’s are still allowed in 2022? I normally do mine this week for the new year.
SecretlyFI is offline   Reply With Quote
Old 01-01-2022, 09:48 AM   #84
Thinks s/he gets paid by the post
 
Join Date: Mar 2013
Location: Coronado
Posts: 3,707
Quote:
Originally Posted by SecretlyFI View Post
When do we think we will know if backdoor Rothís are still allowed in 2022? I normally do mine this week for the new year.
It's legal right now and will still be legal on Monday. I think it's very unlikely that these transactions will be disallowed for tax year 2022. That would create a catch-22 for people who do conversions early in the year that are then retroactively disallowed, because there's currently no way to undo them. The new law could be written to allow for recharacterization of a conversion in this year only, but that's adding a lot of complexity for financial firms and the IRS.

It's not impossible that they could be disallowed though. If you want 100% certainty, you'll have to wait until Congress adjourns for the year sometime in December.
cathy63 is online now   Reply With Quote
Old 01-01-2022, 09:56 AM   #85
Thinks s/he gets paid by the post
 
Join Date: Aug 2007
Posts: 2,874
After BBB didnít pass, I changed back my after-tax contributions to make use of the mega backdoor roth.

Iím betting that if the law is changed, it wonít be for 2022. Hopefully Iím right.
__________________
Eat, Drink and Be Merry.
tulak is offline   Reply With Quote
Old 01-06-2022, 01:39 PM   #86
Recycles dryer sheets
 
Join Date: Apr 2017
Posts: 60
This article does a great job analyzing whether executing a backdoor Roth in 2022 is a good or bad decision based on what is currently known.

2022 Backdoor Roth IRA Ė The FI Tax Guy

Basically it walks you through six possible outcomes and it is the author's opinion that you are more likely to benefit from executing an early Backdoor Roth IRA than to be ultimately harmed by it. Of the six scenarios, only one of them results in paying a 6% tax penalty for excess contributions (and he assigns a low probability to this outcome).

I was on the fence due to the uncertainty of the BBB bill, but having read the article I will go ahead and execute DW and my 2022 backdoor Roths this month. Hopefully it won't be our last!
__________________
You are not fully diversified unless part of your portfolio is underperforming.
AginMS is offline   Reply With Quote
Old 04-02-2024, 07:16 PM   #87
Dryer sheet wannabe
 
Join Date: Oct 2021
Posts: 19
It's 2024 now, is there any news about backdoor Roth? (I haven't been following)
pastoral is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Not a fan of Backdoor Roth IRA sakowitzm FIRE and Money 16 10-03-2016 11:52 PM
Can I do both Backdoor Roth IRA and Mega Backdoor Roth IRA? growerVon FIRE and Money 8 07-30-2015 01:04 AM
Should I move T-IRA into my active 401k and do backdoor ROTH IRA? dvalley FIRE and Money 6 01-17-2014 04:04 PM
Backdoor Roth IRA contributions still allowed in 2012, right? soupcxan FIRE and Money 35 02-12-2012 10:52 PM

» Quick Links

 
All times are GMT -6. The time now is 06:36 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2024, vBulletin Solutions, Inc.