Author Topic: Congressman Proposes Ending "Back Door" Roth Contributions  (Read 8650 times)

etotheix

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Congressman Proposes Ending "Back Door" Roth Contributions
« on: September 10, 2016, 09:40:13 AM »
Link to proposal, partially quoted below

Quote
In addition to cracking down on “mega Roth IRAs,” the draft proposal would:

Allow employers to make “matching” contributions to a 401(k) retirement plan while their employees make student loan repayments. Under this proposal, recent graduates who cannot afford to save money above their student loan repayments would no longer have to forego the employer match.
Make the “Saver’s Credit” refundable so that it is available to Americans with no income tax liability, simplify its structure, require that the credit amount be contributed directly to a tax-favored retirement plan and increase its income cap.
Eliminate Roth conversions for both IRAs and employer-sponsored plans to prevent tax gaming and close the “back door” around income limits.
Eliminate “stretch IRAs” to prevent taxpayer-subsidized retirement accounts from being used as estate planning tax loopholes.
Gradually increase the age at which retirement plan participants are required to begin taking distributions from their accounts. The “required minimum distribution” age of 70.5 years has remained unchanged since the early 1960s. In addition, the draft provides that participants who reach the required age with balances in their retirement plans of less than $150,000 will not be required to begin taking distributions.

Some good proposals, and some not so good.
« Last Edit: September 11, 2016, 10:16:01 AM by etotheix »

seattlecyclone

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Re: Congressman Proposes Ending "Back Door" Roth Contributions
« Reply #1 on: September 10, 2016, 11:45:42 AM »
Oh man, a refundable saver's credit would be so awesome for early retirees with a small amount of income from a side gig. Put that money you didn't need anyway into an IRA and have the government match a fraction of it.

Many of these things (closing the backdoor Roth loophole, reducing the amount of time heirs have to withdraw inherited IRA balances) have been proposed in the Obama budget for several years and not enacted, so I'm not too concerned (or excited) about any of it actually coming to pass.

bacchi

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Re: Congressman Proposes Ending "Back Door" Roth Contributions
« Reply #2 on: September 10, 2016, 12:13:58 PM »
Eliminating Roth conversions would slow down a lot of ER plans. It'd make both 72(t) and taxable accounts more popular. Not ideal but still workable.

MDM

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Re: Congressman Proposes Ending "Back Door" Roth Contributions
« Reply #3 on: September 10, 2016, 12:35:45 PM »
Some good proposals, and some not so good.

And because not everyone will agree on which is which, status quo is more likely than change.

sirdoug007

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Re: Congressman Proposes Ending "Back Door" Roth Contributions
« Reply #4 on: September 10, 2016, 04:50:15 PM »
Lots of people here at least talk about using Roth conversion pipelines. This would put an end to this if you can't convert a traditional ira to Roth.


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Telecaster

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Re: Congressman Proposes Ending "Back Door" Roth Contributions
« Reply #5 on: September 10, 2016, 05:04:14 PM »
I take advantage of the backdoor Roth.  Saves me a bundle in taxes.

That said, it needs to end, it really does.  The purpose of the IRA is to give a little boost to lower and middle income people to help save for retirement. 

The backdoor Roth helps high income people save for retirement.   If the argument is that high income people need to pay fewer taxes, that's fine.  We can have that debate.  But this is an obvious example of the tax law being bent to favor people it is not supposed to help. 

MoonLiteNite

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Re: Congressman Proposes Ending "Back Door" Roth Contributions
« Reply #6 on: September 11, 2016, 03:36:24 AM »
More control? Less freedom? Coming from the government? Shocking...

Paul der Krake

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Re: Congressman Proposes Ending "Back Door" Roth Contributions
« Reply #7 on: September 11, 2016, 03:53:41 AM »
This is a good reminder to not put all our eggs in the same tax-advantaged basket. Keep an eye on legislative activity, pad your taxable account, maintain professional contacts, be willing to move, etc.



In the last couple years we did get some awesome new developments for aspiring retirees in the form of the ACA (please don't debate this here) and the mega backdoor Roth. You win some, you lose some. New legislation will come to pass. Some will be good, some won't. Loopholes and sweet spots will be discovered. Obscure rules will be invalidated. Savers will save, spenders will complain.

Paul der Krake

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Re: Congressman Proposes Ending "Back Door" Roth Contributions
« Reply #8 on: September 11, 2016, 04:01:07 AM »
By the way OP's link craps the bed, here is a working version.

Undecided

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Re: Congressman Proposes Ending "Back Door" Roth Contributions
« Reply #9 on: September 11, 2016, 10:01:41 AM »
I take advantage of the backdoor Roth.  Saves me a bundle in taxes.

That said, it needs to end, it really does.  The purpose of the IRA is to give a little boost to lower and middle income people to help save for retirement. 

The backdoor Roth helps high income people save for retirement.   If the argument is that high income people need to pay fewer taxes, that's fine.  We can have that debate.  But this is an obvious example of the tax law being bent to favor people it is not supposed to help.

I guess you can claim to know the "purpose" of permitted backdoor Roths, but are you sure it wasn't to accelerate taxable events into 2010, when lots of people converted traditional IRAs to Roths, and paid taxes on the earnings and the taxable contributions? It wasn't that long ago, and there wasn't any effort to limit it to the initial conversions.

seattlecyclone

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Re: Congressman Proposes Ending "Back Door" Roth Contributions
« Reply #10 on: September 11, 2016, 10:51:38 AM »
I take advantage of the backdoor Roth.  Saves me a bundle in taxes.

That said, it needs to end, it really does.  The purpose of the IRA is to give a little boost to lower and middle income people to help save for retirement. 

The backdoor Roth helps high income people save for retirement.   If the argument is that high income people need to pay fewer taxes, that's fine.  We can have that debate.  But this is an obvious example of the tax law being bent to favor people it is not supposed to help.

I guess you can claim to know the "purpose" of permitted backdoor Roths, but are you sure it wasn't to accelerate taxable events into 2010, when lots of people converted traditional IRAs to Roths, and paid taxes on the earnings and the taxable contributions? It wasn't that long ago, and there wasn't any effort to limit it to the initial conversions.

Regular Roth conversions definitely do exist to accelerate tax revenue. Conversions of after-tax traditional IRA/401(k) balances do not bring any new tax revenue to the government. The fact that these are allowed at any income while "front door" Roth contributions still have an income limit is clearly an oversight.

Undecided

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Re: Congressman Proposes Ending "Back Door" Roth Contributions
« Reply #11 on: September 11, 2016, 11:17:19 AM »
I take advantage of the backdoor Roth.  Saves me a bundle in taxes.

That said, it needs to end, it really does.  The purpose of the IRA is to give a little boost to lower and middle income people to help save for retirement. 

The backdoor Roth helps high income people save for retirement.   If the argument is that high income people need to pay fewer taxes, that's fine.  We can have that debate.  But this is an obvious example of the tax law being bent to favor people it is not supposed to help.

I guess you can claim to know the "purpose" of permitted backdoor Roths, but are you sure it wasn't to accelerate taxable events into 2010, when lots of people converted traditional IRAs to Roths, and paid taxes on the earnings and the taxable contributions? It wasn't that long ago, and there wasn't any effort to limit it to the initial conversions.

Regular Roth conversions definitely do exist to accelerate tax revenue. Conversions of after-tax traditional IRA/401(k) balances do not bring any new tax revenue to the government. The fact that these are allowed at any income while "front door" Roth contributions still have an income limit is clearly an oversight.

If it's "clearly an oversight," please explain the pro rata treatment, which clearly contemplates that conversions may include after-tax money.

seattlecyclone

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Re: Congressman Proposes Ending "Back Door" Roth Contributions
« Reply #12 on: September 11, 2016, 11:38:06 AM »
The pro rata treatment has always been there, back before the Roth conversion income limit was removed, and likely before Roth IRAs even existed in the first place.

One of two things has to be true:
1) Congress removed the Roth conversion income limit to generate more revenue but failed to consider that they would be enabling a "back door" way to make Roth IRA contributions at high incomes, or
2) Congress intended for everyone to be able to contribute to Roth IRAs, but they wanted to make high-income folks submit more paperwork to do so, and high-income folks with existing pre-tax traditional IRA balances and no 401(k) willing to accept a rollover should be excluded for some reason.

Option 1 seems a lot more plausible to me. You're welcome to see it differently.

Undecided

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Re: Congressman Proposes Ending "Back Door" Roth Contributions
« Reply #13 on: September 11, 2016, 11:48:46 AM »
The pro rata treatment has always been there, back before the Roth conversion income limit was removed, and likely before Roth IRAs even existed in the first place.

One of two things has to be true:
1) Congress removed the Roth conversion income limit to generate more revenue but failed to consider that they would be enabling a "back door" way to make Roth IRA contributions at high incomes, or
2) Congress intended for everyone to be able to contribute to Roth IRAs, but they wanted to make high-income folks submit more paperwork to do so, and high-income folks with existing pre-tax traditional IRA balances and no 401(k) willing to accept a rollover should be excluded for some reason.

Option 1 seems a lot more plausible to me. You're welcome to see it differently.

3) Congress is a lot of people, and the immediate taxation opportunity garnered support of some; anti-taxers liked the continuing conversion possibility.

I don't know, but I don't think we should presume that legislative outcomes reflect monolithic "intent."

SwordGuy

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Re: Congressman Proposes Ending "Back Door" Roth Contributions
« Reply #14 on: September 11, 2016, 12:12:11 PM »
I take advantage of the backdoor Roth.  Saves me a bundle in taxes.

That said, it needs to end, it really does.  The purpose of the IRA is to give a little boost to lower and middle income people to help save for retirement. 

The backdoor Roth helps high income people save for retirement.   If the argument is that high income people need to pay fewer taxes, that's fine.  We can have that debate.  But this is an obvious example of the tax law being bent to favor people it is not supposed to help.

I guess you can claim to know the "purpose" of permitted backdoor Roths, but are you sure it wasn't to accelerate taxable events into 2010, when lots of people converted traditional IRAs to Roths, and paid taxes on the earnings and the taxable contributions? It wasn't that long ago, and there wasn't any effort to limit it to the initial conversions.

Loopholes are for the rich. 

When the hoi polloi start to use them in bulk, they have to be shut down.  Otherwise, who would pay the taxes?

Proud Foot

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Re: Congressman Proposes Ending "Back Door" Roth Contributions
« Reply #15 on: September 12, 2016, 09:45:06 AM »
I'm not a fan of legislative text so I read the long summary to get a better understanding of it and I think for the most part they sound like great proposals. Here's my thoughts on some of the proposals.

Matching Contributions for Savers Credit - Great idea that would really benefit lower income individuals who want to save more but are limited by income.

Repeal Max Age for Traditional Contributions - I don't exactly like this one.  I think a better change would be to apply the limit to ROTH contributions and make exceptions for individuals above 70 1/2 who are working and have investable assets under a certain threshold.

Employers Making Retirement Matching on Student Loan Repayments - A good idea but I think it needs refined more. How do you determine this: " contributions to their 401(k) retirement plans on behalf of their employees who made student loan payments but were unable to afford to also contribute to their 401(k) plans."  Their example of an employee making 5k per month and paying 500 on student loans the employee should be able to make contributions to their 401k. This obviously is dependent on the COL where they are living.  This would delve into a larger discussion/look into household income and COL to determine what income is too high to be eligible for this. Plus the whole issue of the company having to actually adopt this election into their 401k plan.

Mega ROTH IRA's - I would would be fine with putting a cap where further contributions were no longer permitted.  You could also apply the cap to rollovers.  I do not agree with requiring distributions over the cap though.

Eliminate ROTH Conversions - I would be fine with putting an income cap on allowing ROTH conversions.  I would also be for removing the income cap on traditional IRA contributions. 
 

 

NoStacheOhio

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Re: Congressman Proposes Ending "Back Door" Roth Contributions
« Reply #16 on: September 12, 2016, 10:05:50 AM »
Employers Making Retirement Matching on Student Loan Repayments - A good idea but I think it needs refined more. How do you determine this: " contributions to their 401(k) retirement plans on behalf of their employees who made student loan payments but were unable to afford to also contribute to their 401(k) plans."  Their example of an employee making 5k per month and paying 500 on student loans the employee should be able to make contributions to their 401k. This obviously is dependent on the COL where they are living.  This would delve into a larger discussion/look into household income and COL to determine what income is too high to be eligible for this. Plus the whole issue of the company having to actually adopt this election into their 401k plan.

I think the easiest thing would be to count student loan payments as retirement contributions in the context of the employer's regular retirement plan.

For example:

My employer matches 50% of my contributions up to 6% of my salary. If I contribute 3% to my retirement, I'm missing out on half of the available matching, so add in my student loan payments up to the regular matching limit (which would also meet the fairness test for employer-sponsored retirement plans). Obviously, you need a little bit of documentation, but it doesn't have to be super complicated.

Proud Foot

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Re: Congressman Proposes Ending "Back Door" Roth Contributions
« Reply #17 on: September 12, 2016, 10:19:36 AM »
I agree with you NoStacheOhio.  If they would remove the portion about employees making student loan payments but unable to afford to contribute to 401k plans it would be a lot easier.  As far as documentation, that could be as simple as the employee submitting a copy of their loan statement each month.

Tjat

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Re: Congressman Proposes Ending "Back Door" Roth Contributions
« Reply #18 on: September 18, 2016, 04:59:47 AM »
So there would be an incentive to underfunding your 401k AND not paying off your student loans? Uhh
No thanks government...taking out student loans would actually become an investment strategy...yeesh


Djeayzonne

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Re: Congressman Proposes Ending "Back Door" Roth Contributions
« Reply #19 on: September 18, 2016, 06:46:55 PM »
I am just about to set up a solo 401K plan within the next few weeks.
This will actually be my first 401K as I never bothered when I was working as a normal employee.

Anyway, I was seriously considering going through one of those firms to set up a full-control 401K plan so I could do the mega backdoor Roth.

Do you think it would be worth it at this point considering this thread?

ender

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Re: Congressman Proposes Ending "Back Door" Roth Contributions
« Reply #20 on: September 18, 2016, 08:27:32 PM »
I'll be curious if the elimination of the back door Roth is enacted in such a way as to prevent "legitimate" Roth conversions, or just prevent people contributing to an IRA they can't deduct and then immediately converting it.

protostache

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Re: Congressman Proposes Ending "Back Door" Roth Contributions
« Reply #21 on: September 19, 2016, 04:36:09 AM »
I am just about to set up a solo 401K plan within the next few weeks.
This will actually be my first 401K as I never bothered when I was working as a normal employee.

Anyway, I was seriously considering going through one of those firms to set up a full-control 401K plan so I could do the mega backdoor Roth.

Do you think it would be worth it at this point considering this thread?

Depends on how big of a mega backdoor Roth contribution you're planning on making for TY2016 and if you think this will affect TY2017 (it has little to zero hope of affecting TY2016). The fees to set one of these up are not huge, but it's still more than the free plans. I paid $750 to set mine up, plus $125/yr in maintenance fees. If you're only going to do $500 then there's no point, but if you're going to do like $20k-30k then sure, it's probably worth it.

Djeayzonne

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Re: Congressman Proposes Ending "Back Door" Roth Contributions
« Reply #22 on: September 19, 2016, 01:20:11 PM »
Yeah, I wanted to get it set up now, but probably wouldn't take advantage of the back door until next year.

aaron3719

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Re: Congressman Proposes Ending "Back Door" Roth Contributions
« Reply #23 on: September 19, 2016, 02:58:18 PM »
I agree, it would help some but not all

robartsd

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Re: Congressman Proposes Ending "Back Door" Roth Contributions
« Reply #24 on: September 19, 2016, 03:24:35 PM »
I like some of the ideas.

Student Loan payment counts for 401(k) match: Good point about the perverse incentive to drag out student loans - this could be reduced if only principal payment counts as retirement contribution (student loan interest already gets special tax treatment anyway).

Refundable Saver's Credit: As long as the credit is only available to those who have not taken any distributions from their retirement accounts, early retirees would only be able to abuse this while living on taxable investments and working a side gig.

Roth Conversions: I don't want to see the Roth Conversions completely go away, but I could see income limits on conversions as reasonable to close the backdoor Roth. I also wouldn't mind an account balance limit to Roth Contributions and Conversions (as long as the limit remained no lower than 25 times median income - currently a little over a million dollars).

boarder42

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Re: Congressman Proposes Ending "Back Door" Roth Contributions
« Reply #25 on: September 20, 2016, 07:06:40 AM »
this comes up almost every year it seems like.

few things:
1. roth conversion from pretax monies will never go away b/c the govt would rather collect taxes now
2. yeah it would suck for ultra high income earners to not be able to shelter the gains on 5500 bucks a year ... whoopty do... who really cares at that point when you're making that much money.

NoStacheOhio

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Re: Congressman Proposes Ending "Back Door" Roth Contributions
« Reply #26 on: September 20, 2016, 04:52:34 PM »

Student Loan payment counts for 401(k) match: Good point about the perverse incentive to drag out student loans - this could be reduced if only principal payment counts as retirement contribution (student loan interest already gets special tax treatment anyway).


Does it really though? Assuming a rational actor, eliminating the debt and actually saving the money for yourself would still be preferable to making minimal SL payments. I don't think it's a stretch to say that people would transfer the expense of SL payments into retirement saving.

seattlecyclone

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Re: Congressman Proposes Ending "Back Door" Roth Contributions
« Reply #27 on: September 20, 2016, 05:18:54 PM »

Student Loan payment counts for 401(k) match: Good point about the perverse incentive to drag out student loans - this could be reduced if only principal payment counts as retirement contribution (student loan interest already gets special tax treatment anyway).


Does it really though? Assuming a rational actor, eliminating the debt and actually saving the money for yourself would still be preferable to making minimal SL payments. I don't think it's a stretch to say that people would transfer the expense of SL payments into retirement saving.

Agreed. I suppose you could find some people on the margins who decide to drag their loan payments out for a couple of extra years to get the employer match "for free," but they're really not doing themselves any favors. Employer matching funds tend not to be all that large (a couple percent of salary), not nearly enough to retire on all by themselves.

Johnez

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Re: Congressman Proposes Ending "Back Door" Roth Contributions
« Reply #28 on: October 13, 2016, 05:18:18 PM »
If they want to close the backdoor, might want to make the front door more... open. $5500 a year? Plugging in the numbers for a 35 year career, ya can't even hit 300k in contributions. Give the little guy a chance. Not everyone has access to a 401k. Why is there such an imbalance between 401k contributions and IRAs?

Telecaster

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Re: Congressman Proposes Ending "Back Door" Roth Contributions
« Reply #29 on: October 13, 2016, 06:17:54 PM »
If they want to close the backdoor, might want to make the front door more... open. $5500 a year? Plugging in the numbers for a 35 year career, ya can't even hit 300k in contributions. Give the little guy a chance. Not everyone has access to a 401k. Why is there such an imbalance between 401k contributions and IRAs?

A couple reasons.  Although this is disputed above <g>, the purpose of an IRA is to incentivize low and middle income earners to save for retirement.  That's why the contributions limits are set fairly low, high earners don't qualify, and originally there was an excise tax on accounts that grew too large (15% over $1MM, IIRC).   Beyond that it is assumed you can save on your own. 

401(k)s, believe it or not, were originally a loophole in the tax code so their creation and current form was mostly by accident. 

Back to your point, you are correct the system is not particularly equitable, but it is the system we have. 

robartsd

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Re: Congressman Proposes Ending "Back Door" Roth Contributions
« Reply #30 on: October 14, 2016, 08:43:13 AM »
If they want to close the backdoor, might want to make the front door more... open. $5500 a year? Plugging in the numbers for a 35 year career, ya can't even hit 300k in contributions. Give the little guy a chance. Not everyone has access to a 401k. Why is there such an imbalance between 401k contributions and IRAs?
Yes, there is a glaring hole in available retirement plans in the US for employees whose employer is not willing to sponsor a plan for them. This is most likely to be the case for low-wage workers working part-time or for small businesses. It seems to me that employees without access to any employer sponsored plan should have access to plans similar to the plans available to the self-employed.

protostache

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Re: Congressman Proposes Ending "Back Door" Roth Contributions
« Reply #31 on: October 14, 2016, 09:00:40 AM »
If they want to close the backdoor, might want to make the front door more... open. $5500 a year? Plugging in the numbers for a 35 year career, ya can't even hit 300k in contributions. Give the little guy a chance. Not everyone has access to a 401k. Why is there such an imbalance between 401k contributions and IRAs?
Yes, there is a glaring hole in available retirement plans in the US for employees whose employer is not willing to sponsor a plan for them. This is most likely to be the case for low-wage workers working part-time or for small businesses. It seems to me that employees without access to any employer sponsored plan should have access to plans similar to the plans available to the self-employed.

Is there, though? Because literally anyone can open a brokerage account and start chucking money into low cost index funds with no limits or rules. The people you're referring to are likely in tax brackets without capital gains taxes, which means there is no practical difference between a Tax advantaged and a normal brokerage account.

robartsd

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Re: Congressman Proposes Ending "Back Door" Roth Contributions
« Reply #32 on: October 14, 2016, 04:05:27 PM »
Is there, though? Because literally anyone can open a brokerage account and start chucking money into low cost index funds with no limits or rules. The people you're referring to are likely in tax brackets without capital gains taxes, which means there is no practical difference between a Tax advantaged and a normal brokerage account.
Good point about most of the people in this situation do not make enough to pay capital gains; however, some taxable income could still occur from buying and holding index funds as short term capital gains and non-qualified dividends. Assuming someone spends their entire working life employed without access to employer sponsored retirement accounts so they save in taxable instead, they would have quite a bit of income from dividends and capital gains on transactions within the funds they hold, potentially increasing their tax bracket as they approach retirement.

teen persuasion

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Re: Congressman Proposes Ending "Back Door" Roth Contributions
« Reply #33 on: October 15, 2016, 07:00:31 AM »
If they want to close the backdoor, might want to make the front door more... open. $5500 a year? Plugging in the numbers for a 35 year career, ya can't even hit 300k in contributions. Give the little guy a chance. Not everyone has access to a 401k. Why is there such an imbalance between 401k contributions and IRAs?
Yes, there is a glaring hole in available retirement plans in the US for employees whose employer is not willing to sponsor a plan for them. This is most likely to be the case for low-wage workers working part-time or for small businesses. It seems to me that employees without access to any employer sponsored plan should have access to plans similar to the plans available to the self-employed.

Is there, though? Because literally anyone can open a brokerage account and start chucking money into low cost index funds with no limits or rules. The people you're referring to are likely in tax brackets without capital gains taxes, which means there is no practical difference between a Tax advantaged and a normal brokerage account.

There's no reduction in AGI for contributions to taxable accounts.  At low incomes, EITC is bigger than tax reduction, but together they can be huge.  My employer doesn't offer any retirement accounts, but DH currently has a 401k thru his employer.  Every $ he contributes (traditional) increases our tax refunds: .21 (EITC phaseout) + .063 (state 30% match of EITC) + .10 (fed tax) + .04 (state tax) = .413 refund.

Lowering our AGI below $50k lets us qualify for the Simplified Needs Test on the FAFSA, too.
« Last Edit: October 15, 2016, 03:08:44 PM by teen persuasion »

MDM

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Re: Congressman Proposes Ending "Back Door" Roth Contributions
« Reply #34 on: October 15, 2016, 07:20:27 AM »
There's no reduction in AGI for contributions to taxable accounts.  At low incomes, EITC is bigger than tax reduction, but together they can be huge.  My employer doesn't offer any retirement accounts, but DH currently has a 401k thru his employer.  Every $ he contributes (traditional) increases our tax refunds: .21 (EITC phaseout) + .063 (state 30% match of EITC) + .10 (fed tax) + .04 (state tax) = .413 refund.

Lowering our AGI below $50k let's us qualify for the Simplified Needs Test on the FAFSA, too.

A great example of when traditional is better than Roth, despite one being in the 10% federal tax bracket, because the marginal savings rate is so high.  Good for you!

Ambergris

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Re: Congressman Proposes Ending &quot;Back Door&quot; Roth Contributions
« Reply #35 on: October 15, 2016, 07:59:48 AM »
Lots of people here at least talk about using Roth conversion pipelines. This would put an end to this if you can't convert a traditional ira to Roth.

The only way this would become a problem for Roth conversion pipelines/ladders would be if they ended conversions altogether, which would be extremely unlikely (for the reasons others have mentioned). Much more likely is that they would put conversions back the way they were earlier, with an income limit on conversion (I believe this was $100K previously) or some other similar restriction (maybe a high balance restriction). In that case, most ER folks who are expecting an income below that limit in retirement or retiring on a fairly modest retirement balance would be just fine.

jeffnhl

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Re: Congressman Proposes Ending "Back Door" Roth Contributions
« Reply #36 on: November 03, 2016, 11:25:08 AM »
Since removing all conversions is exactly what was proposed in the legislative draft submitted for comment:

page 22:
http://www.finance.senate.gov/imo/media/doc/RISE%20Act%20JCT%20technical%20explanation.pdf

Title II summary:
http://www.finance.senate.gov/imo/media/doc/RISE%20Act%20discussion%20draft%20one%20pager.pdf

Has anyone else sent in for Public comment? --> Retirement_Savings@finance.senate.gov
http://www.finance.senate.gov/ranking-members-news/wyden-proposal-would-crack-down-on-tax-avoidance-in-retirement-plans-create-new-opportunities-for-working-americans-to-save

On the off chance the Senators don't follow this thread ;-) I know I sent a note to that address as well as a note to my Senators...  Seems to me like they are burning the house down to close the back door...

financiallypossible

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    • Financially Possible
Re: Congressman Proposes Ending "Back Door" Roth Contributions
« Reply #37 on: November 03, 2016, 12:23:45 PM »
I take advantage of the backdoor Roth.  Saves me a bundle in taxes.

That said, it needs to end, it really does.  The purpose of the IRA is to give a little boost to lower and middle income people to help save for retirement. 

The backdoor Roth helps high income people save for retirement.   If the argument is that high income people need to pay fewer taxes, that's fine.  We can have that debate.  But this is an obvious example of the tax law being bent to favor people it is not supposed to help.

I agree with you that it does need to be closed. I did not get access to after tax contributions within my 401k until this October. I'd be a bit disappointed if it gets closed shortly after I finally gained access when others had a few years of access.

 

Wow, a phone plan for fifteen bucks!