Author Topic: New Roth IRA limitations proposed today  (Read 2980 times)

Greenstache

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New Roth IRA limitations proposed today
« on: September 13, 2021, 10:12:12 AM »
Many interesting elements in the tax revision outline released by the Ways & Means Committee this morning.

One provision will remove the ability to make Roth conversions for single taxpayers with taxable income (TI) over $400k, and for MFJ the TI limit will be $450k.

Possibly of more consequence to this community is this provision: "Furthermore, this section prohibits all employee after-tax contributions in qualified plans and prohibits after-tax IRA contributions from being converted to Roth regardless of income level, effective for distributions, transfers, and contributions made after December 31, 2021." 

https://waysandmeans.house.gov/sites/democrats.waysandmeans.house.gov/files/documents/SubtitleISxS.pdf

ender

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Re: New Roth IRA limitations proposed today
« Reply #1 on: September 13, 2021, 10:19:14 AM »
Damn, that's going to kill the megabackdoor too.

Quote
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.

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


Where did you see this linked @Greenstache ?
« Last Edit: September 13, 2021, 10:25:21 AM by ender »

Greenstache

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Re: New Roth IRA limitations proposed today
« Reply #2 on: September 13, 2021, 10:26:48 AM »
For sure.

I got the document from an EY release this morning.  I'll attach the PDF here.

joe189man

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Re: New Roth IRA limitations proposed today
« Reply #3 on: September 13, 2021, 10:28:15 AM »
is this a loophole that needs to be closed? how big of a tax deal is this for the government?

ender

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Re: New Roth IRA limitations proposed today
« Reply #4 on: September 13, 2021, 10:30:30 AM »
Weird. I can't really see that linked anywhere off their website other than the pdf.

boarder42

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Re: New Roth IRA limitations proposed today
« Reply #5 on: September 13, 2021, 11:10:13 AM »
The legislation would end the backdoor Roth IRA strategy by eliminating Roth conversions for both IRAs and workplace plans like 401(k) plans.

This is the bigger proposal that affects everyone here. It could kill the Roth ladder

They're also forcing rich people to take withdrawals. So they're proposal eliminates a tax savvy way for lower networth individuals together their money early while forcing higher incomes to take it. How about we just get rid of the age for withdrawals.
« Last Edit: September 13, 2021, 11:12:03 AM by boarder42 »

Greenstache

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Re: New Roth IRA limitations proposed today
« Reply #6 on: September 13, 2021, 11:32:21 AM »
I was really surprised to see this - never heard this floated as an idea in any of the many Big 4 webcasts and articles about what might make it into the legislation.  Meanwhile, nothing about ending or capping 1031 real estate exchanges is in the text, which was mentioned often leading up to this.  Hard to tell if this will pass, but it feels like there isn't much of a backdoor Roth lobby, while there are many lobbyists working hard on things like making sure 1031 exchanges survive. 

ender

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Re: New Roth IRA limitations proposed today
« Reply #7 on: September 13, 2021, 11:34:05 AM »
Let's be honest though, "backdoor Roth IRA" sounds way more sketchy than "1031 exchange."

boarder42

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Re: New Roth IRA limitations proposed today
« Reply #8 on: September 13, 2021, 11:34:48 AM »
I was really surprised to see this - never heard this floated as an idea in any of the many Big 4 webcasts and articles about what might make it into the legislation.  Meanwhile, nothing about ending or capping 1031 real estate exchanges is in the text, which was mentioned often leading up to this.  Hard to tell if this will pass, but it feels like there isn't much of a backdoor Roth lobby, while there are many lobbyists working hard on things like making sure 1031 exchanges survive.

The backdoor Roth is pretty insignificant in the grand scheme for fire.  What is significant is if conversions completely go away with only 10% penalty or sepp 72t left to access it.

bacchi

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Re: New Roth IRA limitations proposed today
« Reply #9 on: September 13, 2021, 11:42:44 AM »
The legislation would end the backdoor Roth IRA strategy by eliminating Roth conversions for both IRAs and workplace plans like 401(k) plans.

This is the bigger proposal that affects everyone here. It could kill the Roth ladder

How so? It would eliminate the mega option; converting a 401k with regular pre-tax funds still works.

boarder42

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Re: New Roth IRA limitations proposed today
« Reply #10 on: September 13, 2021, 11:44:52 AM »
The legislation would end the backdoor Roth IRA strategy by eliminating Roth conversions for both IRAs and workplace plans like 401(k) plans.

This is the bigger proposal that affects everyone here. It could kill the Roth ladder

How so? It would eliminate the mega option; converting a 401k with regular pre-tax funds still works.

I don't know how that sentence I posted is unclear.

It will end Roth conversions from IRA and 401k accounts. The Roth ladder is based on Roth conversions from IRA accounts.

boarder42

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Re: New Roth IRA limitations proposed today
« Reply #11 on: September 13, 2021, 11:49:07 AM »
The policy would apply at the same income thresholds listed above. It would count for distributions, transfers and contributions made in taxable years beginning after Dec. 31, 2031.

Apparently there is an income threshold and it doesn't apply the first 10 years. Going to be piles for this community to unpack over the next month or so as this plan is finalized

RobertFromTX

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Re: New Roth IRA limitations proposed today
« Reply #12 on: September 13, 2021, 11:54:16 AM »
Anyone have further insight on this section?

I own shares in a privately-held US bank, some non-retirement but some in a Traditional IRA and then some in a 401k (ESOP).  Just curious whats going to happen to the IRA shares.

Quote
Sec. 138312. Prohibition of IRA Investments Conditioned on Account Holder’s Status.
The bill prohibits an IRA from holding any security if the issuer of the security requires the IRA
owner to have certain minimum level of assets or income, or have completed a minimum level of
education or obtained a specific license or credential.  For example, the legislation prohibits IRAs
from holding investments which are offered to accredited investors because those
investments are securities that have not been registered under federal securities laws.  IRAs
holding such investments would lose their IRA status. This section generally takes effect for tax
years beginning after December 31, 2021, but there is a 2-year transition period for IRAs already
holding these investments.

Philociraptor

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Re: New Roth IRA limitations proposed today
« Reply #13 on: September 13, 2021, 11:57:00 AM »
The legislation would end the backdoor Roth IRA strategy by eliminating Roth conversions for both IRAs and workplace plans like 401(k) plans.

This is the bigger proposal that affects everyone here. It could kill the Roth ladder

How so? It would eliminate the mega option; converting a 401k with regular pre-tax funds still works.

I don't know how that sentence I posted is unclear.

It will end Roth conversions from IRA and 401k accounts. The Roth ladder is based on Roth conversions from IRA accounts.

It doesn't say it would end ALL Roth conversions, only ones using after-tax IRA contributions. So it sounds like pre-tax IRA contributions could still be allowed to be converted over.

boarder42

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Re: New Roth IRA limitations proposed today
« Reply #14 on: September 13, 2021, 12:00:32 PM »
The legislation would end the backdoor Roth IRA strategy by eliminating Roth conversions for both IRAs and workplace plans like 401(k) plans.

This is the bigger proposal that affects everyone here. It could kill the Roth ladder

How so? It would eliminate the mega option; converting a 401k with regular pre-tax funds still works.

I don't know how that sentence I posted is unclear.

It will end Roth conversions from IRA and 401k accounts. The Roth ladder is based on Roth conversions from IRA accounts.

It doesn't say it would end ALL Roth conversions, only ones using after-tax IRA contributions. So it sounds like pre-tax IRA contributions could still be allowed to be converted over.

Hopefully. The govt should want those since it gets them revenue today vs tomorrow

ender

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Re: New Roth IRA limitations proposed today
« Reply #15 on: September 13, 2021, 12:04:04 PM »
Roth isn't all that meaningful for most FIRE'ed folks either given the short timeline.

Sure, it's advantageous, but the main reason Roth benefits an early retiree has to do with Roth conversion pipeline.


DadJokes

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Re: New Roth IRA limitations proposed today
« Reply #16 on: September 13, 2021, 12:06:47 PM »
I was really surprised to see this - never heard this floated as an idea in any of the many Big 4 webcasts and articles about what might make it into the legislation.  Meanwhile, nothing about ending or capping 1031 real estate exchanges is in the text, which was mentioned often leading up to this.  Hard to tell if this will pass, but it feels like there isn't much of a backdoor Roth lobby, while there are many lobbyists working hard on things like making sure 1031 exchanges survive.

The backdoor Roth is pretty insignificant in the grand scheme for fire.  What is significant is if conversions completely go away with only 10% penalty or sepp 72t left to access it.

It looks like I may stay in government instead of jumping to the private sector until this goes through or is shot down. 457(b) plans are still amazing.

moneymatters242

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Re: New Roth IRA limitations proposed today
« Reply #17 on: September 13, 2021, 01:09:00 PM »
It doesn't say it would end ALL Roth conversions, only ones using after-tax IRA contributions. So it sounds like pre-tax IRA contributions could still be allowed to be converted over.
I hunted down this thread after reading a summary of these changes at this CNBC article: https://www.cnbc.com/2021/09/13/house-democrats-propose-new-retirement-plan-rules-for-the-wealthy.html

Per that article, this legislation would kill BOTH the backdoor Roth AND the mega backdoor Roth in one fell swoop.  Incredible - I feared the long term risk of one of these being killed, but for both to be killed and this soon is depressing as someone striving for FIRE.  I've barely even had time to take advantage of them.

A few questions I have are:
  • Is this truly tied at the hip with the $3.5 trillion spending legislation?  If so, the odds that it gets killed or neutered might be significant.
  • If anyone comes across information about the level of support (or lack of) for these anti-Roth legislation elements, I'd welcome it.
  • Does this imply the mega backdoor would be killed immediately if this passed, or is it also subject to that Dec 2031 deadline listed?  It appears that killing the regular backdoor roth would occur at 2031 but it seems ambiguous as to when the mega backdoor would be killed.
I was really surprised to see this - never heard this floated as an idea in any of the many Big 4 webcasts and articles about what might make it into the legislation.
You can probably thank ProPropaganda (err ProPublica) for this.  I suspect this is more collateral damage about to hit the average Joe thanks to their envy-filled, scorched earth witch hunt of the uber rich.
« Last Edit: September 13, 2021, 01:10:58 PM by moneymatters242 »

Greenstache

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Re: New Roth IRA limitations proposed today
« Reply #18 on: September 13, 2021, 02:48:19 PM »
Quote
Does this imply the mega backdoor would be killed immediately if this passed, or is it also subject to that Dec 2031 deadline listed?  It appears that killing the regular backdoor roth would occur at 2031 but it seems ambiguous as to when the mega backdoor would be killed.

Mega backdoor dies on 12/31/21, per page 11 of the text as it stands now.

seattlecyclone

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Re: New Roth IRA limitations proposed today
« Reply #19 on: September 13, 2021, 03:02:46 PM »
I was really surprised to see this - never heard this floated as an idea in any of the many Big 4 webcasts and articles about what might make it into the legislation.  Meanwhile, nothing about ending or capping 1031 real estate exchanges is in the text, which was mentioned often leading up to this.  Hard to tell if this will pass, but it feels like there isn't much of a backdoor Roth lobby, while there are many lobbyists working hard on things like making sure 1031 exchanges survive.

The backdoor Roth is pretty insignificant in the grand scheme for fire.  What is significant is if conversions completely go away with only 10% penalty or sepp 72t left to access it.

You'd still be able to convert pre-tax balances as long as your income is less than $400k (single)/$450k (married). Wouldn't affect Roth pipeline plans for most of us, I imagine. The 2032 effective date for this section is interesting, almost certainly a result of Congress's system of only considering the budgetary effect over the next ten years. Reducing Roth conversions will result in a short-term revenue drop, so scheduling the change a decade out would take that effect out of the "cost" for the bill.

After-tax conversions will be banned at all income levels. I'm curious how this meshes with the existing pro-rata rules. Would you be prohibited from converting your traditional IRA altogether if it has any after-tax basis in it? The summary is silent on this point, we'd have to see the full text to know. If anyone finds a link to that, please post it here!

Is this truly tied at the hip with the $3.5 trillion spending legislation?  If so, the odds that it gets killed or neutered might be significant.

My understanding is this will be part of the big bill to be passed using the reconciliation process, yes.

Quote
Does this imply the mega backdoor would be killed immediately if this passed, or is it also subject to that Dec 2031 deadline listed?  It appears that killing the regular backdoor roth would occur at 2031 but it seems ambiguous as to when the mega backdoor would be killed.

The backdoor conversion ban would take effect in 2022 for all income levels. Rules around conversions of pre-tax amounts would stay as they are for the next decade, and only in 2032 would there be an income cap put on them.

Quote
You can probably thank ProPropaganda (err ProPublica) for this.  I suspect this is more collateral damage about to hit the average Joe thanks to their envy-filled, scorched earth witch hunt of the uber rich.

Yes, the impetus for a lot of this does seem to be that ProPublica article. The impact on the "average Joe" seems very minimal. Most of it doesn't affect people with incomes under $400k. The only thing that does apply below that level is the backdoor Roth ban, which few people with below-average incomes are taking advantage of at the moment. The mega backdoor was always obviously a huge loophole, only a matter of time before they closed it.

The RMDs for large account balances are rather significant. If you have over $10 million in your retirement accounts (IRAs and workplace plans combined) at the end of the year, you'll need to withdraw half the excess during the next year. In addition if you have over $20 million combined, and you have anything in Roth accounts, you'll need to pull out 100% of the excess over $20 million until your Roth account is empty. All these rules only apply to those with incomes over $400k/$450k. Peter Thiel in particular is going to have a pretty big incentive to do whatever it takes to keep his AGI below that level until he turns 59½ (he will turn 54 next month). His multi-billion Roth IRA is essentially all gains, which counts as taxable income if withdrawn early. He could be looking at paying over half of his Roth balance in taxes if he can't get his income below the line for a few years.

Morning Glory

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Re: New Roth IRA limitations proposed today
« Reply #20 on: September 13, 2021, 03:07:18 PM »
I was really surprised to see this - never heard this floated as an idea in any of the many Big 4 webcasts and articles about what might make it into the legislation.  Meanwhile, nothing about ending or capping 1031 real estate exchanges is in the text, which was mentioned often leading up to this.  Hard to tell if this will pass, but it feels like there isn't much of a backdoor Roth lobby, while there are many lobbyists working hard on things like making sure 1031 exchanges survive.

The backdoor Roth is pretty insignificant in the grand scheme for fire.  What is significant is if conversions completely go away with only 10% penalty or sepp 72t left to access it.

Nothing in that article suggested that the Roth conversion ladder would go away for regular folks. Individuals with income over 140k would not be able to make Roth conversions, but that doesn't seem to apply to most FIRE folks.

seattlecyclone

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Re: New Roth IRA limitations proposed today
« Reply #21 on: September 13, 2021, 03:10:08 PM »
I was really surprised to see this - never heard this floated as an idea in any of the many Big 4 webcasts and articles about what might make it into the legislation.  Meanwhile, nothing about ending or capping 1031 real estate exchanges is in the text, which was mentioned often leading up to this.  Hard to tell if this will pass, but it feels like there isn't much of a backdoor Roth lobby, while there are many lobbyists working hard on things like making sure 1031 exchanges survive.

The backdoor Roth is pretty insignificant in the grand scheme for fire.  What is significant is if conversions completely go away with only 10% penalty or sepp 72t left to access it.

Nothing in that article suggested that the Roth conversion ladder would go away for regular folks. Individuals with income over 140k would not be able to make Roth conversions, but that doesn't seem to apply to most FIRE folks.

The Roth conversion threshold would be $400k-$450k, depending on filing status. The $140k number is the existing income limit for Roth contributions.

ixtap

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Re: New Roth IRA limitations proposed today
« Reply #22 on: September 13, 2021, 03:14:05 PM »
I was really surprised to see this - never heard this floated as an idea in any of the many Big 4 webcasts and articles about what might make it into the legislation.  Meanwhile, nothing about ending or capping 1031 real estate exchanges is in the text, which was mentioned often leading up to this.  Hard to tell if this will pass, but it feels like there isn't much of a backdoor Roth lobby, while there are many lobbyists working hard on things like making sure 1031 exchanges survive.

The backdoor Roth is pretty insignificant in the grand scheme for fire.  What is significant is if conversions completely go away with only 10% penalty or sepp 72t left to access it.

Our Roth accounts are bigger than our taxable accounts. That amounts to a lot of taxes saved during accumulation.

We also always expected the mega backdoor to be a target. It is a huge barn door and the horses are restless....

As for the average Joe, you need to have an above average income to have need of the backdoor. Average Joe has direct access to Roth IRA contributions.

Lucky Recardito

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Re: New Roth IRA limitations proposed today
« Reply #23 on: September 13, 2021, 03:29:22 PM »
PTF. Was JUST going to work on getting on the mega-backdoor train in 2022. :facepalm:

achvfi

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Re: New Roth IRA limitations proposed today
« Reply #24 on: September 13, 2021, 03:30:18 PM »
For sure.

I got the document from an EY release this morning.  I'll attach the PDF here.

Thanks @Greenstache for the document. So much interesting information in there to dig in.

I started mega backdoor Roth this year and converted extra 6 grand to Roth. It worked out very well. Encouraged, I began this elaborate strategy to maximize mega back door Roth contributions during my work years starting this month.

Oh well. I guess I am too late to the party. 

Well, we still have at least 4 months to take advantage.
« Last Edit: September 13, 2021, 03:32:14 PM by achvfi »

Morning Glory

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Re: New Roth IRA limitations proposed today
« Reply #25 on: September 13, 2021, 03:30:40 PM »
I was really surprised to see this - never heard this floated as an idea in any of the many Big 4 webcasts and articles about what might make it into the legislation.  Meanwhile, nothing about ending or capping 1031 real estate exchanges is in the text, which was mentioned often leading up to this.  Hard to tell if this will pass, but it feels like there isn't much of a backdoor Roth lobby, while there are many lobbyists working hard on things like making sure 1031 exchanges survive.

The backdoor Roth is pretty insignificant in the grand scheme for fire.  What is significant is if conversions completely go away with only 10% penalty or sepp 72t left to access it.

Nothing in that article suggested that the Roth conversion ladder would go away for regular folks. Individuals with income over 140k would not be able to make Roth conversions, but that doesn't seem to apply to most FIRE folks.

The Roth conversion threshold would be $400k-$450k, depending on filing status. The $140k number is the existing income limit for Roth contributions.

Ok, I was reading the paragraph above it about how prior to 2010 the conversion and contribution thresholds were the same. 

Why would someone with that much income want to do a Roth conversion, outside of the mega backdoor strategy already described?

Gronnie

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Re: New Roth IRA limitations proposed today
« Reply #26 on: September 13, 2021, 03:50:40 PM »
Story of my life -- I finally have debts paid, emergency fund saved, and enough income to do mega backdoor (along with a plan that has it) and it's going to be closed.

seattlecyclone

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Re: New Roth IRA limitations proposed today
« Reply #27 on: September 13, 2021, 04:11:52 PM »
Why would someone with that much income want to do a Roth conversion, outside of the mega backdoor strategy already described?

Same reason the rest of us do: because they think they might pay a lower rate today than in the future. The top tax bracket doesn't start until $628k for married couples, giving a range between $450k and $628k where you could conceivably save a bit of future tax if you expect to have that really high income level continue into retirement. If you're one of the people with $10 million in your IRA you could be looking at RMDs approaching that top tax bracket by the time you hit 80, plus whatever other income you might have.

rmorris50

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Re: New Roth IRA limitations proposed today
« Reply #28 on: September 13, 2021, 07:00:48 PM »
I was really surprised to see this - never heard this floated as an idea in any of the many Big 4 webcasts and articles about what might make it into the legislation.  Meanwhile, nothing about ending or capping 1031 real estate exchanges is in the text, which was mentioned often leading up to this.  Hard to tell if this will pass, but it feels like there isn't much of a backdoor Roth lobby, while there are many lobbyists working hard on things like making sure 1031 exchanges survive.

The backdoor Roth is pretty insignificant in the grand scheme for fire.  What is significant is if conversions completely go away with only 10% penalty or sepp 72t left to access it.

You'd still be able to convert pre-tax balances as long as your income is less than $400k (single)/$450k (married). Wouldn't affect Roth pipeline plans for most of us, I imagine. The 2032 effective date for this section is interesting, almost certainly a result of Congress's system of only considering the budgetary effect over the next ten years. Reducing Roth conversions will result in a short-term revenue drop, so scheduling the change a decade out would take that effect out of the "cost" for the bill.

After-tax conversions will be banned at all income levels. I'm curious how this meshes with the existing pro-rata rules. Would you be prohibited from converting your traditional IRA altogether if it has any after-tax basis in it? The summary is silent on this point, we'd have to see the full text to know. If anyone finds a link to that, please post it here!

Is this truly tied at the hip with the $3.5 trillion spending legislation?  If so, the odds that it gets killed or neutered might be significant.

My understanding is this will be part of the big bill to be passed using the reconciliation process, yes.

Quote
Does this imply the mega backdoor would be killed immediately if this passed, or is it also subject to that Dec 2031 deadline listed?  It appears that killing the regular backdoor roth would occur at 2031 but it seems ambiguous as to when the mega backdoor would be killed.

The backdoor conversion ban would take effect in 2022 for all income levels. Rules around conversions of pre-tax amounts would stay as they are for the next decade, and only in 2032 would there be an income cap put on them.

Quote
You can probably thank ProPropaganda (err ProPublica) for this.  I suspect this is more collateral damage about to hit the average Joe thanks to their envy-filled, scorched earth witch hunt of the uber rich.

Yes, the impetus for a lot of this does seem to be that ProPublica article. The impact on the "average Joe" seems very minimal. Most of it doesn't affect people with incomes under $400k. The only thing that does apply below that level is the backdoor Roth ban, which few people with below-average incomes are taking advantage of at the moment. The mega backdoor was always obviously a huge loophole, only a matter of time before they closed it.

The RMDs for large account balances are rather significant. If you have over $10 million in your retirement accounts (IRAs and workplace plans combined) at the end of the year, you'll need to withdraw half the excess during the next year. In addition if you have over $20 million combined, and you have anything in Roth accounts, you'll need to pull out 100% of the excess over $20 million until your Roth account is empty. All these rules only apply to those with incomes over $400k/$450k. Peter Thiel in particular is going to have a pretty big incentive to do whatever it takes to keep his AGI below that level until he turns 59½ (he will turn 54 next month). His multi-billion Roth IRA is essentially all gains, which counts as taxable income if withdrawn early. He could be looking at paying over half of his Roth balance in taxes if he can't get his income below the line for a few years.
Hmm, looks like Peter’s foresight to get New Zealand citizenship just might have been the smart thing to do.


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seattlecyclone

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Re: New Roth IRA limitations proposed today
« Reply #29 on: September 13, 2021, 07:31:27 PM »
As far as I know Thiel is still a US citizen. Even if he weren't I'd be very surprised to find that foreign citizens with US retirement accounts are exempt from RMDs and any taxation that may arise from those.

rmorris50

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Re: New Roth IRA limitations proposed today
« Reply #30 on: September 13, 2021, 08:26:52 PM »
Found this online https://premieroffshore.com/what-happens-to-your-ira-when-you-give-up-us-citizenship-expatriate/

This is why the ultra rich get dual citizenships, so if a country starts coming after your money you can (to the best of your legal ability) get out of said country with as much of your fortune intact as possible as quickly as possible.


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secondcor521

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Re: New Roth IRA limitations proposed today
« Reply #31 on: September 13, 2021, 09:02:57 PM »
PTF.  I'm not really going to bother worrying about any of this until the legislation gets further along.  They're just in the drafting stages, and I think there's going to have to be some serious negotiations if it ends up passing through both houses of Congress.

All my Congressional representatives will be voting against the $3.5T bill anyways.

chasesfish

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Re: New Roth IRA limitations proposed today
« Reply #32 on: September 14, 2021, 05:58:24 AM »
I'm looking forward to the article coming on kitces.com today, one of the writers had a long twitter thread last night on it.  I'm not surprised a strategy called "backdoor" stays around.

The prohibition on private placements inside IRAs will hurt those of us who use real estate syndications as an investment in our tax deferred accounts.

Shocked the 1031 still survives and not much in there targeting carried interest (20 to 25% increase in capital gains).   This seems like a tax the wealthy but not the really wealthy type of legislation.  Not sure they get anywhere close to the $3.5tril in revenue increases though.

ender

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Re: New Roth IRA limitations proposed today
« Reply #33 on: September 14, 2021, 06:40:12 AM »
Realistically can this even be voted on and enacted for the 2022 tax year?

I'd imagine this has major impact for the various financial institutions which means they'd have only a few months to update all their systems, if this passed today.

That feels unlikely, especially since there's a HUGE number of items just in that proposal doc that the committee put; the Roth IRA/401k ones are a small part of them.

boarder42

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Re: New Roth IRA limitations proposed today
« Reply #34 on: September 14, 2021, 08:49:32 AM »
Realistically can this even be voted on and enacted for the 2022 tax year?

I'd imagine this has major impact for the various financial institutions which means they'd have only a few months to update all their systems, if this passed today.

That feels unlikely, especially since there's a HUGE number of items just in that proposal doc that the committee put; the Roth IRA/401k ones are a small part of them.

trumps tax cuts and jobs act was passed in december days before the end of  the year.  Had to make a last minute contribution to a DAF to take advantage of a higher tax bracket as well as other minor changes.  you can enact any tax changes any time even retroactively effective.  The govt doesnt care about the amount of time or stress it puts on people or companies.

secondcor521

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Re: New Roth IRA limitations proposed today
« Reply #35 on: September 14, 2021, 11:40:49 AM »
Realistically can this even be voted on and enacted for the 2022 tax year?

I'd imagine this has major impact for the various financial institutions which means they'd have only a few months to update all their systems, if this passed today.

That feels unlikely, especially since there's a HUGE number of items just in that proposal doc that the committee put; the Roth IRA/401k ones are a small part of them.

trumps tax cuts and jobs act was passed in december days before the end of  the year.  Had to make a last minute contribution to a DAF to take advantage of a higher tax bracket as well as other minor changes.  you can enact any tax changes any time even retroactively effective.  The govt doesnt care about the amount of time or stress it puts on people or companies.

Not commenting on the relative quality of the bills, but in terms of legislative timing, the ARP Act was passed in March of this year and had several tax related changes that were applicable to the 2020 tax year.

I would say generally that the government has not made "adverse" tax law changes in retroactive fashion in my memory.  But even though the ARPA changes were "beneficial", the timing of their passage meant that generally you couldn't do any tax planning to take advantage of them because the tax year had already closed.

boarder42

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Re: New Roth IRA limitations proposed today
« Reply #36 on: September 14, 2021, 12:36:33 PM »
Realistically can this even be voted on and enacted for the 2022 tax year?

I'd imagine this has major impact for the various financial institutions which means they'd have only a few months to update all their systems, if this passed today.

That feels unlikely, especially since there's a HUGE number of items just in that proposal doc that the committee put; the Roth IRA/401k ones are a small part of them.

trumps tax cuts and jobs act was passed in december days before the end of  the year.  Had to make a last minute contribution to a DAF to take advantage of a higher tax bracket as well as other minor changes.  you can enact any tax changes any time even retroactively effective.  The govt doesnt care about the amount of time or stress it puts on people or companies.

Not commenting on the relative quality of the bills, but in terms of legislative timing, the ARP Act was passed in March of this year and had several tax related changes that were applicable to the 2020 tax year.

I would say generally that the government has not made "adverse" tax law changes in retroactive fashion in my memory.  But even though the ARPA changes were "beneficial", the timing of their passage meant that generally you couldn't do any tax planning to take advantage of them because the tax year had already closed.

some of this current proposed bill is active as of yesterday if its not changed in the coming weeks.  not necessarily retroactive but its adverse to the people it affects and they won't know if its true til the bill is finalized. 


Paul der Krake

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Re: New Roth IRA limitations proposed today
« Reply #37 on: September 14, 2021, 12:50:05 PM »
Some doors open, some doors close. The grind never stops.




Papa bear

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New Roth IRA limitations proposed today
« Reply #38 on: September 14, 2021, 02:24:43 PM »
Toddler pressed button post. Woops
« Last Edit: September 14, 2021, 02:27:40 PM by Papa bear »

seattlecyclone

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Re: New Roth IRA limitations proposed today
« Reply #39 on: September 14, 2021, 02:45:14 PM »
I found the actual text of the proposal.

Details about the retirement changes I found interesting:
* The prohibition on contributing more once you hit $10 million in retirement accounts wouldn't apply to SEP or SIMPLE IRAs. It would apply to other employer contributions, which implies that employers that typically make these contributions will need to have some way of knowing which of their employees are above the limit.
* The $10 million limit would apply to retirement plans under 401(a), 403(a), and 403(b), plus IRAs and governmental 457 plans. Non-governmental 457 plan balances are excluded from this calculation.
* Any employer who has a retirement plan participant with more than a $2.5 million balance will have to report information about those participants and their plan balances to the IRS.
* The $400k-$450k "adjusted taxable income" used for determining who gets caught up in these rules is defined as taxable income plus any deduction for IRA contributions that brings the total above $10 million, minus any income from the new RMDs for people with high retirement account balances.
* The new RMD for people with high retirement account balances will be exempt from the 10% early withdrawal tax. No exemption from the taxation of Roth growth if withdrawn early, as far as I can tell.
* Employer plans will need to allow in-service distributions from employees who certify that they need to take out the money to satisfy their high-balance RMDs.
* For the changes to close the backdoor Roth, I didn't see anything in there that would modify the pro-rata rule for IRA distributions, meaning that people with any after-tax basis in a traditional IRA may be prohibited from doing any Roth conversions. Not super confident on this point though.
* No more purchasing investments requiring accredited investor (or similar) status in an IRA after 2021, and if you have any such investments already in your IRA you'll need to dispose of them by the end of 2023.
* No more investing through your IRA in privately-held businesses where you own at least 10% of the shares, or any businesses where you serve on the board of directors (or similar). Any such pre-existing investments will need to be sold by the end of 2023.
* The statute of limitations for enforcing IRA violations would increase to six years.


Some other interesting bits unrelated to the retirement account stuff:
* The temporary suspension of the itemized deduction for casualty losses, that began in 2018, would be repealed. This would include allowing losses to be deducted retroactively for the years where this deduction was suspended.
* There would be a new tax credit for 30% of the amount of money people spend on wildfire mitigation/prevention measures.
* The tax credits for low-income housing would be increased, and there would be a new credit for housing development/renovation costs in certain lower-income neighborhoods when the homes are sold to lower-income individuals.
* Certain tax credits for renewable energy and alternative fuels would be extended and expanded.
* New tax credit for 15% of the cost of an electric bicycle (phases out at AGI above $150k married/$112.5k HoH/$75k single).
* The new higher monthly child tax credit payments would be extended through 2025. After that the child tax credit amounts would revert to what they were before, except the credit would be fully refundable.
* The increases to the child/dependent care tax credit and dependent care FSAs would continue indefinitely instead of sunsetting at the end of this year.
* There would be a new tax credit against employer payroll taxes, subsidizing certain child care employee wages.
* There would be a new tax credit against employer payroll taxes, subsidizing certain local journalist wages.
* There would be a new tax credit of up to $4,000 for people who pay for in-home caregivers for adults that need long-term care.
* Certain temporary changes to the earned income credit for 2021 (including higher amounts for childless individuals, no upper age limit, ability to use prior year's earned income if higher) would be extended indefinitely.
* The new ACA applicable percentages, currently scheduled to sunset after 2022, would be extended indefinitely. No more cliff at 400% of the poverty level.
* Some changes to allow ACA marketplace coverage for people with low incomes. Looks like a workaround to the fact that many states haven't expanded Medicaid and therefore have a bunch of folks ineligible for Medicaid or ACA subsidies.
* New federal scholarships for certain medical students who promise to practice in an underserved area after they graduate.
* New 40% tax credit for donations toward certain research projects at public universities, to be claimed in lieu of a charitable itemized deduction.
* People with prior drug convictions would no longer be disqualified from receiving the American Opportunity education credit.
* The 39.6% bracket would be reinstated for taxable incomes over $450k (married), $425k (HoH), $400k (single), $225k (married filing separately), effective 2022. This replaces all of the current 37% bracket and part of the 35% bracket.
* A new 3% additional tax on MAGI over $5 million, effective 2022.
* The capital gains rate would go up to 25% for the same income thresholds as the 39.6% regular income bracket, effective yesterday.
* The estate tax exemption would go back down to $5 million (in 2010 dollars), effective 2022.
* The amount of property exempt from estate tax if it's used for a family business will increase from $750k (in 1997 dollars) to $11.7 million (in 2020 dollars). Seems like a new strategy in estate planning: park at least half of your net worth in an operating business (or businesses), with at least 25% of your net worth into real property used by the business (or businesses), hire a family member to run it or otherwise "materially participate" for at least five of the eight years before you die, and no estate tax on the first $11.7 million of the business value!
* Almost $79 billion appropriated to pay for additional IRS tax enforcement over the next decade.
* A new $2,000 credit for assistive technology purchased for a blind taxpayer, or blind member of the taxpayer's family.

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Re: New Roth IRA limitations proposed today
« Reply #40 on: September 14, 2021, 03:09:57 PM »
Hallelujah on the ACA cliff becoming a gentle decline permanently. Cliffs in income taxes are bad, and this is a pretty big one.

And that is the right thing to do regarding the ACA donut hole. Aggravating that federal legislation is required today because expanding Medicaid solves that problem and has been available for quite a while now, and done in such a way that it benefits pretty much everyone - lower cost to state, expansion states have seen lower premiums on the exchange, obviously it directly benefits folks newly eligible for medicaid. And still the powers that be in some places just won't do it.

Knocking on all the wood that those two provisions make it into the final bill.

RobertFromTX

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Re: New Roth IRA limitations proposed today
« Reply #41 on: September 14, 2021, 05:03:52 PM »
Quote
* No more purchasing investments requiring accredited investor (or similar) status in an IRA after 2021, and if you have any such investments already in your IRA you'll need to dispose of them by the end of 2023.
* No more investing through your IRA in privately-held businesses where you own at least 10% of the shares, or any businesses where you serve on the board of directors (or similar). Any such pre-existing investments will need to be sold by the end of 2023.

This one is most concerning for me. I dont think you can sell shares from your IRA to yourself. Or will you have to pay taxes on the balance to get it out of an IRA?

dandarc

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Re: New Roth IRA limitations proposed today
« Reply #42 on: September 14, 2021, 05:43:04 PM »
Quote
* No more purchasing investments requiring accredited investor (or similar) status in an IRA after 2021, and if you have any such investments already in your IRA you'll need to dispose of them by the end of 2023.
* No more investing through your IRA in privately-held businesses where you own at least 10% of the shares, or any businesses where you serve on the board of directors (or similar). Any such pre-existing investments will need to be sold by the end of 2023.

This one is most concerning for me. I dont think you can sell shares from your IRA to yourself. Or will you have to pay taxes on the balance to get it out of an IRA?
Paying taxes to get it out of the IRA is the whole point - these changes are aimed at raising revenue.

boarder42

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Re: New Roth IRA limitations proposed today
« Reply #43 on: September 14, 2021, 06:10:20 PM »
Quote
* No more purchasing investments requiring accredited investor (or similar) status in an IRA after 2021, and if you have any such investments already in your IRA you'll need to dispose of them by the end of 2023.
* No more investing through your IRA in privately-held businesses where you own at least 10% of the shares, or any businesses where you serve on the board of directors (or similar). Any such pre-existing investments will need to be sold by the end of 2023.

This one is most concerning for me. I dont think you can sell shares from your IRA to yourself. Or will you have to pay taxes on the balance to get it out of an IRA?
Paying taxes to get it out of the IRA is the whole point - these changes are aimed at raising revenue.

Correct this is meant to prevent the mega wealthy from the games they play with companies and making mega Roth's

boarder42

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Re: New Roth IRA limitations proposed today
« Reply #44 on: September 14, 2021, 06:12:27 PM »
@seattlecyclone thanks for the break down. I have a work place ESOP at a privately held company that's a qualified retirement plan. We're an s Corp esop. Does this 10mil limit apply to funds in that account added to funds in our 401k?

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Re: New Roth IRA limitations proposed today
« Reply #45 on: September 14, 2021, 07:10:39 PM »

* Almost $79 billion appropriated to pay for additional IRS tax enforcement over the next decade.


My favorite part of this appropriation is the bit stating "except that no use of these funds is intended to increase taxes on any taxpayer with taxable income below $400,000."  It makes me laugh that it is "not intended to" but not prohibited from doing so - just a nice bit of fanciful verbiage to throw into the bill.  And since this follows the proposed huge increases on tobacco, nicotine, and vaping products, it certainly WILL increase taxes for many users of those products who make far less than $400k. 

I also think the above-the-line $250 union dues deduction (clearly a carrot for union loyalty) is rather silly.  But, such is tax policy.

seattlecyclone

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Re: New Roth IRA limitations proposed today
« Reply #46 on: September 14, 2021, 07:23:34 PM »
@seattlecyclone thanks for the break down. I have a work place ESOP at a privately held company that's a qualified retirement plan. We're an s Corp esop. Does this 10mil limit apply to funds in that account added to funds in our 401k?

I believe so. There's actually a special section about how to handle ESOP retirement plans. Quoted below:

Quote
(iii) SPECIAL RULES FOR EMPLOYEE STOCK OWNERSHIP PLANS.—If any payee to which this subsection applies for any taxable year has account balances in 1 or more employee stock ownership plans (as defined in section 4975(e)(7)) any portion of which is invested in employer securities which are not readily tradable on an securities market, the increase in minimum required distributions by reason of this subsection shall be allocated—
    (I) first to all account balances (other than such portions) of the payee in all applicable retirement plans in the manner provided by this subparagraph (without regard to this clause), and
    (II) then to such portions in such manner as the taxpayer chooses.
The Secretary shall prescribe regulations which provide that if any such increase is allocated to any such portion of an account balance for the first taxable year of the payee beginning in 2022, the payee may elect to have such portion distributed over a period of years not greater than the period specified by the Secretary in such regulations (and any distributions made in accordance with such election shall be treated for purposes of this section as made in such first taxable year).

What I think it's saying is that if you're over $10 million and you have some non-publicly-traded stock in one or more ESOP accounts, you're supposed to take your special high-balance RMD first from any other retirement accounts you have. If you empty those out and still need to take out some high-balance RMD from your ESOP(s) in 2022, the IRS is supposed to make some regulations for how you can do that over a period of a few years instead of all at once, and it will still count toward the 2022 RMD. In 2023 and later, I guess you'll need to figure out how to liquidate it all at once.

seattlecyclone

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Re: New Roth IRA limitations proposed today
« Reply #47 on: September 14, 2021, 07:48:46 PM »
Quote
* No more purchasing investments requiring accredited investor (or similar) status in an IRA after 2021, and if you have any such investments already in your IRA you'll need to dispose of them by the end of 2023.
* No more investing through your IRA in privately-held businesses where you own at least 10% of the shares, or any businesses where you serve on the board of directors (or similar). Any such pre-existing investments will need to be sold by the end of 2023.

This one is most concerning for me. I dont think you can sell shares from your IRA to yourself. Or will you have to pay taxes on the balance to get it out of an IRA?
Paying taxes to get it out of the IRA is the whole point - these changes are aimed at raising revenue.

The accredited investor thing is predicted to raise an average of $170 million per year over the next decade. The prohibition on owning shares of closely-held businesses is predicted to raise only about $4.2 million per year. Neither of these things is hugely impactful where the federal budget is concerned, the latter item especially. The slight increase to the top bracket is expected to raise about 100 times as much as both of these IRA changes combined. I'd guess they were more intended to remedy perceived unfair advantages enjoyed by Thiel et al.

rmorris50

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Re: New Roth IRA limitations proposed today
« Reply #48 on: September 14, 2021, 08:00:38 PM »
I found the actual text of the proposal.

Details about the retirement changes I found interesting:
* The prohibition on contributing more once you hit $10 million in retirement accounts wouldn't apply to SEP or SIMPLE IRAs. It would apply to other employer contributions, which implies that employers that typically make these contributions will need to have some way of knowing which of their employees are above the limit.
* The $10 million limit would apply to retirement plans under 401(a), 403(a), and 403(b), plus IRAs and governmental 457 plans. Non-governmental 457 plan balances are excluded from this calculation.
* Any employer who has a retirement plan participant with more than a $2.5 million balance will have to report information about those participants and their plan balances to the IRS.
* The $400k-$450k "adjusted taxable income" used for determining who gets caught up in these rules is defined as taxable income plus any deduction for IRA contributions that brings the total above $10 million, minus any income from the new RMDs for people with high retirement account balances.
* The new RMD for people with high retirement account balances will be exempt from the 10% early withdrawal tax. No exemption from the taxation of Roth growth if withdrawn early, as far as I can tell.
* Employer plans will need to allow in-service distributions from employees who certify that they need to take out the money to satisfy their high-balance RMDs.
* For the changes to close the backdoor Roth, I didn't see anything in there that would modify the pro-rata rule for IRA distributions, meaning that people with any after-tax basis in a traditional IRA may be prohibited from doing any Roth conversions. Not super confident on this point though.
* No more purchasing investments requiring accredited investor (or similar) status in an IRA after 2021, and if you have any such investments already in your IRA you'll need to dispose of them by the end of 2023.
* No more investing through your IRA in privately-held businesses where you own at least 10% of the shares, or any businesses where you serve on the board of directors (or similar). Any such pre-existing investments will need to be sold by the end of 2023.
* The statute of limitations for enforcing IRA violations would increase to six years.


Some other interesting bits unrelated to the retirement account stuff:
* The temporary suspension of the itemized deduction for casualty losses, that began in 2018, would be repealed. This would include allowing losses to be deducted retroactively for the years where this deduction was suspended.
* There would be a new tax credit for 30% of the amount of money people spend on wildfire mitigation/prevention measures.
* The tax credits for low-income housing would be increased, and there would be a new credit for housing development/renovation costs in certain lower-income neighborhoods when the homes are sold to lower-income individuals.
* Certain tax credits for renewable energy and alternative fuels would be extended and expanded.
* New tax credit for 15% of the cost of an electric bicycle (phases out at AGI above $150k married/$112.5k HoH/$75k single).
* The new higher monthly child tax credit payments would be extended through 2025. After that the child tax credit amounts would revert to what they were before, except the credit would be fully refundable.
* The increases to the child/dependent care tax credit and dependent care FSAs would continue indefinitely instead of sunsetting at the end of this year.
* There would be a new tax credit against employer payroll taxes, subsidizing certain child care employee wages.
* There would be a new tax credit against employer payroll taxes, subsidizing certain local journalist wages.
* There would be a new tax credit of up to $4,000 for people who pay for in-home caregivers for adults that need long-term care.
* Certain temporary changes to the earned income credit for 2021 (including higher amounts for childless individuals, no upper age limit, ability to use prior year's earned income if higher) would be extended indefinitely.
* The new ACA applicable percentages, currently scheduled to sunset after 2022, would be extended indefinitely. No more cliff at 400% of the poverty level.
* Some changes to allow ACA marketplace coverage for people with low incomes. Looks like a workaround to the fact that many states haven't expanded Medicaid and therefore have a bunch of folks ineligible for Medicaid or ACA subsidies.
* New federal scholarships for certain medical students who promise to practice in an underserved area after they graduate.
* New 40% tax credit for donations toward certain research projects at public universities, to be claimed in lieu of a charitable itemized deduction.
* People with prior drug convictions would no longer be disqualified from receiving the American Opportunity education credit.
* The 39.6% bracket would be reinstated for taxable incomes over $450k (married), $425k (HoH), $400k (single), $225k (married filing separately), effective 2022. This replaces all of the current 37% bracket and part of the 35% bracket.
* A new 3% additional tax on MAGI over $5 million, effective 2022.
* The capital gains rate would go up to 25% for the same income thresholds as the 39.6% regular income bracket, effective yesterday.
* The estate tax exemption would go back down to $5 million (in 2010 dollars), effective 2022.
* The amount of property exempt from estate tax if it's used for a family business will increase from $750k (in 1997 dollars) to $11.7 million (in 2020 dollars). Seems like a new strategy in estate planning: park at least half of your net worth in an operating business (or businesses), with at least 25% of your net worth into real property used by the business (or businesses), hire a family member to run it or otherwise "materially participate" for at least five of the eight years before you die, and no estate tax on the first $11.7 million of the business value!
* Almost $79 billion appropriated to pay for additional IRS tax enforcement over the next decade.
* A new $2,000 credit for assistive technology purchased for a blind taxpayer, or blind member of the taxpayer's family.
Good lord, the social engineering that goes on with the tax code.


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rmorris50

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Re: New Roth IRA limitations proposed today
« Reply #49 on: September 14, 2021, 08:00:38 PM »
I found the actual text of the proposal.

Details about the retirement changes I found interesting:
* The prohibition on contributing more once you hit $10 million in retirement accounts wouldn't apply to SEP or SIMPLE IRAs. It would apply to other employer contributions, which implies that employers that typically make these contributions will need to have some way of knowing which of their employees are above the limit.
* The $10 million limit would apply to retirement plans under 401(a), 403(a), and 403(b), plus IRAs and governmental 457 plans. Non-governmental 457 plan balances are excluded from this calculation.
* Any employer who has a retirement plan participant with more than a $2.5 million balance will have to report information about those participants and their plan balances to the IRS.
* The $400k-$450k "adjusted taxable income" used for determining who gets caught up in these rules is defined as taxable income plus any deduction for IRA contributions that brings the total above $10 million, minus any income from the new RMDs for people with high retirement account balances.
* The new RMD for people with high retirement account balances will be exempt from the 10% early withdrawal tax. No exemption from the taxation of Roth growth if withdrawn early, as far as I can tell.
* Employer plans will need to allow in-service distributions from employees who certify that they need to take out the money to satisfy their high-balance RMDs.
* For the changes to close the backdoor Roth, I didn't see anything in there that would modify the pro-rata rule for IRA distributions, meaning that people with any after-tax basis in a traditional IRA may be prohibited from doing any Roth conversions. Not super confident on this point though.
* No more purchasing investments requiring accredited investor (or similar) status in an IRA after 2021, and if you have any such investments already in your IRA you'll need to dispose of them by the end of 2023.
* No more investing through your IRA in privately-held businesses where you own at least 10% of the shares, or any businesses where you serve on the board of directors (or similar). Any such pre-existing investments will need to be sold by the end of 2023.
* The statute of limitations for enforcing IRA violations would increase to six years.


Some other interesting bits unrelated to the retirement account stuff:
* The temporary suspension of the itemized deduction for casualty losses, that began in 2018, would be repealed. This would include allowing losses to be deducted retroactively for the years where this deduction was suspended.
* There would be a new tax credit for 30% of the amount of money people spend on wildfire mitigation/prevention measures.
* The tax credits for low-income housing would be increased, and there would be a new credit for housing development/renovation costs in certain lower-income neighborhoods when the homes are sold to lower-income individuals.
* Certain tax credits for renewable energy and alternative fuels would be extended and expanded.
* New tax credit for 15% of the cost of an electric bicycle (phases out at AGI above $150k married/$112.5k HoH/$75k single).
* The new higher monthly child tax credit payments would be extended through 2025. After that the child tax credit amounts would revert to what they were before, except the credit would be fully refundable.
* The increases to the child/dependent care tax credit and dependent care FSAs would continue indefinitely instead of sunsetting at the end of this year.
* There would be a new tax credit against employer payroll taxes, subsidizing certain child care employee wages.
* There would be a new tax credit against employer payroll taxes, subsidizing certain local journalist wages.
* There would be a new tax credit of up to $4,000 for people who pay for in-home caregivers for adults that need long-term care.
* Certain temporary changes to the earned income credit for 2021 (including higher amounts for childless individuals, no upper age limit, ability to use prior year's earned income if higher) would be extended indefinitely.
* The new ACA applicable percentages, currently scheduled to sunset after 2022, would be extended indefinitely. No more cliff at 400% of the poverty level.
* Some changes to allow ACA marketplace coverage for people with low incomes. Looks like a workaround to the fact that many states haven't expanded Medicaid and therefore have a bunch of folks ineligible for Medicaid or ACA subsidies.
* New federal scholarships for certain medical students who promise to practice in an underserved area after they graduate.
* New 40% tax credit for donations toward certain research projects at public universities, to be claimed in lieu of a charitable itemized deduction.
* People with prior drug convictions would no longer be disqualified from receiving the American Opportunity education credit.
* The 39.6% bracket would be reinstated for taxable incomes over $450k (married), $425k (HoH), $400k (single), $225k (married filing separately), effective 2022. This replaces all of the current 37% bracket and part of the 35% bracket.
* A new 3% additional tax on MAGI over $5 million, effective 2022.
* The capital gains rate would go up to 25% for the same income thresholds as the 39.6% regular income bracket, effective yesterday.
* The estate tax exemption would go back down to $5 million (in 2010 dollars), effective 2022.
* The amount of property exempt from estate tax if it's used for a family business will increase from $750k (in 1997 dollars) to $11.7 million (in 2020 dollars). Seems like a new strategy in estate planning: park at least half of your net worth in an operating business (or businesses), with at least 25% of your net worth into real property used by the business (or businesses), hire a family member to run it or otherwise "materially participate" for at least five of the eight years before you die, and no estate tax on the first $11.7 million of the business value!
* Almost $79 billion appropriated to pay for additional IRS tax enforcement over the next decade.
* A new $2,000 credit for assistive technology purchased for a blind taxpayer, or blind member of the taxpayer's family.
Good lord, the social engineering that goes on with the tax code.


Sent from my iPhone using Tapatalk