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The end is nigh: Megabackdoor Roth. RIP

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  • #91
    Thanks GasFIRE and spiritrider - seems like this is the only option.

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    • #92
      Originally posted by CordMcNally View Post

      Must be nice when one of your strategies is to 'slow the growth'...
      frankly I think a lot of people on this forum are going to try to slow the growth of tax-deferred by the time we're in our mid or late 50s. It's a variation of Bernstein's when you've won the game stop playing.

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      • #93
        Or keep cash/taxfree bonds in taxable and use that as final years pre retirement and minimize any and all taxable income saving it all for Roth conversions. Now you can have 100-450k Roth conversions to fill up lower brackets while tapping cash funds to support.

        I'd rather to that than have heavy bonds in taxdeferred space where equity growth over 20+ years compounded would be missed.


        eg: our currently revised no MBD Roth/retirement horizon.

        Goal: retire 60 yo
        -5 years prior to retire: start building cash taxable account to support 3 years spend
        -60 yo Retire -- do NOT take pensions; access cash to support lifestyle -- Roth Conversions on entire bucket to ~340k.
        -62 yo -- SS start since have disabled adult child and opensocialsecurity says to do so with 97.1% optimal take vs 70yo.
        -65 yo -- Start full pensions. Roth conversions limited to ~100k anticipated
        -74 yo -- RMDs hit -- forced spend for Grandkids

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        • #94
          I take it you are expecting the RMD to increase from 72 to 74? B/c it's 72 now...

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          • #95
            Originally posted by JBME View Post
            I take it you are expecting the RMD to increase from 72 to 74? B/c it's 72 now...
            Yep

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            • #96
              If you are referring to the so-called SECURE ACT 2.0, I wouldn't give it much chance of passing this year. Also, while it raised the RMD age to 73 on 1/1/2022, it didn't raise it to 74 until 1/1/2029 and 75 on 1/1/ 2032.

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              • #97
                Originally posted by spiritrider View Post
                If you are referring to the so-called SECURE ACT 2.0, I wouldn't give it much chance of passing this year. Also, while it raised the RMD age to 73 on 1/1/2022, it didn't raise it to 74 until 1/1/2029 and 75 on 1/1/ 2032.
                I'm expecting to rise as we approach those ages -- luckily only 49 right now magic eight ball says 'cloudy future I see'

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                • #98
                  Dilemma regarding 12/31/21 after-tax contribution:

                  Can Fidelity be trusted to auto convert the 12/31/21 contribution to Roth before Jan 1st? Or best to just abort the final contribution? These contributions usually land several days after the pay period. But, to make things interesting, the recent 11/30/21 was contributed and converted on 11/30/21.

                  A messy 401k year due to an acquisition (26k of 58k that was contributed/converted by June 2021 was later deemed excess contributions) has left us with limited time/pay at the end of 2021 to "recontribute" and convert the after-tax portion at the new company 401k.

                  Torn between trying to maximize Roth vs not creating any tax/financial headaches. Maximum upside would be about 10k additional Roth from December contributions.

                  Fidelity rep could not answer this question, and only stated that Fidelity would most likely not want to complicate things for themselves if the conversion rule changes. This might leave one lonely after-tax contribution stranded, or at worst, ineligibly converted to Roth in January?

                  The tricky part is, if we choose to abort, when to make the contribution change online in order to capture the 12/15/21 contribution, but not the 12/31/21 contribution. The changes are effective after a vague "one to two pay periods".


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                  • #99
                    Originally posted by Tom Kazansky View Post
                    Dilemma regarding 12/31/21 after-tax contribution:

                    Torn between trying to maximize Roth vs not creating any tax/financial headaches. Maximum upside would be about 10k additional Roth from December contributions.
                    This isn't even up for debate. Don't make a headache for yourself over 10k. It is now worth the time having to file a 1040x and all the time leading up to it that you will "think about it".

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