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Doubling up on MBDR

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  • Doubling up on MBDR

    Our pension guru at work tells me that most likely outcome of the MBDR and BD Roth debate in Congress is that the transactions will be prohibited, but not until December 2022, one year from now, instead of this year. He is a keen observer of the rules process, so I’m inclined to take him seriously enough to do some planning.

    First, since this is speculation, I have still set myself up to end MBDR contributions this month in case the MBDR transactions end this month. Easy to start back up in January, but meanwhile I’ll have all the past 2021 after tax contributions converted to Roth.

    But, more fun, here is the subject opportunity. Offered here for comment, but I’m pretty sure it works. My plan fiscal year is July to June. That mean that I can complete my current FY $58K by June 2022, then start a new $61K year in July 2022. But since the MBDR opportunity would end in December under my scenario I’ll plan to put the whole $61K away by December 2022.

    For you sticklers, no it is not literally a doubling in 2022. Really more like an acceleration to get the whole amount allowed when I would otherwise miss out on about half of the potential 2022 contribution to Roth. But still worth doing, again, assuming Congress ends the MBDR next December.

  • #2
    I'm sure you know this but unless your pension guru is in Senator Manchin's head, he has no idea. Even if he's a "keen observer" of the rules process, he has no idea. Still, it's a good idea to plan and I think you're super lucky and fortunate to have this opportunity. Wish I did!

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    • #3
      Oh sure. But this isn't really from him. It is from the professional association that is working with the Senate staffers. It is too late for me to pull off the strategy for this December regardless. My hope is that the bill doesn't pass at all, but if it does with the MBDR restrictions, ideally it will be early enough in the year to allow some maneuvering next year.

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      • #4
        Originally posted by Larry Ragman View Post
        Oh sure. But this isn't really from him. It is from the professional association that is working with the Senate staffers. It is too late for me to pull off the strategy for this December regardless. My hope is that the bill doesn't pass at all, but if it does with the MBDR restrictions, ideally it will be early enough in the year to allow some maneuvering next year.
        Which Senate staffers and which professional association? Rhetorical question. You have nonpartisan staffers and partisan staffers and many associations and lobbyists that all are very competent and make big bucks. That is how tax law gets written. However, that is not how tax law gets passed.
        I have a college frat bro that has worked every angle as well as big law and big 4 accounting firms. Hired guns for advocacy. Sometimes the client wins and sometimes the lose. A source connected is still suspect. Those are his words. Basically you get inside info on current status, not the results.

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        • #5
          I don't want to link to twitter because it's not a reliable source of information but I initially saw it there and then did a quick google search to find that BBB is being shelved for now and won't be addressed until next year. Which means, started saving up if you haven't already for your backdoor Roth IRA in 2022

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