Congress Blesses Roth IRAs For Everyone, Even The Well Paid

[notadoc]

The new tax law makes Roth IRAs officially available to even more people. That’s because Congress put its stamp of approval on a backdoor approach that allows folks who earn too much to contribute directly to a Roth IRA to fund one anyway.

https://www.forbes.com/sites/ashleaebeling/2018/01/22/congress-blesses-roth-iras-for-everyone-even-the-well-paid/#4104c30d7471

 

[RogueDadMD]

https://www.forbes.com/sites/ashleaebeling/2018/01/22/congress-blesses-roth-iras-for-everyone-even-the-well-paid/amp/

From Forbes. Some Congressional committee officially said it was ok.

“The Congressional blessing came in four footnotes in the Conference committee report: 268, 269, 276 and 277.

The tax law eliminates the ability to “recharacterize” or redo a Roth conversion. In practice, that affects taxpayers with large traditional IRAs who are converting, not those doing serial, smaller backdoor Roth conversions.”

[FIREshrink]

It's officially official.

[The White Coat Investor]

Topics merged into one thread.

 

I told you so. 18 of these I've done now. I considered it official when it was announced in 2008 or so.

[LizOB]

I'll have to show my husband this. He was doubting me that it's legal.

[litovskyassetmanagement]

Now, the next big thing would be to actually allow in-plan Roth conversion of after-tax contributions.  This will make the Mega Backdoor Roth strategy complete all around.

[WallStreetPhysician]

Were Roth conversions permitted beginning in 2010 or 2008? Asking because I'm running a post on this footnote tomorrow and want my dates right.

https://en.m.wikipedia.org/wiki/Tax_Increase_Prevention_and_Reconciliation_Act_of_ 2005

https://www.journalofaccountancy.com/issues/2010/jan/20091743.html

-WSP

[spiritrider]

The White Coat Investor wrote:

I told you so. 18 of these I’ve done now. I considered it official when it was announced in 2008 or so.

Click to expand...

I agree there never was any reason to consider other wise.

Mostly all of the FUD can be traced to the "Chicken Little" screechings of a well known, but unceremoniously not mentioned financial planner. In case you were wondering. Thankfully, he is not one of our excellent financial professional forum members or WCI advertisers.

[InfoRPh]

The first year you could actually do a backdoor Roth was in 2010.  I remember it well...(or at least remember the next year when I was trying to figure out how to correctly report it on my taxes)

[The White Coat Investor]

WallStreetPhysician wrote:

Were Roth conversions permitted beginning in 2010 or 2008? Asking because I’m running a post on this footnote tomorrow and want my dates right.

https://en.m.wikipedia.org/wiki/Tax_Increase_Prevention_and_Reconciliation_Act_of_ 2005

https://www.journalofaccountancy.com/issues/2010/jan/20091743.html

-WSP

Click to expand...

2010 was the first year you could do the conversion step as a high earner. But you could see it coming and do contribution steps for at least 2-3 years before. Here's a good example published in 2009: http://www.raymondjames.com/branches/c2c/3dz/compass_point/pdfs/091012_forefield6.pdf

I didn't pay much attention because I could do direct Roth IRA contributions up until 2010-2011 thanks to that awesomely low income the military was paying me.

[The White Coat Investor]

spiritrider wrote:

The White Coat Investor wrote:

I told you so. 18 of these I’ve done now. I considered it official when it was announced in 2008 or so.

Click to expand…

I agree there never was any reason to consider other wise.

Mostly all of the FUD can be traced to the “Chicken Little” screechings of a well known, but unceremoniously not mentioned financial planner. In case you were wondering. Thankfully, he is not one of our excellent financial professional forum members or WCI advertisers.

Click to expand...

Don't give Kitces a bad time. Overly cautious, yes, intentionally misleading, no. But I am enjoying my victory lap.

[Craigy]

Once companies like Vanguard started doing how-tos it was pretty tough to argue against it.

[FIREshrink]

May 2006 is when it was first "discovered".

[FIREshrink]

I posted at Bogleheads when they made it unofficially official.

https://www.bogleheads.org/forum/viewtopic.php?t=94372

[FIREshrink]

Here is the original WSJ article which was the ‘first’ major publication article I saw that discussed the new backdoor opportunity. This byline says the article was updated May 2007 but the original article was published April or May 2006.

 

https://www.wsj.com/articles/SB117511735138452332