What to do if Democrats ax the backdoor Roth individual retirement account strategy

What to do if Democrats ax the backdoor Roth individual retirement account strategy

A couple of popular retirement savings techniques may soon be disappearing as Democrats hash out how to pay for their multitrillion-dollar spending package. Advisors are already exploring solutions for their clients.  Currently, investors with a modified adjusted gross income for 2021 above $140,000, or $208,000 for couples filing jointly, can't contribute to a Roth individual retirement account. But wealthier investors can skirt the limits with a so-called backdoor maneuver by making what's known as nondeductible contributions to their traditional IRA and then quickly converting the money to their Roth IRA. The "mega-backdoor" Roth strategy can be even more powerful, allowing someone to convert more funds with .  House Democrats, however, want to crack down on both, regardless of income level, after Dec. 31, according to  released by the House Ways and Means Committee. Pretax conversions — using funds that levies haven't been paid on — are still allowed in the proposed legislation. But those with taxable income of more than $400,000, or $450,000 for married couples filing together, wouldn't be able to use the strategy just over a decade from now, after Dec. 31, 2031. As the debate heats up in Congress, financial advisors are still watching