Backdoor Roth - Go forward strategy

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FinanceIsFun(ds)
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Joined: Tue Dec 28, 2010 10:00 am

Backdoor Roth - Go forward strategy

Post by FinanceIsFun(ds) »

I keep seeing more smoke about the IRS closing the backdoor IRA loophole. Going down that road, I got to thinking about the optimal strategy going forward if I'm not able to convert any of my non-deductible IRA contributions to my Roth.

Do I continue to contribute to a non-deductible IRA with the $6k (or $7k) annually even if I can't convert it? If the IRS closes the loophole, wouldn't there always be a chance that they open it back up at some point in the future? If they did, it would be advantageous to have however many years of non-deductible IRA contributions that could be converted at some point.

Otherwise, if the loophole stays closed I don't see any benefit of non-deductible IRA contributions vs. an after-tax brokerage account.

I know we're dealing with hypotheticals here, but would be interested to know if this group has planned out some "what if" scenarios?
sailaway
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Re: Backdoor Roth - Go forward strategy

Post by sailaway »

Currently, it is precisely the non deductible contributions that they are talking about eliminating.

All you can ever do is make decisions based on exist law. Trying to second guess where proposed legislation will end up is as confusing as timing the market.
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LadyGeek
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Re: Backdoor Roth - Go forward strategy

Post by LadyGeek »

This thread has run its course and is locked. Speculation about future legislation is prohibited by forum policy, see: Unacceptable Topics
Politics and Religion

In order to avoid the inevitable frictions that arise from these topics, political or religious posts and comments are prohibited. The only exceptions to this rule are:
  • Common religious expressions such as sending your prayers to an ailing member.
  • Usage of factual and non-derogatory political labels when necessary to the discussion at hand.
  • Discussions about enacted laws or regulations that affect the individual investor. Note that discussions of proposed legislation are prohibited.
  • Proposed regulations that are directly related to investing may be discussed if and when they are published for public comments.
This forum is focused on investing that is directly actionable to personal investors. We don't hold debates on conjecture.

The whole point of the policy is to (1) eliminate contentious disagreements that result from these discussions and (2) keep investors from making bad decisions. Proposed legislation changes many times between the time it's introduced and signed into law.

The disagreements will indeed occur, which is more work for the moderators and results in locking the thread. See: Yellen: "We're taking a look at negative interest rates."

As noted by sailaway, the best approach is to make your decision about current law. When the law changes, make your decision at that time.

Also see this locked thread: Locked and merged threads on proposed budget, Roth, etc.
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