$3.5 Trillion doesn’t just grow on trees!
 

https://www.cnbc.com/2021/09/13/hous...e-wealthy.html

Not good for many of us…

”Democrats’ legislation would end the mega-backdoor Roth by prohibiting all after-tax contributions in workplace plans and prohibiting after-tax IRA contributions from being converted to a Roth account.”

These changes are for people making over $400k single filer or $450k joint and with over $10 million in retirement. I’m guessing that’s next to nobody frequenting these forums. In any event, unlikely to pass.

There were some provisions in there about after-tax contributions that are converted to Roth designation, regardless of income. That would affect a lot of people here.


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… and it actually affects the younger crowd the most since they have the largest amount to contribute to the PRAP after-tax.

”Furthermore, this section prohibits all employee after-tax contributions in qualified plans and prohibits after-tax IRA contributions from being converted to Roth regardless of income level, effective for distributions, transfers, and contributions made after December 31, 2021.”

Eh, that part is of little importantance to me as there are better strategies than after-tax 401k contributions. The alarmist part (which applies to almost nobody) was saying it ends backdoor roth. In any event, no point in arguing over it because it’s unlikely to get traction; however, it made for some great clickbait nonsense that most only read a subject line about.

The ability to save up to 58k in your 401K by making after-tax contributions and subsequently converting those dollars to Roth (if your plan offers that option) is a huge benefit and advantage.


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I didn’t say it wasn’t.

Let’s have another multi-page thread over nothing though. 🍿

One could make an inference that you don’t think it’s a huge benefit. Otherwise, why would you regard the loss of a huge tax benefit as “of little importance?” In any case, what is a better strategy than having many thousands of dollars contributed every year, and growing tax free?


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Maybe you do have better strategies, I’d love to hear them. I’ve been investing since I got a paycheck; putting tens of thousands of dollars a year into an after-tax 401k that is immediately rolled into a Roth 401k (offering zero future taxes on all of it) is an unbelievably powerful way to build massive tax-free wealth…. Ummmm, perhaps this is why the pols want to end the practice (duh)?

Not really clickbait, read the article - it applies to every non first-year pilot (and some of us when we were first-year). This provision (as quoted) is not limited to income >$400k, the specific mega backdoor section bans ALL after-tax contributions…

It may not pass (I sure hope it doesn’t) but being aware that’s it’s in the bill should get your attention, at least a little bit.

It applies to almost everyone here. They would end the ability to do it at all income levels. The only people it wouldn’t apply to are the few that have income levels low enough to contribute to a Roth IRA directly.

We’ll see what happens. Obama tried to go after 529’s tax status and was humbled at the smack down that received.

If your wife/husband has a job you are hitting those income limits pretty easily. They get people on board with ideas like this with "dont worry we are paying for it with those peoples money" and then they keep spending and soon the definition of "those" people quickly includes everyone to pay their share. Killing the after tax to roth conversion in 401ks will severely impact anyone who wanted to retire before 59.5 yrs of age.

Was this quote removed in the article update? I don’t see anything in there about the proposed change affecting Roth contributions. Just the conversions.

It's in the proposal here on page 11.

https://waysandmeans.house.gov/sites/democrats.waysandmeans.house.gov/files/documents/SubtitleISxS.pdf

I have no idea about any of this stuff. I take the company max and I take the max I can per year into the Roth 401k.

Tax the rich!!!!!

Yeah! Screw those new hires!

Rich in bill is top 1 percent and those that make 450,000 dollars or more.

New hires?

you sound greedy must have voted no

The provisions in that bill that affect us are primarily for those earning less than $240k/year. Which is a lot of us. And the degree to which it affects you increases as your income goes down.

I love the experts on here that haven’t read the bill, or even the article, and assume if you make less than $400/450k then this doesn’t apply. It most certainly does.

READ something before you pontificate about it. Maybe you’ll learn something…

The mega back door Roth applies to all income ranges. This is a big deal. I’ll be calling my representatives.

lol guy still believes his government actually works for him. How cute.

Definitely. Thanks LJ Driver . I would never have seen this steaming pile otherwise. Although, I live in a red district, so they wouldn't be voting yes for it anyway.

Wait, I thought that was one of the targeted areas of the new tax code the uncle joe regime was going after.

Wait…were you wearing a white dress that said that in red letters this past weekend?! :D

Same. This is very significant and I know a lot of people besides myself that use this.

Not as cute as your mom but I’ll take it, thanks.

30 years in this business, all I ever hear is that Dems are gonna take my money (and guns), yet we always get the phat contracts when Dems are in the White House. They nominate liberal, labor friendly NMB members that get assigned to our contract negotiations. Record breaking Contract 2000 is the best example. Signed under President Clinton. Contract 2012 and Extension 2016, both during Obama’s run are other examples. Of course we didn’t get one under Trump. Just a concessionary LOA and an all time high record annual deficit in 2020. He made Obama look downright thrifty in his handling of the financial crisis. Smokin Joe did not disappoint. He has nominated a Teamster lawyer to the NMB…. Lol. So get ready for our next contract.

And let’s talk about the stock market runs during Mr. Clinton and Obama’s terms. Wow. These gentlemen own the #1 and #2 best stock market percentage gains of modern times. Cha freakin’ Ching, baby!! And I still have my guns!! Lol. For the life of me, I can’t figure out why anyone would vote for more “lost decade” Rep presidents. It’s been my experience that my money grows best during Dem president’s terms. Both in contractual gains and B-fund earnings. Oh look, the S&P is up 20% year to date during Joe’s disastrous first year. Saddle up… 3 more years to go. Ridin with Biden. 😎

c

Well, according to that proposed legislation, that would be a correct statement if passed.

I do all my 401k contributions after tax (roth)

Would this effect me? I'm obviously not doing any backdoor conversions

Not from what I see. Roth 401(k) contributions will still be allowed. It’s after-tax that will be impacted.

If you ever want to add more than just the elective deferral (2021=19500) of your own money, it affects you.

I read if you are vaccinated and wear 3 masks you can still do the back door Roth regardless of income level. It’s on page 69. Also Miata based EFTs will have tax free earnings, but only if you vote yes. These tax laws are complicated.

Problem with this is a majority of people don't make over $400k per year aka middle class. Guess what when the politicans still don't get their taxes they want they're always going to come after the middle class people because its the largest tax base.

What do you think the income of the "middle class" is?

I still remember the best quote ever from The Cosby Show… “we are not rich because we work for our money. Rich is when your money works for you.”

this is a tax on the middle class, not the rich. Only a change to the rate in long term capital gains will change that.

I think they did want to up the capital gains tax. To a minimum of 25% I believe

I think one of the big things they wanted to stop was the what the PayPal creater did by taking his Roth with $2000 in 99 to $15B today

Yep, that’s in there too. It’s basically a crush to retirement plans in general outside of pensions.

A crush that prevents the extraordinarily wealthy from utilizing resources no one else has to shelter billions of dollars tax free. The middle class generally won't feel anything with the Roth IRA provisions

Or the saver making $80k/year from investing in their retirement and everyone in the military from exceeding their elective deferral limit to the TSP.