Backdoor Roth in 2013

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Backdoor Roth in 2013

Postby CoderDude » Thu Dec 27, 2012 1:44 am

Has there been any news regarding whether the Backdoor Roth is still allowed in 2013? I haven't heard anything saying it would be disallowed, but given all the tax changes with the fiscal cliff and such, I'm just not sure.

Should I do the contribution and conversion in early January, or wait until the end of the year when the tax changes are better understood?
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Re: Backdoor Roth in 2013

Postby Default User BR » Thu Dec 27, 2012 2:52 am

It's not part of the temporary laws set to expire. It's the current permanent law. That's not to say that it can't change, but it would take specific action by Congress to change it, not keep it from changing automatically.


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Re: Backdoor Roth in 2013

Postby NYBoglehead » Thu Dec 27, 2012 8:07 am

I can't imagine this backdoor option being altered in any way. The reason backdoor Roth IRAs are possible is because the limit on conversions was removed a few years back. That allowed people to make conversions regardless of income and the federal government certainly does not want to cut off any revenue stream.
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Re: Backdoor Roth in 2013

Postby bUU » Thu Dec 27, 2012 8:35 am

NYBoglehead wrote:... the federal government certainly does not want to cut off any revenue stream.
I don't really see that as an issue. The government can simply change the five-year rule so that the conversion can only be applied to qualified assets that have been sitting around already for five years (or perhaps even just one year). That gets the government the big money it wants (from wholesale conversions of old tIRAs into Roth IRAs) while only deferring the revenue it would have gotten from shorter-term tIRA asset conversions.
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Re: Backdoor Roth in 2013

Postby STC » Thu Dec 27, 2012 8:44 am

Max it out while the window is open! I am just kicking myself that I didn't fund an IRA at all until last year. Still, will have $30k in ROTHs between me and my wife (including a tiny 401k roll over) on Jan 1. I just hope for a few more years of an unlocked Backdoor!!!
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Re: Backdoor Roth in 2013

Postby bogleblitz » Thu Dec 27, 2012 10:26 am

I worry more about Roth going away completely and we will pay for gains in Roth than for the backdoor to go away.
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