Backdoor Roth 2022

[bbrock]

Hi Bogleheads,

Simply put, given the state of Build Back Better, are you waiting to do your backdoor Roth contribution for 2022 (I still am)? If no, will you please explain why?

B

[anon_investor]

Hi Bogleheads,

Simply put, given the state of things, are you waiting to do your backdoor Roth contribution for 2022 (I still am)? If no, will you please explain why?

B

Zero benefit to wait since it is all after-tax dollars anyway. If you are doing backdoor Roth properly, you should have a $0 tIRA balance anyway.

[pasadena]

No, I did it early January. What do you mean by "the state of things"?

[9-5 Suited]

Hi Bogleheads,

Simply put, given the state of things, are you waiting to do your backdoor Roth contribution for 2022 (I still am)? If no, will you please explain why?

B

Zero benefit to wait since it is all after-tax dollars anyway. If you are doing backdoor Roth properly, you should have a $0 tIRA balance anyway.

I think OP is implying the market is going further down so it’s more valuable to delay the Roth contribution in order to have more Roth appreciation potential for the same maximum dollar limit.

I don’t market time, so I couldn’t care less about that. Did mine in January.

[atlgenxennial]

"State of things" = market timing. Bad idea. Stick to the plan...or come up with a new plan.

[bbrock]

Hi Bogleheads,

Simply put, given the state of things, are you waiting to do your backdoor Roth contribution for 2022 (I still am)? If no, will you please explain why?

B

Zero benefit to wait since it is all after-tax dollars anyway. If you are doing backdoor Roth properly, you should have a $0 tIRA balance anyway.

Yes, I’ve always maintained a zero TIRA balance. But if it has to be undone, and it can’t, then after tax dollars or not the investor is in a bind.

[bbrock]

No, there is no market timing here. I’ve always made mine the first week in January, except’22.

Referring to build back better, although this stalled as of March. Still though I’ve read various things about it being safest to just wait until December.

[bbrock]

Hi Bogleheads,

Simply put, given the state of things, are you waiting to do your backdoor Roth contribution for 2022 (I still am)? If no, will you please explain why?

B

Zero benefit to wait since it is all after-tax dollars anyway. If you are doing backdoor Roth properly, you should have a $0 tIRA balance anyway.

I think OP is implying the market is going further down so it’s more valuable to delay the Roth contribution in order to have more Roth appreciation potential for the same maximum dollar limit.

I don’t market time, so I couldn’t care less about that. Did mine in January.

Thank you for the reply. But, this is not the case at all.

[anon_investor]

No, there is no market timing here. I’ve always made mine the first week in January, except’22.

Referring to build back better, although this stalled as of March. Still though I’ve read various things about it being safest to just wait until December.

Should just convert and worry about legal changes later.

[9-5 Suited]

Hi Bogleheads,

Simply put, given the state of things, are you waiting to do your backdoor Roth contribution for 2022 (I still am)? If no, will you please explain why?

B

Zero benefit to wait since it is all after-tax dollars anyway. If you are doing backdoor Roth properly, you should have a $0 tIRA balance anyway.

I think OP is implying the market is going further down so it’s more valuable to delay the Roth contribution in order to have more Roth appreciation potential for the same maximum dollar limit.

I don’t market time, so I couldn’t care less about that. Did mine in January.

Thank you for the reply. But, this is not the case at all.

I see. The original post was very vague about why you were considering delaying. I still would just make your Backdoor Roth conversion and worry about the rest later.

[SheReadsHere719]

I completed mine for 2022.I found this WCI article to be a helpful framework for thinking through the options. Effectively, the backdoor contribution would be fine in scenarios #1 – #3.

[bbrock]

Tx. I will take a look at from WCI.

[jgalt133]

Discussion of pending legislation is not allowed, so I'd like to redirect this topic to something that may be allowable. Specifically:

• If we need to unwind our "backdoor Roth", how would we do so?
• If we unwind our backdoor Roth, do our funds get stuck in a tIRA, or can we pull them out back into a taxable account?

[retiredjg]

Backdoor Roth is currently legal. I see no reason to avoid it if that is a tool you want to use. Even if we knew for sure it will go away on say, July 5, 2022...it would still be legal to do today.

It is currently not possible to "undo" a Roth conversion. If the law does change, it cannot be made retroactive without Congress creating some way to undo what has already been done. That seems incredibly unlikely to me. Our lawmakers are not all genus level, but even the dumbest can see what a mess that would be.

[bbrock]

Got it jgalt133. My bad.

+1 retiredjg. Now considering things from that perspective, it makes sense and I believe that is the logic I needed to hear in order to proceed forward. Yes it seems like it would be a major fiasco in which lawmakers would have to make some way for it to be unwound.

I’ll make our TIRA contributions, wait a couple days, and then convert to ROTH.

[Statistical]

Hi Bogleheads,

Simply put, given the state of Build Back Better, are you waiting to do your backdoor Roth contribution for 2022 (I still am)? If no, will you please explain why?

B

No. The prior version that they tried to pass in 2021 in the legsilation had it take effect the year AFTER passage. So had it passed in 2021 it would take effect in 2022. So if BBB2.0 passes in 2022 almost certainly it would apply to Backdoor Roth in 2023.

Technically you could have retroactive tax laws but the utter shitstorm nightmare that would create not just for taxpayers but companies like Fidelity and Vanguard which would need to reverse millions of transactions and deal with irate customers who blame them means it almost certainly won't happen.

I did my backdoor roth on Jan 1. I will do my next backdoor Roth on Jan 1. I will keep doing it until legislation makes it impossible. I have near complete certainty that any change will not be retroactive.