Photo by lalesh aldarwish from Pexels Did The Tax Cuts and Jobs Act (TCJA) harm the backdoor Roth strategy? As you likely know, there are ways to use an Roth IRA to grow your wealth with tax planning around tax deductions, because you pay the taxes up front and then, with the proper holding period, pay no taxes after that. But if you earn too much, you’re completely barred from contributing to a Roth IRA unless you can use the backdoor Roth technique.
The backdoor Roth strategy has been around for a good nine years, and it has experienced no trouble that we are aware of, so we think it’s a good strategy. We also like the recent notations in the legislative history and the comments from the IRS spokesperson that show approval of the strategy. Keep in mind that with some planning, you can avoid any taxes on the rollover. For example, if you have an existing traditional IRA, you can move those monies and if you have no traditional IRA, the contribution can triggers no taxes.
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Spencer Accounting Group, LLC does not provide investment, tax, legal, or retirement advice or recommendations in these blogs. The information presented here is not specific to any individual's personal circumstances. AuthorKeana Spencer is an Accountant, Entrepreneur, and Educator to her clients, with a strong passion. Keana has over 10 years of experience and through her practice, she is a source of knowledge and strategies to her clients. |