Congress has recently proposed new tax laws that, among other changes, would eliminate the Backdoor Roth IRA strategy beginning in 2022. We don’t know for sure whether these proposals will be passed into law, but this provision in particular seems likely.
What does that mean for you? If you’d like to execute a Backdoor Roth IRA for 2021, or if you need to complete the process for prior years, the smart move is likely to do so before December 31. Otherwise, you may miss out on your last opportunity.
For more on the Backdoor Roth IRA and how it works, you can read the following post: The Backdoor Roth IRA: How High Earners Can Get Tax-Free Money in Retirement.
The same changes, and therefore the same December 31 deadline, would also apply to the Mega Backdoor Roth IRA. This is not a commonly available strategy, but it’s powerful if you can use it. More on that here: The Mega Backdoor Roth IRA.
If you have any questions about how this applies to your personal situation, please feel free to comment here or reach out to me directly at email@example.com. I’m always happy to help.