Biden’s budget targets backdoor Roths and $10M retirement accounts

The article highlights:

Wealthy Americans would lose some of the tax perks they can currently access through various retirement savings accounts under the budget recently proposed by President Joe Biden.

• One item on the cutting board is the “backdoor” Roth IRA conversion, a popular strategy used by higher earners to get around income limits on contributions to IRAs.

  • The proposed budget would also tamp down on high account balances in tax-deferred accounts.

• The Treasury Department’s note on the proposal would prohibit a rollover to a Roth IRA from a traditional retirement account in an employer-sponsored plan for “high-income taxpayers.”

  • High income is generally defined by the Treasury Department as earning more than $400,000 for individuals and $450,000 for those who are married and filing jointly.

• The proposal also prohibits Roth IRA rollovers “unless the distribution was from a designated Roth account within an employer-sponsored retirement plan or was from another Roth IRA if any part of the distribution includes a distribution of after-tax contributions.”

• The Biden Administration also plans to impose distribution rules for high earners who have more than $10 million in IRAs and other accounts to help reduce “excessive balances.”

Source:

https://www.investmentnews.com/retirement/news/bidens-budget-targets-backdoor-roths-and-10m-retirement-accounts-250751