YouTube Q&A – Is that true that mega backdoor roth are going away?4 Replies
Top ForumsPrivate: My Community Webinars, Solo 401kNovember 22, 2021 at 6:01 am
We received the following question in response to the following video posted on Back Again! Mega Backdoor Roth Solo 401k/IRA Bans Added Back to Build Back Better Act
Please see our response below:
Is that true that mega backdoor IRA and 401K are going with Build Better Act passed on last Friday?
While the legislation did pass the House, the Mega Backdoor Roth Solo 401k and IRA Bans would also need to be included in the Senate version (see Mega Backdoor Roth Solo 401k Ban Passes House Hurdle But Senate Sign Off Still Needed – My Solo 401k Financial). If the proposal in its current form is enacted, the ability to make Mega Backdoor Roth Solo 401k and Backdoor Roth IRA contributions will be eliminated after 12/31/2021. This means that to “Beat the Ban” you would need to open a Solo 401k including depositing voluntary after-tax contributions into a voluntary after-tax Solo 401k sub-account and then converting to either a Roth Solo 401k sub-account or Roth IRA no later than 12/31/2021.
Top ForumsReal Estate Investments, Solo 401k – 5500-EZ
Top ForumsPrivate: My Community Webinars, Solo 401kNovember 23, 2021 at 2:06 am
Top ForumsIRAs and 401k plans Under Attack – Act Now!November 23, 2021 at 10:33 am
Assuming this DOES make it into a final bill and you want to make a Voluntary After Tax Contribution and convert to a Roth 401(k), do you have to do the the Roth portion of this year before 12/31 or can you do the Roth portion before the filing of your tax return.
So assuming enough Income and age 50, can you do the $38,500 after tax contribution in December and convert to a Roth by 12/31 and then do the $26,000 Roth contribution by April 15. Or must the Roth Contribution be completed before the after tax contribution, therefore requiring the $64,500 by 12/31/2021.
Top ForumsPrivate: My Community Webinars, Solo 401kNovember 23, 2021 at 8:18 pm@MichaelMagnotta
In short and as described below, you can make the Mega Backdoor Roth Solo 401k contributions by the end of the year and then make additional contributions next year:
1) This confirms if the proposed legislation is enacted in its current form (and assuming that you are eligible to set up a Solo 401k and set up a Solo 401k plan that allows for Mega Backdoor Roth Solo 401k contributions), 2021 Solo 401k voluntary after-tax contributions including the conversion to the Roth Solo 401k must be completed no later than 12/31/2021. See more info in the slides available here: https://mysolo401k.net/mycommunity/forums/discussion/youtube-friday-230-est-back-again-mega-backdoor-roth-solo-401k-ban-is-back/
2) This confirms that even if the proposed legislation is enacted (and assuming that you are eligible to set up a Solo 401k and set up a Solo 401k plan that allows for Mega Backdoor Roth Solo 401k contributions) you will still be able to make both 2021 Solo 401k employee (whether pre-tax or Roth contributions) as well employer contributions (subject to the contribution limits and provided that you have the self-employment income to justify such contribution(s)) any time up until your business tax return deadline including any timely filed extension.
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