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No. of Recommendations: 3
We've been making some post-tax contributions to IRAs, and some backdoor ROTH conversions. We should probably continue that, though AJ has been saying the rules are changing on that (as I recall), and of course they could continue to change in the coming years.

The rules that may change are currently part of the Build Back Better plan. So your guess is as good as mine as to whether any/all of it will become law. The new rules would eliminate the ability to do conversions of any after-tax contributions in all retirement plans (IRA, 401(k), etc.) At this point, I would not expect there to be any retroactive restrictions, because that would be a huge mess for those who have already done conversions this year. But if that part of Build Back Better passes, I wouldn't be surprised if those types of conversions had an expiration date sometime during this year - either as of the effective date of the law, or maybe the beginning of a specific quarter, like July 1, 2021. So for anyone who has any after-tax contributions that they want to convert, doing the conversion sooner rather than later would probably be advisable.

I will also point out that preventing conversion of after-tax contributions into a Roth account does raise revenues, because it keeps after-tax contributions in Traditional accounts, where the earnings will be taxed upon withdrawal. Even if there was an off-ramp that allowed a one-time withdrawal of all after-tax contributions because they could no longer be converted (not that I've seen this in any of the current proposals), it still gets the money back into a taxable account, where earnings will be taxed. And because the impact is limited to those who are both well-off enough to make after-tax contributions and then actually do make those contributions, the number of voters it would impact is limited. So even if it doesn't pass as a part of Build Back Better, I wouldn't be surprised to see it show up in a future bill, no matter which party is proposing the bill.

The Build Back Better proposals also had rules limiting all conversions based on income - either immediately or at some point in the future, depending on the version - which basically reinstitute the rules that Roth accounts originally started with, although with higher income limits. These rules also raise revenues by keeping money in Traditional accounts, where the earnings will be taxed upon withdrawal. I also wouldn't be surprised to see this type of rule show up in a future bill, no matter which party is proposing the bill. So again, getting any conversions done sooner rather than later is probably advisable.

AJ
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