Ed Slott article 5 things clients learned about roth conversions this tax season

Submitted by Jon Steffen on Wed, 2019-05-01 15:18

the article said, “5. Back-door Roth conversions. More clients whose income was too high to qualify for a Roth IRA contribution used the so-called “back-door Roth conversion” process in which they contributed to a nondeductible traditional IRA and then converted those funds to a Roth IRA. With the TCJA, both Congress and IRS have confirmed that this is an allowable strategy, which makes advisers more comfortable recommending it.”

Where did the IRS say this is an allowable strategy? I thought if you showed repeated steps of, contributing to IRA, converting to Roth, year after year, that they said that was just like contributing to the roth?

Do you have any good info about what is and isn’t allowed for the mega-back door roth conversion?



Submitted by William Tuttle on Wed, 2019-05-01 16:53

  • The TCJA conference report and In the June 10, 2018 Tax Talk Today webcast, Donald Kieffer Jr., tax law specialist (employee plans rulings and agreements), IRS Tax-Exempt and Government Entities Division, said the back-door Roth is allowed under the law.
  • However,  the conference report is not law and an individual IRS employees statement is not “substantial authority. They are not any different than the clear legislative intent in the the Tax Increase Prevention and Reconciliation Act of 2005 (TIPRA) which removed the $100,000 income limit for Roth conversions or previous statements in 2011 and 2012 from an IRA spokesman.
  • I don’t know why all of a sudden people are thinking something non-binding that was said by congress now and the IRS is any different than similar things that were said when the enabling law was enacted by congress and okayed by an IRA spokesman after the effective date.
  • IRS notice 2014-54 confimed the legitimacy of the Mega Backdoor Roth which can be 5 – 10 times larger than a Backdoor Roth. If that didn’t previously wipe away any concerns about the Backdoor Roth, I don’t know what would.
  • The are many sources on the Mega Backdoor Roth. Google is your friend.

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